The Blog

Financial thoughts to keep you focused on money matters

How to Diversify Funding for Nonprofits: A Success Story

best practices board finances funding Feb 22, 2024


     What is your strategy for diversifying your organization’s funding? Today, I want to share a testimonial. I’d like to introduce this important topic by taking a moment to highlight the success of a nonprofit I've been working with. 

How Can Nonprofits Diversify Their Funding Sources Effectively?

     One of my clients came to me about a year ago, and we started a conversation about how to begin succession planning. Basically, their model was dependent upon their Chief Executive’s presence in their day to day programs, which were also a primary income source to fund their mission. So, this Executive came to me saying,

 “What in the world do I do? I don't even know where to start. I feel like I should quit this program, but then it means we're cutting off the revenue source.”

Start with the Facts: Assess Your Nonprofit’s Financials

     Well, our first step was to start with the facts. So we did. We went to the accounting records because good books will help you define what reality is. We discovered they were actually making a lot of money! Gross revenue was high, but between their operating costs and their time, they were actually spending far more than they were ever aware of. Once all the costs were counted, there just wasn't a lot of net income left. In fact, it was on the brink of becoming a loss. 

     But even more concerning than the income,  It strained the leadership of the organization and it just didn’t have a lot of future income potential. 

     So, we paused and we assessed those financials, and here's what we discovered: Donations had actually been growing! Outside support of their mission was increasing! 

Let Your Current Reality Inform Your Nonprofit Funding Strategy

     With fresh eyes and a data-driven perspective, we focused in on a donor relationship strategy that would help them to cultivate the generosity that was already present. We did not reinvent the wheel with  some new gimmicky campaign. Instead, we simply focused on nurturing the relationships that had already trusted us with the mission.

Review and Reflect

     I sat down with this same nonprofit leader recently, and here's what he told me:

 “I never knew I can do this! I'm shocked at how many people want to support us!”

     He shared that their donors even thanked him for asking them. Can you imagine? He was afraid to even ask? This experience helped him to realize that his fear of asking was ultimately not allowing the people that had wanted to support him to be a part of their mission. 

     So here we are, a year later, and this nonprofit’s year-end giving was the greatest it's ever been! But more importantly, they've actually added monthly givers! He expressed to me that their monthly giving is now clearly exceeding the income of that day to day work that they had been so focused on doing. Now, their next step is deciding whether or not this day to day activity is ready to sunset. Either way, he has now transitioned himself to a more future-oriented focus for the organization, allowing us to begin some very exciting work toward succession planning.

     If you'd like to talk to somebody about diversifying your nonprofit’s funding models, I'd love to brainstorm with you! Feel free to book a strategic consult with me here!

Sign Up to Receive Financial Tips in Your In Box

We hate SPAM. We will never sell your information, for any reason.