How do you cultivate and steward relationships with restricted and unrestricted funders?

1 Define the terms

Restricted funds are donations or grants that are earmarked for a specific purpose, project, or outcome. They usually come with conditions, guidelines, and reporting requirements that you must follow to use the funds. Unrestricted funds are donations or grants that are not tied to any specific purpose, project, or outcome. They give you more flexibility and discretion to use the funds as you see fit, within your mission and vision.

2 Know your funders

Before you approach any potential funder, you need to do your homework. Research their mission, values, priorities, interests, and past giving history. Find out what they are looking for, what they are passionate about, and what they are concerned about. Tailor your communication and proposal to match their needs and goals, and show how your program aligns with their vision. Demonstrate your credibility, impact, and value proposition, and use stories and data to illustrate your case.

3 Build trust and rapport

Funding is not a one-time transaction, but a long-term relationship. You need to build trust and rapport with your funders, and maintain regular and meaningful contact with them. Thank them for their support, acknowledge their contributions, and update them on your progress and challenges. Invite them to visit your program, meet your staff and beneficiaries, and participate in your events and activities. Ask for their feedback, input, and advice, and show that you value their partnership and expertise.

4 Report and communicate

Reporting and communication are key aspects of stewarding your funders, especially those who provide restricted funds. You need to comply with their reporting requirements, deadlines, and formats, and provide clear and accurate information on how you used their funds, what you achieved, and what you learned. You also need to communicate beyond the formal reports, and share your stories, successes, and challenges in a timely and engaging manner. Use different channels and formats, such as newsletters, emails, social media, blogs, videos, or webinars, to keep your funders informed and inspired.

5 Manage expectations and challenges

Sometimes, you may face challenges or changes that affect your program or your use of funds. For example, you may encounter delays, obstacles, unexpected costs, or external factors that impact your activities or outcomes. In these situations, you need to manage your funders' expectations and challenges, and be proactive and transparent in addressing them. Communicate with your funders as soon as possible, explain the situation, and propose solutions or alternatives. Negotiate with them if you need to adjust your budget, timeline, or deliverables, and seek their approval and support.

6 Diversify and leverage

While it is important to cultivate and steward your existing funders, you also need to diversify and leverage your funding sources. Don't rely too much on one or a few funders, as this may limit your options and expose you to risks. Seek out new funders who share your mission and vision, and diversify your funding mix between restricted and unrestricted funds. Leverage your unrestricted funds to cover your operational costs, fill the gaps, and invest in innovation and growth. Leverage your restricted funds to demonstrate your impact, attract more funders, and scale up your program.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?