Why Funding Infrastructure Is Mission Work

The most difficult experience I’ve ever had as a nonprofit professional was during my time working with an organization that eventually had to file for bankruptcy. It was the most stressful and emotional professional experience of my life. But it was also an experience that shaped my nonprofit management philosophy and taught me how small weaknesses—common in many nonprofits—can quietly grow into fatal problems.

The core problem for this nonprofit was a lack of adequate cash flow to cover overhead expenses. This organization’s mission generated earned revenue and they had regular grants and a consistent donor base. The problem was that their mission required significant infrastructure to fulfill it and much of their funding was restricted. Plenty of people and grantors were there to pay for the mission. But none were helping pay the bills.

They could afford their mission.

They could not afford the infrastructure behind the mission.

The term unrestricted gift will bring a smile to any Executive Director. That no-strings-attached cash brings a sigh of relief because we see clearly that paying staff payroll, utilities, insurance, taxes, and all the other boring overhead that keeps us functioning is essential.  Unfortunately, that’s not always the way donors and granting organizations see it. We have all seen advice telling donors to review overhead percentages when deciding where to give and emphasizing the need to only support organizations that focus on donor funds being used directly for mission.

As if paying the electric bill were optional.

 Or paying livable wages to staff were a luxury.

On top of that, mission focused fundraising often comes easy. People want their dollars going to housing families, providing food for the poor, creating concerts and plays, and supporting all the visible work your organization does for your community. Getting them excited about your electric bill is much harder. But just as vital.

Because we struggle with getting enough donor dollars for infrastructure, we often see restricted funds as a burden. Looking at the account and seeing cash you can’t use when you have needs within your organization is frustrating and sometimes leads to ignoring donor intent.

I once worked with an organization that would often “dip” into restricted funds to cover gaps in overhead. On the surface, it was understandable. They had funds in the bank, and they had to make payroll. They could always “pay back” those funds later by investing future cash into the mission. The problem was that they never concentrated on bringing in more funds to actually pay back that restricted “loan.” They dipped in every month. They never paid it back. This left them with paid staff, but no funds for the mission—and an upset donor base.

Using money as the donor intended is one of the most important promises we must keep. You will lose a donor in an instant if donor intent is ignored. We often take restricted grants very seriously. We should be doing the same with all our contributions.

Honoring donor intent is the very core of what stewardship is.

So, what do we do when donors are interested in funding the work, but not the people who do the work? How do we pay our staff and keep the lights on if donors aren’t interested in funding that boring stuff?

We rethink how we view our money and the approach in which we receive it.

Money as a Tool

First, let's talk about how our organization views the money that comes in. Money is naturally tied to emotion. We work hard to earn it. We use it to support ourselves and the ones we love. And donors use it to support the causes that mean the most to them. We make emotional decisions about money when what nonprofits require are structural ones. Reframe how you see your money — think of it as a tool, not a measure of success or failure.

But not all money is the same tool. Some funds—the dreaded restricted funds—are specialized tools meant for specific work. Unrestricted funds, on the other hand, are a multi-tool that can be used for any job. Use restricted funds for their intended purpose. Use unrestricted funds to fill the gaps.

But what happens when unrestricted funds aren’t enough for our overhead? What if our multi-tool isn’t accomplishing what we need it to? The answer is to pursue the specialized tool. Specifically seek the funds you need by creating fundraising plans that intentionally include raising money for all the organization’s needs.

It’s also vital to understand that restricted funds are not the enemy. In fact, because they are specialized tools, we should be seeking them—but not just for mission delivery. We should also pursue restricted funds for infrastructure and overhead.

So how do we get donors to give specifically for utilities?

Tell your story—then give them the option.

We often focus our storytelling entirely on mission. We almost act embarrassed if we need funds for our bills, as if it’s a failing of our nonprofit to need help with payroll and copy paper. But the narrative changes when we explain to our donors that none of the mission delivery would be possible without office space, an Executive Director, printers, website, and office supplies.

Tell donors where you need support. Place as much emphasis on telling your donors how the mission is fulfilled and why the infrastructure is necessary. Donors want to help you improve the world. Tell them the best way to do that—even if it means asking for money to pay the electric bill. Remind them that without a foundation, your organization sinks.

Funding infrastructure is funding the mission. That message should be clear to all your donors.

After you outline where funds are needed, make it easy for donors to restrict their gifts to infrastructure. On your donation platform—whether that’s a remittance envelope or a website page—give donors options for restricting their gifts to areas your organization needs.

University foundations are great examples of this. The vast majority of their donations are restricted to various funds—sometimes numbering in the thousands—that support everything from department operations to student scholarships. Donors are given a menu of options and can pinpoint their dollars’ impact. Our organizations can do this too, regardless of size. We may only have three giving areas, but providing options allows donors to fund what you truly need.

Because in reality, you need more restricted funds—not fewer. The multi-tool gets the job done, but ensuring you have enough specialized tools for all areas of need allows the multi-tool to become a safety net. With a focused fundraising strategy, a healthy mix of restricted funds, and an underlying base of unrestricted support, we build strong nonprofits with solid foundations.

Don’t make the mistake my previous nonprofit did.

The nonprofit I watched go bankrupt had passionate people, a real mission, and donors who believed in the work. What they didn't have was a foundation strong enough to hold it all up.

The mission is the reason. The infrastructure is the way. Fund both — or risk losing everything you've built.

Now go do some good!