Money Doesn’t Move the Way You Think It Does

3-minute read

$400,000 closed, and I was sure I knew exactly what it was.

It looked like a straightforward sponsorship. Unrestricted money we could use wherever it was needed.

But finance saw it differently.

What “Unrestricted” Depends On

By the time we signed the agreement, finance had already reclassified it as a sponsored program. We had planned for it as a simple sponsorship.

That change set off a chain reaction we hadn’t expected. We needed new account codes. Staff had to log their time against the grant, so hours we used to spend freely now needed documentation. We also ran into expense restrictions we didn’t notice until we tried to use the funds.

We made our plan for that money based on one set of rules, but we were actually working under a different set.

Finance Wasn’t to Blame

This next part took me longer to accept than I’d like to admit.

Finance was making sure we had a clean audit, following rules that were in place long before this gift arrived. Their decision wasn’t random. It was the right one.

The real problem was timing. The classification happened after we had already decided, both internally and with our board, what kind of money it was.

Why the Goalposts Feel Like They Move

When there’s pressure to raise more, it’s easy to think every dollar should count the same way. But that’s not true.

A pledge isn’t the same as cash in hand. A grant has different rules than a simple gift. We already knew that. What surprised us was how often we learned these differences after the fact, not before.

The Classification Checklist

Now, we’ve made it a habit to ask three questions before we sign any agreement.

1. Are we promising the funder any deliverables or benefits in return? If so, expect it to be treated as a sponsorship with obligations, not just a simple gift.

2. Is any of the money tied to a specific program, timeline, or use? If so, expect restrictions instead of unrestricted revenue.

3. Has finance reviewed the actual agreement language, not just the label we gave it? If not, we still don’t know what we really have.

We don’t guess anymore. Every agreement goes through finance before we call it anything, even to ourselves or our board. It takes more time, but it’s the only way we’ve found to keep the rules from changing.

Your Turn

Before Friday, pick one agreement from your pipeline and run it through the three questions above. If anything isn’t clear, ask finance to review the actual language before you make a budget for it.

Coming Next Week

Next Sunday, I’ll share a plan I haven’t looked at in 20 years—my hand-written 2005 development plan for the YWCA. I’ll talk about what still works, what AI can now draft in an afternoon, and the five prompts I use to test any plan before I trust it.

Until next Sunday,
Christine

PS - This issue was written for the Chief Fundraiser tired of re-litigating what a gift is after finance gets involved. If that’s you, reply and tell me what happened. I respond to every message.

This newsletter grows one fundraiser at a time, and mostly by word of mouth. If it's useful, forward it to one Chief Fundraiser who'd get something out of it.

I’m Christine Bork, Chief Development Officer at the American Academy of Pediatrics.

I write CFW to share what I’m learning as I lead a growing team and try to do the work in a way that’s sustainable and thoughtful.

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