An earmarked donation is a contribution made by a donor with the intention of the donation being used for a specific purpose, project or appeal, rather than being used for general operating expenses or unrestricted use by the recipient organization.
When a donor makes an earmarked donation, they are designating the funds for a particular program or appeal within the organization. Earmarking can help ensure that the donor's funds are used in a way that aligns with their values or interests, and can provide a sense of satisfaction that the donation is making a direct impact on a specific area of need.
While earmarked donations can be beneficial for both donors and organizations, they can also create challenges for organizations if they receive too many earmarked donations that are too specific or restricted. Earmarking can limit the organization's ability to use funds where they are most needed, and can create administrative burdens in terms of tracking and reporting on the use of the funds.