Editorial: Unrestricted Funding

What would you do with a million dollars? For those who play the lottery it’s a common and exciting question. Unfortunately for those lucky enough to hit the jackpot, what begins as an unmitigated windfall often ends poorly. Perhaps this is why so many funders look at unrestricted grants as a risky proposition, but in actuality, the impact of consistent, reliable, unrestricted funding on Non Profit Organizations like the Boys & Girls Clubs of Napa Valley result in healthier organizations that actively make deeper and more meaningful investments in the community. This type of funding quite literally elevates everything non profits do.

Despite their importance, funding for non-profits often comes with restrictions that limit their effectiveness. There is a growing movement in philanthropy that advocates for more unrestricted grants, where donors provide large sums of money without restrictions and trust the non-profits to use them effectively. However, this practice is still uncommon as it is considered risky by many donors.

Recent research by the Center for Effective Philanthropy and Panorama Global examined the impact of unrestricted grants on a number of organizations that received unrestricted grants from the MacKenzie Scott Foundation and found that the effects were "dramatically and profoundly positive." In conjunction with this analysis, the Ballmer Group also made large unrestricted grants to 21 US based non-profits as a case study to identify the benefits or potential hazards of unrestricted funding. These grants were disbursed evenly over five years, and grantees were told there was a possibility of renewal. The funds from the grants were used to strengthen the organizations, invest in their programs, and build resilience, which created conditions that optimized the granted organizations allowing for deeper and far reaching impact on a much larger scale.

Leaders from 18 of the Ballmer Group grantees were interviewed, and public data was analyzed for all 21 to understand their experience over the initial five-year grant period. The funds from the grants created space for leaders to lead, built morale within the organizations, allowed for re-granting or other forms of collaboration across the broader field, and served as a "vote of confidence" in conversations with other donors.

Investing in operational supports as well as programs was found to be imperative to creating healthy organizations capable of delivering the impact they set out to achieve. In other words, while it might be exciting to launch a new stem lab, the lights still need to work and the toilets still need to flush and over emphasizing the former over the latter can lead to dire and smelly circumstances. As to the case study grantees, the funds were used to increase impact directly by providing growth capital for expansion, innovating on their model, particularly around digital delivery, and adding frontline staff. Nearly 90% of the grantees used funds to shore up foundational capabilities, such as measurement and learning, IT systems, and fundraising. Over 70% reported investing in organizational

resilience, as reflected in their average cash reserves, which increased from about 3.5 months in 2017 to 6.5 months in 2021.

The leaders of the organizations were unanimous in their positive experiences over the study. These experiences highlighted important themes regarding large, unrestricted grants, what they enable and, more importantly, stressed the limitations of more restrictive grantmaking practices. Key takeaways included the ability for organizations to invest in building their foundations as well as their programs. They built key efficiencies by allowing them to adapt and remain flexible to the needs of the community as they developed. Furthermore, these investments allowed them to refine their scope and vision, by providing bandwidth to focus on creating healthier organizations capable of delivering the impact they set out to achieve.

Great, but why is this relevant to Napa? While MacKenzie Scott doesn’t currently reside in Napa County, there are many local organizations who rely on an ever tightening unrestricted grant supply. The decline in this type of funding partially explains the growth of local event based fundraising and direct appeals but with every non-profit hosting an annual gala and mail boxes crammed with mailers that market too has become hyper competitive and, because of the costs associated with production, marketing, and orchestration the investment, inherently risky. The anxiety among nonprofits should come as no surprise then when local foundations which traditionally supply unrestricted sources of funding deviate from that practice. Especially in the wake of earthquakes, wild fires, and Covid, all of which require non profits to remain nimble and flexible to the needs of their communities in emergent situations.

Investing in the Boys & Girls Clubs of Napa Valley, among others, through unrestricted grants is an effective way to ensure that they can continue to provide safe and supportive environments for children. The unrestricted nature of these grants allows the organization to invest in building their foundations as well as their programs and gives them the flexibility required to navigate dynamic and rapidly changing circumstances faced by our community. This is crucial for an organization like the Club, which relies heavily on community support to continue its work.

Lastly, investing in the Boys & Girls Club through unrestricted grants establishes trust in their priorities and capacity as an agency. With over 65 years as an independent agency and tens of thousands of youth served over that time they are experts in their field and supported by passionate professionals who are committed to making a difference for kids, families, and the Napa Valley community at large.

Are you, your foundation, or your business interested in exploring unrestricted funding? Contact us at Info@begreatnv.org to learn more about how the Club has leveraged these gifts previously and our track record of success!