The change comes after a five-year study by not-for-profit Open Road Alliance, revealing that of all the issues faced by charities, 46 per cent stemmed from those that donated money: a concept known as donor dysfunction.

As Thankyou co-founder Daniel Flynn explained to Inside Retail, the shift to unrestricted funding aims to tackle the disconnect between what donors want and what the communities at the other end actually need.

“As a donor, when you’re the one with the funds, you can find yourself feeling like you’re in the driver’s seat,” Flynn said.

“But imagine giving a heart surgeon money, and then directing them how you want that surgery done because it’s your money. As bizarre as that sounds, that’s the best picture we can paint to describe where much of the funding [for charities] is at.”

The change is particularly pertinent to Thankyou as a product-led business, as it will make showcasing the good that customers are doing by purchasing its products more difficult. 

In the past, customers would scan QR codes printed on Thankyou’s products to view the specific assistance their purchase provided. 

According to Flynn, the business will now need to be less specific in how it shows its impact, but its funding will be used for more necessary projects.

Donors tend to prefer to fund ‘simple’ solutions that sound good on paper and deliver tangible results when they are making a donation: $500,000 for a remote hospital, or $1000 for a new well, for example.

But in most regions that need such assistance, there are more systemic issues that are not being addressed, and largely being ignored by donors. This is due to a desire to ensure that the money donated ‘achieves’ something, Flynn said. 

“Imagine it through the lens of business: when you invest in something, you can’t say ‘here’s my money, but I don’t want it used for any projects that might fail’,” Flynn said. 

“It’s important that you, as a shareholder, don’t get to decide these things because the management team needs to be able to run the business to find success.”

Thankyou believes moving to unrestricted funding will remedy this issue, and, provided its charity partners continue to align with Thankyou’s purpose, they’ll keep being funded.

“For us it’s about letting go of control, but not letting go of accountability,” Flynn said. 

“When we back an organisation, we are backing them long-term, and trusting them to spend the money how they see fit. If a project ‘fails’, we want to talk about it to learn what failed so we can pivot to achieve something.”

Thankyou isn’t the first to implement unrestricted funding, joining a list of about 800 global organisations which made the switch during the pandemic, but Flynn said it was still on the fringe.

But, with more customers paying attention to brands’ purpose, and more businesses using purpose as a marketing tool, Flynn said it’s the perfect time to make the change.

“It’s the best time for brands to rethink this kind of stuff. With all the disruption that has happened in the last few years, now is the best time to stop and think about what you’re doing,” Flynn said. 

“Purpose isn’t supposed to be the paint you put on the outside [to show off], it’s meant to be the fuel on the inside. It’s meant to drive everything.”