Managing Your Fundraising Campaign Message to Avoid Restricted Funds
Money makes the world go ‘round. We’ve all heard the saying, and it couldn’t be truer for nonprofits. For these organizations trying to make a positive impact on the world and their communities, money enables services to be delivered, programs to be created and expanded, and missions to be served. It also provides employees with paychecks.
All these operational expenses require funds, which makes fundraising campaigns for nonprofits a necessary and regular undertaking.
Effective fundraising campaigns need to have a concise, compelling message. This message needs to connect to donors. Maybe it’s a heartstring argument, perhaps it appeals to their sense of communal good. Sometimes it could be a logical argument, sharing the facts and data that support that the nonprofit is needed and has a massive impact already. Regardless of the persuasive angle, the message must connect donors to the why and how the nonprofit helps people and makes a community thrive.
But when you’re very specific with your message and story you might worry, am I accidentally creating restricted funds?
Is my message creating restricted funds?
When you make your message specific and punchy enough to solicit donations, you might worry that you accidentally paint yourself into a corner and create restricted funds. The short answer? No. The longer answer? Let’s try to avoid the ethical gray area.
Ultimately, the decision to make a donation restricted lies with the donor. The donor makes this designation through a letter that accompanies the gift or through an explicit agreement with the non-profit organization, such as checking a box or filling out a line on the form that says, in short, “This money is for X.”
This is where the morale middle ground comes in. For your donor, your message is like an agreement. It may not be legal, it may not be binding, but can set an expectation for the donor of how funding will be used.
What are restricted funds?
Restricted funds come in three varieties:
Donor-restricted funds
Grant-restricted funds
Organization-restricted funds
The one that applies most to fundraising campaigns is donor-restricted funds.
With donor-restricted funds, a donor indicates that their gift may only be used for a specific purpose. They may designate it only for a single program a nonprofit runs or professional development of the employees, for example. (This is why organizations often have an option for donors to make a gift specifically to one thing when a check is mailed or a donation is given online.)
Although donor restrictions can be difficult for organizations, they serve an important purpose: building trust with donors who contribute to a nonprofit. Using restricted funds to the letter communicates a culture of transparency and accountability to the donors who chose to mark those donations to one specific item. It also can encourage an otherwise hesitant donor to make a gift because they know where their money will go. All this to say, don’t be afraid of restricted funds to the point that you don’t give donors an option to decide but also don’t worry so much that you think all funds raised are restricted. Especially, if there hasn’t been a written agreement between the donor and the nonprofit.
So then, how do you create trust, flexibility, and buy-in from donors?
Flexibility and Integrity in Fundraising Campaigns
To ensure that your nonprofit isn’t unintentionally misleading with its campaign marketing and communications, we have three recommendations to help you create compelling messages while maximizing flexible giving from your donors.
#1: It Starts with a Story
Did you know that up to 65% of our daily conversations are storytelling? That’s because stories are one of the most effective ways to connect, persuade, and demonstrate a point.
So, when you prepare your campaign message, first tell a story of how you help people. Focus on the human connection to your nonprofit, whether it’s through employees, people utilizing services, or your board.
People connect with people, so find the stories that illustrate the need for the campaign and the mission. Then, with your call to action (CTA), avoid making a promise that funds will specifically support that person or need by using generalized, non-specific language. For example, “Save the Peregrine Falcon” and “Support bird conservation efforts and protect endangered species” have two intentionally different levels of specificity. The first example gives the impression that any gift made would only help the Peregrine Falcon; whereas the overarching CTA, like the second example, indicates that a gift supports all efforts to safeguard birds.
#2: Practice Transparent, Frequent Communication
Next, honesty is the best policy.
The primary reason people would rather give restricted versus non-restricted is the control. They want to know that you will be good stewards of their dollars and that the money only supports the intended program or service. While restricted funds may just be a fact of life; however, you can specify how unrestricted funds will be used. Donors want to feel trust in your organization that you’ll use funds right. Practice what works to build this trust, and ensure that even if funds aren’t restricted by a donor, they’re still going towards the essence of what the donor is looking for.
Sometimes, you may not be able to stop the donor from restricting a fund. But, you can work on messaging that supports flexibility in donations for your nonprofit.
Here are some ideas on how to do that:
List areas of need without giving the most important need, and specify how funding will go to these areas of need based on current priorities: This can encourage unrestricted donations that can then be divided up based on your nonprofit’s current needs.
Emphasize that all gifts help: One way to do this in a fundraising campaign is a promise that at least X% of all donations will go towards some program or aspect of the mission, ensuring that donors will feel comfortable giving without a set restriction.
#3: Use Safeguards
While there is no magic word to make donors give unrestricted funds, your nonprofit can employ specific phrases and clarifications to show how you will use funds raised during a campaign.
One way to do this is to include a statement in a campaign that emphasizes that donations will support all needed projects, not just the one used in your primary campaign message.
An example of a nonprofit animal shelter might sound like this: “Your gift will not only support adoptions in 2024 but will support future fostering and adoption programs that emphasize our mission of caring for all animals that need a home.”
This is essentially your organization’s way of informing donors that funds can go to more than one program or initiative and that it will still be going towards something specific. The specific part is key as vague blanket statements, such as “supporting our mission” can come off as incredibly dubious to donors concerned about how nonprofits use funding.
Another important way to distinguish the use of funding for donors interested in giving to your nonprofit is by including a clause within campaign landing or donation pages. Specifically mention that donations will be used on this project and for “other projects.” You can go more in-depth when you decide on your messaging, but this makes it clear and upfront to donors that the funds given will be going to other impactful projects if needed.
Essentially, these kinds of messaging tools serve two really important purposes:
They are an important safeguard. If you run a fundraising campaign exclusively using one story and then the year-end financials show half of that money going to a different cause, people won’t be very happy. Nothing erodes donor trust faster than shady stewardship.
Donors appreciate transparent communications so put these statements in plain view It needs to be clear to your supporters that you will use the funds for the project or program, and wherever else specifically that support is needed. This communicates to donors that money will go to the cause they want it to and potentially other important mission-driven work for your nonprofit. Doing this presents an image of transparency and accountability to the people who empower your nonprofit to do the work it does best.
Use Giving Language Wisely
The reality is, that donor restrictions will be something nonprofits will always navigate. But that doesn’t mean we won’t continue to advocate for using a simple message structure that provides clarity and converts donors. Just be mindful to use language around your story to safeguard your nonprofit and to promote goodwill and integrity.
Keep it transparent, keep it rooted in the story, and keep it honest, and you’ll find success in your fundraising campaigns.
