Restricted vs. Unrestricted Donations

Private donations make up a significant percentage of museums' funding, and development departments spend a good deal of time cultivating relationships with private donors. However, private donors frequently put restrictions on what their donation money can be used for, creating problems for the museum staff. Of course there is always the issue of museum staff "chasing" funding from private donors who are willing to give only for specific exhibitions or causes. But what are the pros and cons of restricted and unrestricted donations?

Restricted donations are donations of any amount given by private donors or foundations that have particular specifications about how the money is to be used. For example, the Smith family foundation may choose to donate $5,000 to the Phillips Collection, but will stipulate that the money can only be used for a particular museum program. But what if the museum needs money for operational expenses instead? In this case, unrestricted donations might be more beneficial, because a museum can use the funding towards what it needs the most. However, many private donors like the idea of seeing where their money is going, and many feel that if they are the ones giving the money, they should be able to designate its use.

One solution to this problem was devised by the Boston Children's Museum when it raised money to fund its Japanese House. The development department created a "Wishbook" online, similar to a bridal registry, where donors could check what items needed to be donated, and "buy" a specific item for the museum. This way, the museum was able to put donation funds towards fulfilling its needs, while still giving donors a stake in the project. Not only was all the necessary money raised for the Japan House, but donors felt a certain accountability and pride in contributing to a specific exhibition.