Lunch & Learn
No strings attached?
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Lunch & Learn 55 🔹  Thursday, May 15th 2025

No strings attached? Promises and challenges of flexible and unrestricted funding in philanthropy

Philanthropic funders traditionally adopt a top-down and targeted funding approach, in which they impose the terms of their support on their grantees. By default, grants are earmarked to fund a specific project or program. Restrictions apply as to how the grantee can use the funds. Recently, approaches such as “trust-based philanthropy” have gained momentum among large foundations that have decided to depart from these established funding practices. The Covid-19 crisis has marked a significant shift. Many foundations in Europe and in the US have pledged to loosen or eliminate traditional restrictions on grants to better support struggling nonprofit organizations. Adopting “flexible” or “unrestricted” funding is a key feature of these approaches. While no definitive definition exists, such funding can be used by grantees for general operations, emergency responses to crises, or the development of their organizational capacity. Flexible and unrestricted funding provide obvious advantages for nonprofit organizations: they can focus on their mission, fund essential but “unpopular” activities, adapt to changing circumstances, and spend less time and resources on fundraising and reporting. While funders may also benefit (lower transaction costs, more effective outcomes, greater impact generated by grantees), many prefer earmarked funding to monitor how grants are used and prevent opportunistic behaviors from grantees in the face of high information asymmetry. While the Ford Foundation now commits 80% of its grants for general operating support, restricted funding is still the norm. Flexible funding made up 19% of donations between 2016 and 2019, according to OECD data on philanthropy for development. How prevalent are flexible and unrestricted funding in philanthropy, more generally? Who provides and receives it? And what are their consequences for nonprofit organizations and their ability to generate positive impact?

 Guests:

🔹 Nelson Amaya, Global Knowledge Manager, Jacobs Fondation; Lead author of “No strings attached? Making sense of flexible financing in philanthropy” (OECD Centre on Philanthropy, 2024)

🔹 Arjen de Wit, Assistant Professor, Center for Philanthropic Studies, Vrije Universiteit Amsterdam; Co-author of “Unrestricted funding and nonprofit capacities: Developing a conceptual model” (Nonprofit Management & Leadership, 2024)

➡️ Guest-speakers' biographies

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