Unrestricted funding requires a different management logic than project based grants. Rather than primarily emphasising ex ante specification and monitoring of activities, the funder focuses on strategic alignment, organisational health, learning, and contribution to long term change. This does not imply that project funding is inherently about control or poor stewardship; rather, it reflects different accountability frameworks and constraints. This section outlines how unrestricted funding can be responsibly and coherently managed from start to finish.
Phase 1: Entry point and due diligence
Funders may choose different entry routes when offering unrestricted support. The choice of route should reflect the funder’s strategy, objectives, and approach to risk, equity, and relationship‑building.
Option A: Invitation to apply
In many cases, the decision to invite an organisation to apply for unrestricted support sits with programme staff. Invitations typically follow earlier reflection on:
- Alignment between the funder’s mission and the partner’s overall strategy
- The maturity of the relationship and level of mutual understanding
- The suitability of flexible funding for achieving the funder’s intended outcomes
Risk: This approach can reinforce a closed funding loop, where support is concentrated among organisations already known and trusted by the funder. As a result, it may limit exposure to new actors, emerging approaches, or less visible organisations, potentially constraining diversity, innovation, and the discovery of high-potential partners outside existing networks.
Option B: Open or targeted call
Some funders may choose to offer unrestricted support through an open or targeted call, particularly when seeking to:
- Widen access beyond existing partners
- Reduce reliance on informal networks
- Surface organisations that may be less visible but well aligned
- Address equity concerns associated with by‑invitation models
When using an open or targeted call, it is especially important to:
- Communicate clearly that the unrestricted support can be used for anything the organisation believes furthers their mission or supports the aim of the funding
- Design application and due‑diligence processes that focus on organisations rather than projects
- Ensure selection criteria do not unintentionally replicate narrow or exclusionary “readiness” thresholds, which may unintentionally exclude new actors, emerging approaches, or less visible organisations.
Due diligence (for both routes)
Regardless of entry point, due diligence procedures apply. These should be:
- Proportionate to the level of financial and organisational risk
- Adapted to the nature of unrestricted funding
- Focused on organisational health, governance, and financial management rather than activity‑level controls
The purpose of due diligence in core support is to provide assurance, not to recreate project-based oversight through alternative mechanisms. In practice, this means avoiding the introduction of proxy controls – such as overly detailed reporting requirements, earmarking expectations, or informal restrictions on how funds are used – that effectively reimpose project funding discipline under a different label.
Instead, due diligence should confirm that the organisation has the capacity, systems, and leadership to allocate resources responsibly in line with its mission, allowing the funder to rely on institutional trust rather than continuous intervention in operational decisions. The burden for this due diligence lies with the funder, who collects the information with as little effort as possible from the organisation.
Phase 2: Discussing objectives at application and recommendation stage
Agreeing on objectives
Because unrestricted funding supports an organisation as a whole, it is neither realistic nor desirable to isolate its impact at activity level. A critical moment in the cycle is therefore the application and grant recommendation stage, where funder and partner develop a shared understanding of the organisation’s direction and how it contributes to both the organisation and the funder’s missions. This may include, where useful, agreement on:
- A small number of high-level objectives for the grant to support learning and reflection. However, in some cases these may not be defined, with the grant instead grounded in a shared understanding that the organisation’s overall work contributes to the funder’s mission without the need for specific grant-level objectives.
- Where objectives are defined, ensuring they are specific enough to guide learning, but not so detailed that they become proxy logframes.
- Areas of focus such as organisational resilience, strategic direction, capacity, or field-level contribution, whether framed as explicit objectives or as part of the broader shared understanding.
These discussions – whether centred on defined objectives or a broader alignment of purpose – help create a shared frame of reference, which is essential for ongoing dialogue, reflection, and learning without constraining the flexibility that core funding is intended to provide.
How progress is tracked
During the application process, programme staff and partners should also discuss:
- How the organisation already tracks its own progress, in ways that are meaningful and useful to its leadership and governance
- What existing systems, processes, or practices are in place to support learning and reflection
- Whether any additional support or resourcing would strengthen these efforts, if identified by the organisation
In the context of unrestricted funding, the primary responsibility for tracking progress sits with the organisation itself. The role of the funder is not to prescribe or manage monitoring systems, but to understand and, where appropriate, support the organisation’s own approaches to learning and accountability.
Where relevant, this may include:
- Optional resourcing to strengthen learning, monitoring, or organisational reflection capacities, where this aligns with the organisation’s own priorities
- Maintaining a light-touch approach that avoids introducing new, compliance-driven reporting requirements or parallel systems primarily serving the funder’s needs
This approach helps ensure that progress tracking remains embedded in the organisation’s own practice, rather than becoming an externally driven exercise.
Phase 3: Grant implementation and ongoing relationship
During the grant period, the emphasis shifts from oversight to a mutually beneficial relationship and learning.
