Unrestricted Funding: A Practical Guide for Funders

Overview

Unrestricted funding remains unusual across much of philanthropy. Many funders and grantees agree it strengthens organisations and shifts power towards grantees, yet concerns persist around loss of control, reputational and compliance risk, uncertainty around accountability, and monitoring, evaluation and learning (MEL) systems built for project funding. This guide takes these concerns as starting points for constructive dialogue rather than obstacles to argue away.

In many cases, the challenge is not a lack of belief in flexible funding, but the perception that existing rules, governance structures, legal frameworks, or organisational cultures do not allow it. This guide focuses on how it can be put into practice and combines definitions, scenarios, tools and insight drawn from Philea members, wider philanthropy and academia. As a living resource, it will continue to evolve, incorporating further examples and hybrid models over time.

Key takeaways

• Unrestricted funding is in demand and increasingly evidence-backed, yet still rare. Only 14% of grantees of Europe-based funders report receiving multi-year unrestricted support, compared with 31% in the US.
• There are signs of progress with OECD data highlighting flexible financing among major funders rising from around 5% in 2000 to 20% in 2021.
• The evidence base is strong. Among recipients of MacKenzie Scott’s grants, 92% reported improved long-term financial sustainability; in the Ford Foundation’s BUILD programme, 84% reported greater financial stability and 71% diversified their revenue sources.
• Who benefits most varies by field. Between 2020 and 2022, 52% of US foundation funding for anti-democracy organisations was unrestricted, compared with 38% for social justice movement organisations.