You are coming up on the biggest giving months of the year: November and December. And in other countries, where the giving cycles are different, you can apply the same principles I am writing about here. But this is an important time for major gift giving.

And that’s why Jeff and I and our frontline team of coaches urge you to give your donors specific projects and programs to fund vs. the general fund.

I know. Believe me, I know. To be sure, this is not going to go over well with your finance department. They want you to bring in unrestricted funds so they can pay for your organization’s overhead.

Which is why it is not uncommon for leadership to tell major gift officers the following: “I really don’t care that donors are more apt to give to a specific thing they are interested in. What we need are unrestricted funds. So, focus on that.”

We have heard this statement hundreds if not a thousand times or more over the years. And it reflects a lack of understanding of a non-profit’s economy and the core drivers of donor giving. The result is that donors do not give to their capacity and there is high donor and value attrition. Ultimately, the non-profit’s economy suffers.

If you are a MGO reading this, you have, most certainly, faced the pressure to secure unrestricted funds while your donor-qualified caseload donors yearn to support those areas of your organization they are interested in.

Here’s why this is happening.

Managers and leaders would love to accept restricted funds if:

1. They had a good way to cover overhead. Overhead is, on average, 25-35% of the total organization budget. This is no small point. Think about it. A $10 million non-profit has to find $3 million of unrestricted monies to deal with the overhead issue. Just add some zeros to the gross revenue line for larger organizations. You can see that this becomes quite a mountain to climb. Not easy.
2. They had a good way to deal with programs and projects that were over-funded. Sure, it would be nice to let donors pick those organization programs and projects that they are passionate about. But what do you do if the total budget for program A is $1 million and several donors give a total of $1.5 million? Huge problem.

Here’s the good news. There are relatively easy solutions to both situations.

I say relatively because once you have set this all up, which is a rather detailed and labor-intensive venture in the setup phase, it is almost effortless to maintain.

If you would like to explore how to set this all up, please let us know and we will help.

In the meantime, as best as you can, present those projects and programs to your donor that match their interests and passions.

And when you are asking the donor to fund that program category that they love, be sure to have a plan for overfunding in your ask.

Here is what I mean in this overfunding point. Yes, ask the donor to give to what she is most interested in. It is a fact that donors will give more and find more satisfaction in their relationship to you when your ask perfectly matches their passions and interests.

So, do that, as long as you have asked the donor for permission to use her gift in a more general way if the program category or project she is giving to is overfunded.

Let me illustrate this point.

Let’s assume that the donor is interested in clean water development in Ethiopia. And the program has a budget of $750,000 all costs in. The donor has already stated she will give $250,000 to the project. The MGO is now confirming the details. Here is what it sounds like:

“Donor Name, we have been talking about the clean water development project in Ethiopia that you are interested in. And you have said that you would like to contribute $250,000 to the $750,000 budget for this project. There is one other item I would like to talk to you about. We have been discussing this project with several other donors over the last few months. If the project is over-funded, do we have your permission to use some or all your gift to fund clean water development in Africa? And, if for some reason that larger category of expense is also overfunded, would it be OK with you if we allocate your giving to our worldwide health programs?”

In our experience, this type of very clear and transparent asking for permission to use the gift for a larger category is always met with: “Look, MGO, I am fine with that. Just be sure that I get all the detailed reporting on how that Ethiopia clean water development project is doing.”

The gift is then given.The MGO memorializes the agreement in a letter or email. And everything is just fine.

Donors are reasonable people. And they understand and accept that overfunding can and will occur. It is just a matter of being open about it and seeking their permission to use the funds for the larger category to which the project belongs. Or, even a category above that.

If you adopt these two practices (asking for project-oriented giving and asking for permission to use their gift differently in an overfunding situation) in your organization, you will not be facing the restricted/unrestricted funds dilemma. Try it. You will find that your caseload donors will give more and have a much more satisfying relationship with you.

Richard