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Partners talk unrestricted funding for Foundation’s second year

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Published on February 04, 2020

"The value of unrestricted funding cannot be overstated. Responding effectively to human rights crises is dependent on our ability to be flexible and nimble, so we frequently feel like there’s not enough unrestricted funding baked into grants."

Now in its second year, the Dropbox Foundation has grown to support six nonprofit partners around the world that work to defend human rights—Allies Against Slavery (Allies), GOAL, Larkin Street Youth Services, Physicians for Human Rights (PHR), War Child UK, and WITNESS. These organizations help victims of human trafficking, use technology to document human rights violations, support youth experiencing homelessness, work with children affected by conflict, and much more.

The Foundation’s core philosophy of effective partnership is rooted in both long-term unrestricted funding and skills-based volunteering. Partners have been able to harness the skills of Dropbox employees around the world, through events like Hack Week, to build and strengthen their organization’s infrastructure, processes, and technologies. The unrestricted model also places complete trust in the partners by giving them the freedom to allocate funds to any part of their organization, from operational expenses to specific projects, based on their judgement. Through talking with our partners, we’ve learned about their perspective on the value of unrestricted funding, the challenges with securing it, and ways to further the message about its importance. 

In general, receiving grants depends on many factors: if the nonprofit’s work aligns with a donor’s focus areas, if there is a new or existing relationship with the donor, or if the timing aligns with the donor’s grant-making cycle, etc. So while securing a grant is already hard enough, getting access to unrestricted funding is even harder. Restricted funding means the money is allocated for a specific program or purpose, but unrestricted funding offers a nonprofit the flexibility of how and when to use the funds. According to Kathleen Kelly Janus, author of Social Startup Success: How the Best Nonprofits Launch, Scale Up, and Make a Difference, only 20% of nonprofit funding in the US is unrestricted. 

“The value of unrestricted funding cannot be overstated,” says Hannah Chotiner-Gardner, chief development officer at PHR. “Responding effectively to human rights crises is dependent on our ability to be flexible and nimble, so we frequently feel like there’s not enough unrestricted funding baked into grants.”

According to GOAL, who recently did a study on unrestricted funding, “the ability of charitable organizations to deliver impact in their focus areas is linked closely to their ability to operate in a long-term, consistent, and sustainable way.” Restricted funding tends to support short term goals while unrestricted funding can help build out long-term projects and organizational strategy. 

“Smaller nonprofits find the most value in unrestricted grants because in today’s philanthropy reality, many organizations face massive uncertainty about the future, and their ability to sustain operations and provide for beneficiary needs,” says Courtenay Pollard, trusts and foundation manager at GOAL.

One of GOAL’s community healthcare programs is focused around innovating new ways to test nutrition levels in pregnant women and babies under 5 years old with mid-upper arm circumference (MUAC) tape. GOAL has been using unrestricted funds from the Foundation to develop and test prototype MUACs for babies under 6 months old in a long-term collaborative effort with experts and guidance from the World Health Organization (WHO).

Not only does unrestricted funding provide long-term support and greater reach in terms of programming, it also allows for flexibility, which is critical for many nonprofits. 

"It’s really the flexibility and mobility. The ability to deploy unrestricted dollars where and when they are needed is really critical for our success."

For Allies, which uses technology to help identify potential victims of human trafficking and prevent their exploitation, unrestricted funding has provided the flexibility to diversify their work, especially as a small three-person nonprofit. 

“Our north star metric is identifying victims,” says Allies CEO John Nehme. “So we’re always working towards that goal. Unrestricted funding allows us to be creative in what we do with our programming so that we can grow the organization in terms of impact.”

Their work ranges from investing in scaling their software and expanding product capabilities and the capacity to serve more partners, to identifying and caring for more victims. All these efforts ultimately helped to build a state-wide partnership with the Governor’s office in Texas, where Allies is based. 

For Larkin Street Youth Services, which provides a full continuum of services to young people experiencing homelessness, only 10 to 15% of their funding is completely unrestricted. But those dollars have allowed them to grasp opportunities that would otherwise be out of reach.

In 2018 Larkin Street became aware of a single family home available for rent in San Francisco. They were able to act quickly on this by using unrestricted funding, along with getting additional public funding, to create a home serving transgender and gender non-conforming youth experiencing homelessness.

“It’s really the flexibility and mobility,” says Sherilyn Adams, executive director of Larkin Street. “The ability to deploy unrestricted dollars where and when they are needed is really critical for our success.”

