Reasons for charitable giving are varied, but it can be safe to say that most people give because they want to make a difference. That often means providing support to the nonprofits that matter most to you. Yet, how you provide that support can affect how your funds are used.

Usually, gifts fall into two categories — restricted or unrestricted. Restricted gifts come with conditions attached such as asking the nonprofit to use your donated funds for a specific purpose or program, or during a specified time. Unrestricted gifts can be used for any purpose allowing the nonprofit flexibility to use the funds so that they can have the greatest impact.

When giving an unrestricted donation, you provide the funds and trust that the nonprofit will use them to not only honor your intention but also fulfill its mission based on where the funds are needed most.

Restricted gifts have their purpose: Perhaps you feel passionate about a certain program that a nonprofit operates, then you might restrict your funds to that program or an aspect of that program. However, let’s take a very basic example of what could happen with a restricted gift: Let’s say you contribute $5,000 to a food pantry with a restriction of only using the donation for purchasing bottled water. The pantry’s real need is for a temperature-regulated storage unit to house more food items. The pantry may already have stockpiles of bottled water and limited space to store it, but since the $5,000 comes with restrictions, they are obligated to use it to purchase more bottled water or to return the gift to you.

Without restrictions, the nonprofit could use this gift for more pressing needs such as building the new storage unit. This is a win-win for the donor, whose generosity is so appreciated, and the nonprofit that was afforded the flexibility to use the dollars in the most impactful way.

Trust-based Philanthropy

A study by The Center for Effective Philanthropy states that many well-meaning donors do not actually know what the nonprofits they support truly need to do their best work. Most of the time, nonprofits are so grateful for donations that the real needs – often the cost of doing business such as staffing, technology and other operational costs — go unrecognized and, unfortunately, unfunded.

The center’s study notes that, “While you should, of course, be discerning when deciding where to give, when a nonprofit’s work truly aligns with your goals and strategies, consider large, unrestricted gifts. If nonprofits have financial security and aren’t spending most of their time fundraising to keep their doors open – or agonizing over project budgets to fit narrowly specific gift parameters – their leaders and staff can focus on the mission.”

Trust-based philanthropy or unrestricted giving is a lot easier after you perform due diligence in vetting the nonprofit. Maybe, though, you don’t have the time to properly research a nonprofit. That’s when the Community Foundation of Anne Arundel County can help. CFAAC works with you by helping research and explore your giving options. Whether you decide to make a restricted or unrestricted gift, partnering with our donors for the benefit of our community is the core of our mission.

CFAAC’s staff can assist you in setting up a designated fund to support your favorite nonprofits. Or, if you are not interested in establishing a new fund, you can target your giving through one of our Field of Interest Funds, which offer you the opportunity to contribute in alignment with your preferred field of interest such as education, health, the arts, or the environment.

CFAAC offers a variety of Field of Interest Funds including its Arts & Culture Anne Arundel Fund, Women & Girls Fund, Environment Anne Arundel Fund and Grants 4 Teachers Fund. While these funds are broad in scope, they target more focused community needs. CFAAC’s grant review committees use their expertise to identify, evaluate and award grants to the most qualified and deserving organizations in your interest area.

Shifting away from giving restricted gifts may mean shifting your mindset. Trusting a nonprofit to strategically use donations they receive to meet their most pressing needs gives them the freedom to accomplish what they have planned and budgeted to achieve. For most nonprofits, this isn’t possible without the generosity of donors who trust them to get it right.

This story was originally printed in the April 8, 2022 edition of the CAPITAL GAZETTE.