Programme staff maintain contact with partners through:
- Periodic check‑ins
- Rolling conversations that allow for continuous learning
- Informal exchanges, especially during periods of change or uncertainty
In practice, this often works best through multi‑year grants with built‑in reflection points. For example, in a five‑year rolling grant, a substantive learning and decision moment in year three can create space to:
- Confirm and deepen the partnership
- Adjust the form, duration, or conditions of support
- Begin early, transparent conversations about a responsible philanthropic exit, if appropriate
This timing matters. Shorter grants (e.g. three years) rarely allow sufficient time to observe meaningful organisational or field‑level change, or ensure a responsible exit (see Step 6: Closing the cycle).
The role of the funder at this stage is to:
- Act as a thought partner
- Remain attentive to emerging risks or opportunities
- Avoid introducing new conditions ex post
For concrete tips on how to carry out these conversations, see Step 4.
Phase 4: Reflection and learning
Focus and format
With unrestricted funding, formal progress reporting is not always required and, where it exists, should remain light touch. Many funders rely instead on a combination of ongoing dialogue and existing organisational materials (e.g. annual reports, strategy updates, audited accounts) to understand how the organisation is evolving.
Where a written reflection or conversation may be requested – typically at the end of a funding cycle – it should:
- Capture high-level reflections on organisational development over the period
- Focus on what has changed, key challenges encountered, and lessons learned
- Emphasise learning, adaptation, and contribution rather than delivery against predefined plans
- Avoid detailed or activity-level financial reporting
Financial information, where shared, usually treats the unrestricted funding as part of overall organisational funding rather than linking it to specific expenditures.
Content of reflection
Rather than structured reporting against indicators, reflection may touch on questions such as:
- Financial reliance: Has dependency on a single donor decreased or changed in quality?
- Strategic focus: Has flexible funding enabled clearer priorities or more deliberate choices?
- Organisational health: What has evolved in terms of capacity, financial sustainability, resilience, or internal functioning?
These are not reporting requirements, but prompts to support meaningful reflection where useful.
Role of the funder
The primary role of the funder is to engage with and interpret information already produced by the organisation, complemented by periodic conversations. This places the emphasis on understanding rather than monitoring.
The overall aim is to support learning and accountability without introducing regular, compliance-driven reporting cycles or parallel reporting systems that duplicate the organisation’s own processes.
Phase 5: Understanding outcomes and contribution
Because unrestricted funding works through the organisation rather than through predefined projects, outcomes are best understood through a combination of perspectives – at both grant and strategy levels – rather than isolated measurement at grant level alone. Providing unrestricted funding will lead to contribution, rather than attribution.
Grant-level reflection
At the end of the grant, programme staff may develop an internal reflection that captures:
- Key changes the grant has supported or contributed to
- Insights drawn from conversations, organisational materials, and contextual understanding
This is an internal sense-making exercise led by the funder, not a grantee-driven performance assessment or reporting requirement.
Strategy-level contribution
Where funders track progress at strategy level, insights from unrestricted funding can be considered in relation to:
- Broader outcome areas
- Longer-term trajectories
- Cumulative effects across multiple organisations and grants
This helps build an overall picture of contribution without requiring precise attribution or imposing additional tracking requirements on partners.
Typical areas of change under unrestricted funding
While outcomes vary by context, unrestricted funding often supports change across multiple dimensions.
At organisational level:
- Increased financial sustainability, including healthy reserves and strengthened ability to attract and diversify funding
- Improvements in programme quality and effectiveness
- Stronger strategic planning, and consequently enhanced credibility, visibility, or positioning
- Increased influence or leadership within a field
- Stronger organisational culture and internal functioning
- Improved staff well-being, motivation, and retention
- Greater resilience and preparedness
- Increased agility and responsiveness to changing contexts
- Higher level of innovative and high(er)-risk / high-gain projects
At field level:
- Stronger alignment around shared goals (e.g. systems or policy change)
- More effective collaboration and networks
- Increased collective influence
- Gradual improvements in system-level outcomes over time
At the level of the organisation’s work:
- Changes in systems, policies, or practices aligned with its mission
- Outcomes for people or communities that reflect sustained, mission-driven efforts rather than discrete project outputs
Phase 6: Closing the cycle
The cycle of unrestricted funding does not conclude with a formal reporting moment. Instead, it evolves through ongoing understanding built over the course of the grant, drawing on conversations, organisational materials, and the funder’s own reflection.
This ongoing understanding also provides the basis for rolling discussions about continuation, adaptation, or eventual exit. Rather than being postponed to the end of a grant, these conversations are best approached as part of a continuous learning relationship, allowing both funder and partner to anticipate future scenarios and act responsibly (see Step 3: Grant implementation and ongoing relationship).
Because responsible exit decisions would need to be made well before the formal end of funding, multi year grants with built in reflection points provide the best structure for unrestricted funding. A three-year grant just cannot provide the time needed for proper reflection and adjustment.
Rolling decision points help avoid abrupt endings and reduce the risk of harm to funded organisations. This understanding can inform:
- Decisions about whether and how to continue or evolve the partnership
- Adjustments to the funding approach or grant design
- The funder’s own learning about risk, trust, and effectiveness
Rather than relying on a single end-of-grant assessment, unrestricted funding works best when learning is treated as continuous, cumulative, and shared over time.