How Restricted Funds Factor Into Your Fundraising Letter

Writing a fundraising letter has many parts. You have a great story. You’ve made the donor the hero. You have one specific ask. But how do you make sure the gifts that come in go where you need the most?

Understanding Restricted Funds

I think the first thing you have to understand is that any time you ask a donor to give for a specific purpose, the funds given must be used for that purpose. That is called restricted funds. Unrestricted funds are the opposite. They can be used for any expense – including salaries. When we write our fundraising letters, fundraising professionals know that giving for a specific purpose raises more money. This often leaves us with a dilemma – what if we raised more than we need for the purpose?

We have two ways we can plan our fundraising letter to make sure the gifts go to what is needed.

First Strategy-  Ask for a line item of the Budget

We can use ongoing general operations or program expenses in the ask. Let’s say a line item in our program budget is client transportation cost. It’s an expense that is ongoing and always needed. Our goal becomes one year’s funding for this expense. We would need to break that down into human terms. How many trips will be funded? How many clients would be helped? How much is it per trip? These questions help us tell the story in numbers and helps us know the amount of money needed on an understandable scale. So, we may be asking to fund 100 trips for 50 clients at a cost of $10 per trip or $20 per one person’s round trip to the doctor to get life-saving chemo treatments. I hope you get the idea here.

Now, tell the story of one client that benefits from transportation. Tell what life was like before and after they used the service in terms of your organization. To illustrate what I mean, I’ve worked with a volunteer dental clinic before. They provided dental services to uninsured and low-income patients. One of the barriers to receiving services is transportation. Many didn’t have the money to spend on the added fuel it would take to drive 20 + miles for services. Let’s say the answer to the problem for the clinic was to offer gas cards to patients. Let’s say too that their no show list went down by half with this program. To raise funds, they send out a fundraising letter asking for support for these gas cards. They frame it as helping eliminate a barrier to a beautiful smile. They go on to explain that it was more than a smile and use a former client that after dental work, had renewed confidence and was no longer a patient because he was gainfully employed. It wouldn’t have been possible without the help of donors giving so they could purchase the $5 gift gas cards. This strategy helps fund an ongoing line item so other unrestricted funds could take care of some other expenses.

Second strategy- Add a Disclaimer

The second strategy to write your appeal is to ask for a specific need and qualify it by adding parentheses usually with an asterisk in parentheses that all funds over the goal amount for the specific need will be used where it’s needed most. The disclaimer helps you be transparent with how you will use the money and allows you, once the goal funding you stated is reached, to release the extra funds into Unrestricted. An example that comes to mind of this strategy is when I worked with a Youth Organization. Every Christmas an appeal went out and often the ask was for funds to help make Christmas brighter for the kids. The story always told of what Christmas was like before the organization came into the child’s life and what Christmas was like now. While the ask was general (they wanted general operating funds most), the ask was Christmas-related. To be able to use the past Christmas, the nonprofit puts an asterisk at the end of the ask and clarified it at the end of the letter with the words “ any gifts over what is needed to make Christmas brighter for the Youth will go to where it’s needed most. “

When done right, both of these strategies can be very effective. The second strategy is often the most used strategy. The only caveat here is that you must be clear and transparent with how you will use the money.

When you go to write your fundraising letter, remember your responsibilities to the donor’s wishes and be clear with your intentions.