Two-Account Trust Model
Separate restricted impact funds from overhead and protect the promise absolutely.
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 99%
The Two-Account Trust Model answers a common donor objection by separating public contributions for impact from money used to operate the organisation. Harrison says Charity: Water opened two differently audited bank accounts. The public was promised that all of its donations would fund clean-water work, while a smaller group of entrepreneurs and business leaders was asked to cover salaries, rent, travel, insurance, and other operating costs. The mechanism turns fund allocation into a clear trust proposition, but it also creates a hard dependency: the overhead account must be funded independently. When Charity: Water was close to missing payroll despite holding substantial restricted project money, Harrison says he preferred closure to borrowing across the boundary. The model therefore requires governance, honest overhead communication, and an absolute rule against quietly weakening the promise under pressure.
Origin
Harrison created the model after friends repeatedly told him they distrusted charities because they could not tell where their money went.
Core principles
- 01Design the funding model around the audience's central trust objection.
- 02Restricted impact money and operating money need a visible boundary.
- 03Overhead still requires an explicit funding constituency.
- 04The promise loses value if pressure is allowed to create exceptions.
How to run it
- 1
Find the trust objection
Ask prospective supporters what prevents them from giving and identify the objection the model can actually address. Harrison repeatedly heard questions about where money went.
Pro tip Use the audience's own language when defining the problem.
Watch out Do not promise a financial structure merely because it sounds marketable.
- 2
Define the restriction
Specify which incoming funds may be used only for programme impact and what that includes. Write the boundary so donors and staff can understand it.
Pro tip Make ambiguous shared costs explicit before accepting money.
- 3
Fund overhead separately
Build a distinct proposition for funders who value paying for the people and infrastructure behind the mission. Treat this as a core fundraising function, not an afterthought.
Pro tip Recruit funders who understand the leverage created by capable operations.
Watch out Restricted donations do not remove salaries, software, insurance, or rent.
- 4
Separate and audit
Track restricted and operating funds in separate accounts with appropriate oversight. Make it difficult for convenience or cash pressure to blur the boundary.
Pro tip Design reporting for both accounts before scaling fundraising.
- 5
Protect the promise
Decide in advance what happens if operating funds run short. Refuse any transfer that contradicts the stated restriction, even if the restricted account has cash.
Pro tip Document the shutdown or contingency path before a crisis.
Watch out An informal IOU still breaks the allocation promise.
In the wild
Harrison says the organisation placed public donations for clean-water projects in one account and raised salaries, office costs, travel, insurance, and other overhead from a smaller group of private supporters through another account.
→ The structure gave the public a simple allocation promise while making overhead fundraising a separate responsibility.
About a year and a half in, Harrison says the organisation held almost $1 million for water projects but was close to missing payroll. Advisers suggested borrowing from the restricted account, but he decided he would rather close the charity than use any of that money for overhead.
→ The restriction remained credible because it was treated as a rule rather than a preference.
Common mistakes
Pretending overhead disappears
The model separates who funds overhead; it does not eliminate the cost of staff, systems, rent, travel, or insurance.
Funding operations as an afterthought
Harrison says the public model gained momentum while the overhead account repeatedly struggled, putting the organisation at risk.
Making an emergency exception
Borrowing even temporarily from restricted funds would contradict the defining promise and weaken the trust mechanism.
Is it for you?
Best for
Mission-led organisations able to cultivate a distinct group of funders who knowingly pay for staff, systems, rent, and other overhead.
Not ideal for
Organisations that cannot reliably finance operations separately or whose communications would imply that impact work has no overhead.
From the transcript
“separate the overhead from the money”
“two differently audited bank accounts”
“our integrity would be forever compromised”
From the episode
How I Raised $700 Million: Charity: Water Founder