Is unrestricted funding worth the risk? Three funders saying yes

Reimagining Philanthropy is our philanthropy digest, bringing you the latest insights, ideas, and discussions about innovative ways we can reimagine our sector, supporting and platforming the communities that can drive real change for a fairer, more sustainable, and stronger future.

This week’s issue follows on from ‘Busting the myths around unrestricted funding’ and showcases how unrestricted funding has been used by grant-making organisations to strengthen their grantees’ strategies and operations in the mid- to long-term.

Unrestricted funding refers to funding not bound by the funder to a particular purpose. It can also be called core funding, unrestricted giving, general operating support (GOS), framework agreements, or strategic/organisational grants.

Is unrestricted funding worth the risk? Three funders saying yes

MacKenzie Scott

Philanthropist MacKenzie Scott’s approach to gift large grants of unrestricted funding has provided plenty of discussion on the potential impact of core funding windfalls due to analysis of these grants by the Center for Effective Philanthropy (CEP) and Panorama Global.

Since 2019, MacKenzie Scott has given more than $19 billion in unrestricted support to more than 2,000 organisations, writing in a Medium post:

“When our giving team focuses on any system in which people are struggling, we don’t assume that we, or any other single group, can know how to fix it. We don’t advocate for particular policies or reforms. Instead, we seek a portfolio of organisations that supports the ability of all people to participate in solutions.”

In the latest CEP report, the median grant size was $5 million and represented 77% of the organisation’s budget the year before. Even though organisations’ expenses have grown by nearly 50%, almost 90% of leaders from recipient organisations have said the unrestricted grant moderately or significantly strengthened their organisation’s long-term financial sustainability, indicating patterns of sustainable financial growth.

Oak Foundation

The Oak Foundation is a strong advocate of the power of unrestricted funding, with 43% of funding provided in 2023 being core support. In an article about the impact of this funding, Oak’s senior adviser for impact, Silvia Guizzardi , says:

“It gives our partners flexibility, freeing them to focus on their most pressing needs and support their own development. It can also reduce the burden of managing restrictions and bespoke reporting requirements on both sides of the funder/partner agreement.”

Silvia cites the example of Oak’s Environment Programme providing core funding to the Center for Study of Science, Technology and Policy (CSTEP) in India since 2009, when they only had three members of staff. 15 years later, Oak’s support as the first and only core funder enabled CTSEP’s growth into a leading climate organisation with more than 100 staff, multiple funders, and financial security.

Ford Foundation

The Ford Foundation’s Building Institutions and Networks (BUILD) initiative provides social justice organisations with five years of unrestricted funding as well as organisational strengthening support.

A 2022 report by the foundation evaluating BUILD’s impact between 2018-2022 showed that the top priorities of surveyed grantees for their BUILD grants were growth and sustainability; strategic clarity and coherence; and leadership and governance. 

More than 90% of 116 grantees surveyed reported that BUILD enhanced their ability to strengthen and clarify strategy; fortify their finances; engage in deeper, more trusting relationships with Ford Foundation staff; respond to opportunities; adapt to contextual threats; and invest in retaining and developing staff.

A senior staff person of a US-based grantee described the effects of the BUILD grant in the report:

“Unrestricted resources allows us to have the capacity and the capability to [create] workplans to accomplish what it is that we are trying to do through our vision. [BUILD] also gives us the flexibility to do the work … as we are also building infrastructure. The infrastructure [is] everything.

“It’s more people. It’s more technology supports. It’s more space – you name it – all the supports that we need to provide internally to staff to actually do the work. That is how I see the support that BUILD provides as being transformational for this organisation.”

Do you know of any game-changing grant programmes that focus on unrestricted funding? Let us know what you think funders should consider when putting together funding opportunities without ‘strings attached’ in the comments.

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