War Child UK supports children in areas of conflict across the world. Unrestricted funding has been vital to their work since so much of it requires being able to react quickly in emergency situations.

“Unrestricted funding enables us to respond swiftly in emergencies to reach children when they are most vulnerable, without having to wait to mobilize funds,” says Ella McNab, partnerships manager at War Child UK. 

When fighting erupted in Yemen and escalated into one of the largest humanitarian crisis in the world, War Child UK used unrestricted funding to set up operations and provided urgent, life-saving assistance to over 11,000 individuals. This funding also enabled them to establish long-term programs to provide protection and education to vulnerable children throughout the protracted conflict.

The Rohingya genocide is an ongoing humanitarian crises in Myanmar. When the persecutions first started in late 2017, WITNESS didn’t have any funds directed specifically to it. But being able to use unrestricted funds allowed them to make a real impact on the ground, training people on how to capture video documentation safely, ethically, and accurately. 

“This documentation was really important because a lot of journalists weren’t able to get in. Training affected communities locally or in neighboring territories was the only way to capture what was happening,” says Jessie Roth, manager of Institutional Giving at WITNESS.

Together with their local partner, WITNESS helped set up and create a systematic workflow to collect, verify, and archive footage. They fully-verified 500 videos. Now that the International Criminal Court has approved a full investigation into Myanmar’s crimes against the Rohingya, this body of evidence has potential to hold perpetrators accountable.

For an organization like WITNESS that works in situations where the political landscape changes everyday, they would not be able to respond in real time without flexible funds. The same goes for PHR, which works at the intersection of medicine, science, and law to defend human rights worldwide.

“The nature of our work is two-fold,” says Chotiner-Gardner. “We have programs that have definitely benefited from dedicated funding. But a significant part of our work is rapid emergency response that requires the ability to fully respond when needed. That work is made possible by unrestricted funding.”

PHR has been able to help document the impact of the “less-than-lethal” weapons used by security forces in the Hong Kong protests. They have put out fact sheets on how to treat people who have been injured by these weapons, provided support to advocacy groups, and had doctors speak about health impacts of the rubber bullets, water cannons, tear gas, etc. Their work uses scientific evidence to show the real life consequences of excessive use of force. 

Despite all the positive potential that unrestricted funding has for nonprofits, the challenges to securing the funding are multifaceted. First, from a funder perspective, placing smaller short-term bets seems less risky than funding something with potentially greater impact, but more uncertain scope. In addition, with unrestricted funding, the funder has no control of where and how it is being used. That’s where trust comes in. Having or not having full trust between the organizations can make or break the relationship. Lastly, it is more difficult to evaluate the impact of unrestricted funding in a tangible and measurable way—through the number of people or communities served or number of programs created—which often deters funders.

"Caring about an organization that you’ve determined is worthy of your support means trusting that they can make the right strategic decisions."

From the beginning, the Dropbox Foundation has taken a deliberate approach to support its nonprofit partners by providing unrestricted grants for up to three years. The Foundation’s approach is that the most effective way to support the partners is through unrestricted funding, trusting them to allocate the funds the best way possible. The Foundation has built relationships with its partners based in trust and taken the time to understand their needs. In addition to financial support, the Foundation matches organizational needs to the capabilities of Dropbox employee volunteers through skills-based volunteering around the world. 

“Our partnership with the Foundation and their advocacy has fundamentally changed our organization in so many ways,” says Kyle McDaniel, chair of the Allies Against Slavery board. “They have provided resources that helped with many facets of our organizations, such as finance, policy, and legal, through skills-based volunteering and have truly changed the game for us. We are ‘associate Dropboxers’ by choice and for life.”

Tina Lee, head of Social Impact at Dropbox and former nonprofit fundraiser, says she has seen a shift towards donors making capacity-building grants. “They’re focusing on supporting the nonprofit to do good work as opposed to supporting a specific program. And there is a role and responsibility that a funder has, to help promote and educate other funders on the importance of unrestricted funding.”

Donna McKay, executive director of PHR, encourages funders to take a step back and think holistically about how they want to see impact with their grants. “Caring about an organization that you’ve determined is worthy of your support means trusting that they can make the right strategic decisions. To say we believe in you, we’re going to give you these funds, and you know better what to do with this money than I do. The fact that Dropbox made this their m.o. from the onset when they set up the Foundation is really a hopeful call to others in their industry and I hope it can inspire and create a shift among their peers.”