Much of the financial livelihood of nonprofit organizations is dependent upon individuals donating their hard earned money to the organizations of their choice. According the National Center for Charitable Statistics, 72% of donations in the nonprofit sector come from individual donors. This type of giving has been steadily increasing while other sources of funding, such as governmental grants or private foundations, have either been declining or staying somewhat stable over a period of time. While individual donors are really the backbone of giving for the nonprofit sector, there are some harsh realities where donors may actually be causing more harm than good. Sometimes the road to hell really is paved by good intentions.
The Washington Post recently published an article discussing common mistakes both donors and organizations make during their relationship with one another. While they discuss 10 different mistakes, the one we focused on this week at the Financial Management Training at the NSRI was in regards to restricting gifts. A restricted gift occurs when a donor makes a donation with a specific, intended purpose. For example, an individual can make a donation to a homeless shelter and specify that they want their donation to go towards the soup kitchen. If every other donor does the same, the shelter would be legally obligated to only use their funds towards that particular cause.
Clearly, most individuals do not make donations restricted towards overhead or other “business-oriented” areas that are crucial for the organization to run effectively on its’ own. Therefore, by restricting funds to a particular cause in an organization, donors can really stunt the growth that could have been.
In general, donors need to be aware of the total nonprofit environment before making donations. In theWashington Post article, the fix proposed by the author is “Research the charity so you understand what they need and give an unrestricted gift”. This resolution does not take into account the culture that has been created when it comes to individual giving. If people are motivated enough to make a gift, nonprofit organizations are not going to turn it away.
More needs to be done on the end of the organization rather than simply relying on individuals to do their due diligence before making a monetary gift to an organization. It is important to show where funds are needed or solicit unrestricted funds so assistance can go where it is needed most. Ultimately, education by the organization and the donor is necessary to ensure that a sustainable, symbiotic relationship is both created and maintained.
 National Center for Charitable Statistics. “Charitable Giving in America: Some Facts and Figures” <http://nccs.urban.org/nccs/statistics/Charitable-Giving-in-America-Some-Facts-and-Figures.cfm>
 Dagher, Veronica. “When Good Donors Do Bad Things” The Wall Street Journal. April 12, 2015.
 Dagher 2015.