An organization that in 2007 relied heavily on government grants and contracts was likely in trouble by 2009, thanks to the great recession. Another organization that relied heavily on contributions from people in the building trades in that same timeframe probably saw a similar problem. As the construction business went, so went their contributions.
Your financial advisor will tell you, diversify your investments. The same advice goes for nonprofit diversity of income streams. I’m not just talking about earned and contributed income. I am speaking of diversification within both of those major streams. Earned income could include multiple contracts, fees, business-related revenue, etc. The more diverse you are, the more you can withstand financial troubled waters. On the contributed side, the same is true. The more donors you have, the more diversity. The greater mix of foundations and individuals you have, also, the more diversity. Add in a couple of fundraisers, and the mix is even greater.
So when you look at your funding plan, the question is: how diverse is it? Having one that is not diverse is bad news. But it is also good news, because it is likely that you have greater opportunities to grow your revenue. The next steps are yours.
For more information be sure to check out my book Board Essentials: 12 Best Practices of Nonprofit Boards