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August 30, 2023

A Reflection on the Importance of Unrestricted Funding

Over the last year HU has made a conscious shift towards sharing our organizational strategy and approach. In this guest blog our partner, Dylan Mathews of Peace Direct, shares a reflection on the importance of unrestricted funding during times of crisis.

Editor’s note: As one way of cultivating the conditions for enduring peace and freedom, Humanity United strives to provide unrestricted funding when possible and appropriate. Unrestricted funding enables organizations to adapt to both crisis and opportunity, to sustain their work through the ebbs and flows of funding, and to fill in gaps that other types of funding may not cover. Most important, unrestricted funding gives organizations working closest to their communities the power and agency to make decisions about how to allocate resources to best support their work and mission. Over the last year we have made a conscious shift towards sharing our organizational strategy and approach and, as part of this ongoing effort, we hope to more frequently share stories of this work in practice in collaboration with partners.

The devastating earthquake that hit Turkey and northern Syria on Feb. 6, 2023 was met with an overwhelming response from donors and well-wishers around the world. Local organizations – always the first responders – mobilized quickly and international agencies did the same, launching appeals and activating their emergency response teams.

The pattern is repeated time and time again throughout the world: A cataclysmic event, whether flood, earthquake, outbreak of war or some other horror, leads to an outpouring of generosity from the general public, private philanthropic organizations and governments. Many millions of dollars are raised and this flexible, rapid funding is channeled directly to the network of local organizations on the ground that are already there and are already helping.

Except that it doesn’t.

Yes, the funds are raised. But almost none of it is flexible. And almost none of it reaches local organizations.

Instead, the funds end up being restricted to certain activities, based on hastily drafted proposals written by stressed out UN or INGO desk staff. The funds are then channeled to UN agencies and INGOs, only some of which have a presence. Organizations without an existing presence then lose precious time figuring out how to deploy staff to the affected areas. Meanwhile, local organizations wonder whether they have become invisible overnight.

Somehow, we’ve taken a wrong turn in how we respond to such disasters, but it doesn’t have to be this way.

First, let’s focus on the quality of funding and not the quantity. Let me share a few examples of just how important unrestricted funding is to nonprofit organizations, not only in times of crisis but throughout the whole year. We’ve all heard the arguments for unrestricted grants many times, and some of you may have seen the recent study by the Center for Effective Philanthropy showing the impact of large unrestricted grants.

Peace Direct is lucky enough to receive unrestricted funding from a small number of donors, including Humanity United. Because we receive some unrestricted funding, we were able to send small emergency grants to our local partner in the region. There was:
> No need for us to send a proposal to our donors
> No need for us to request a budget modification
> No application form to complete
> No excruciatingly painful delay waiting for a response
> No back and forth with donors asking us for additional information
> No additional due diligence or compliance requirements to complete.

Trust is at the heart of unrestricted funding, and trust enables us to do what is best for the partners we support. And, of course, when we receive unrestricted grants, we can offer the same to our local partners, who we also trust to get on with the job. In the case of the earthquake in Syria, we sent funds quickly and without restrictions to our local partner, and they spent it quickly helping their communities.

We’re now seeing the horror of an escalating war in Sudan, and we’ve offered the same help to our partner there, though getting the funds into the country is proving challenging. Last year, we did the same for our partner in Eastern DR Congo when the fighting in the region escalated. Outside of emergencies, unrestricted funding has allowed us to respond quickly to opportunities, such as helping our partners in advocacy efforts which have appeared at short notice, as well as launching activities which, frankly, may not have been easy to fundraise for.

Let me share with you a story about when we didn’t have unrestricted funding, and what that meant for us and our partners. Several years ago, we heard from our partner in Eastern DR Congo that a militia leader offered to release all the children (more than 100) that he had abducted into his armed group into the care of our local partner, Centre Résolution Conflits, so long as all the children would be returned to their families and be looked after. They contacted us, saying that they would need approximately $50,000 to do this immediately. We didn’t have unrestricted funds then, so we frantically spent weeks searching for a supportive donor. In those weeks, my team and I lost countless hours of sleep wondering if we were going to be too late, because each day we were delayed in sending funds was another day that the children were in the forest, possibly fighting, possibly dying and certainly terrified.

The wait was agonizing.

There is a happy ending to this story. After about eight weeks, the funds were raised and the children were rescued and rehabilitated. None of the children died during the waiting time, but the stress for everyone involved was unbearable.

The unrestricted funding given by funders such as Humanity United is worth its weight in gold. A long time ago, one of our partners memorably said to us that she would prefer $1,000 in unrestricted funding over a $100,000 restricted grant. That’s how important this type of funding is.

Of course, unrestricted funding is just part of the solution. Getting it directly to local organizations is another piece of the puzzle, and if the open letter to funders from Ukrainian civil society organizations is anything to go by, we have a very long way to go. Starting with trust, as unrestricted funding symbolizes, is an excellent place to start.

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