Giving comes in many forms but often falls into one of two categories: restricted or unrestricted giving.
Restricted giving refers to donations that have limitations on how funds can be used within an organization, such as specifying that a donation should go toward a specific project or campaign. The reasoning behind restricted giving is understandable. Donors have a desire to feel connected to the causes that they’re funding, seek to develop direct relationships with nonprofits, and may worry that unrestricted charitable dollars could be used inefficiently — a pervasive, if unsupported, concern among some.
Nonprofits and donors alike are more and more frequently championing the power of unrestricted giving. In contrast to restricted giving, unrestricted dollars are given without condition, providing organization leaders, the experts in their areas of focus, with much more freedom to determine how funds are used.
A grant to Gender Health Center from the Building Equitable Communities Fund was made possible by unrestricted gifts.
Many of our fundholders recognize the power of unrestricted grantmaking. Last year, one donor made grants to eight local nonprofits whose work she admires, asking that the funds “be used where needed most” at the discretion of each organization’s leadership. She’s not alone: Three-quarters of the over 3,300 grants awarded by our fundholders and the Foundation in 2022 were similarly unrestricted.
We see the power of flexible funding in the grants we direct, too, which are fueled by unrestricted gifts to our Impact Fund. Pooled with other resources, and put to work through the right partnerships, unrestricted gifts to the Fund become flexible grants to high-impact groups addressing our community’s greatest needs, particularly for the most marginalized — like a grant that Gender Health Center used to provide life-saving services for queer and gender non-conforming people, one that St. HOPE Academy used to launch a reading series for families in the neighborhoods it serves, and one that Marshall Foundation for Community Health used to strengthen the medical care available to Spanish-speaking residents.
In a time when the Sacramento region is facing a multitude of complex issues, the ability to take nimble action is more important than ever. Unrestricted giving makes this possible and makes charitable dollars all the more effective. When a donor places their trust in organizations to expertly determine where charitable dollars are most effective, relationships strengthen and communities get the resources they need.