Restricted vs unrestricted giving
Restricted gifts are earmarked for a specific program or purpose. Unrestricted gifts can be used wherever the organization needs — usually including overhead, staff, and reserves.
A restricted gift comes with a legal or agreed constraint on how it's used: this money funds Program X, this scholarship, this building. The organization tracks it separately and can't legally redirect it, even if the biggest need has shifted.
Unrestricted giving is the opposite: money the organization can use wherever it's most needed today. This includes the parts of an organization that donors often don't want to fund — administrative overhead, reserves, technology systems, staff training — even though those functions are what make programs work at all.
The tension is well-documented. Donors prefer restricted giving because it feels more accountable ("my money bought a specific goat"). Nonprofits usually prefer unrestricted giving because it lets them respond to actual conditions and cover the invisible costs that keep the lights on. The famous "overhead myth" — that a low overhead ratio equals a good charity — pushes organizations to hide operational costs and starve their own infrastructure.
Well-run orgs generally advocate for unrestricted giving from informed donors and use restricted giving to fund specific campaigns from donors who need that framing. Both are legitimate; both have costs.