Adjusting restricted donations during economic hardship

As ticket sales for charity events and donations decline, charities need to investigate ways to reallocate funds where they are most needed. Today, Stephanie Strom from The New York Times wrote about “Charities Loosening Strings on Arts Grants.” Although the article focuses specifically on arts grants, the strategy can be applied to any type of organization. As such, you may be inclined to approach foundations, individuals or corporations who set restrictions and ask them to release their constraints in this pressing economic time, allowing you to use the funds for a more critical area.

Restricted donations aren’t necessarily iron clad, and if you approach donors with a tactical plan regarding their contribution, they may be willing to assist you to ensure long-term success of your charity.

Here are some steps to take:

1.) Take a sincere approach to understanding the intent of the donation
2.) Have a clear budget of what amount can be used in other areas and why this need is
so great
3.) Show the foundation or donor what adjustments you have already made to help support
your organization
4.) Prove to the donor that their initial cause will not (go by the wayside) by providing a
clear plan for the future use of the funds with their original intent

If the donor is unwilling to make changes to the restricted funds, and you think perhaps you aren’t getting the most use out of the funds provided to your charity, you may request support in managing the funds. A report by the Center for Effective Philanthropy found that grants were most effective when nonmonetary assistance was provided to “help monitor and make critical decisions on necessary next steps.” Meaning that grants provided by Foundations had a greater impact when management expertise was also provided.

Tip: Absolutely do not use restricted funds for purposes not designated by the donor. Such actions can lead to legal problems and infuriate donors as evidenced by several situations at various universities, as The Wall Street Journal’s John Hechinger reports.

Originally posted: June 5,2009 on