Fewer Revenue Streams or Diversify?

When we talk about for-profit businesses, we typically have a good understanding of the different types of business models. For nonprofit organizations, it isn’t as straight forward. This article by the Stanford Social Innovation Review outlines 10 funding models and the types of nonprofits that have success with each model. It then goes on to discuss how not having a clear funding model and seeking money wherever is a mistake. The article says,

“In the current economic climate it is tempting for nonprofit leaders to seek money wherever they can find it, causing some nonprofits to veer off course. That would be a mistake. During tough times it is more important than ever for nonprofit leaders to examine their funding strategy closely and to be disciplined about the way that they raise money.”

And although I would agree that a nonprofit should have a fundraising strategy, it can be difficult to do.

There is a contrasting argument: when nonprofits diversify their revenue streams it enables them to be less reliant on one source of revenue. But as the article mentions, many nonprofits do not have the resources to sustain multiple revenue streams. So, how can nonprofits develop a funding strategy that allows them to be resilient?

At 180 Degrees Consulting Waterloo, we continue to work with nonprofits to develop fundraising strategies that leverage the success they’ve had in the past. We often discuss and conduct research on what revenue streams make sense, how diverse the funding streams should be, and which ones to prioritize. Finding that balance can be very difficult and is often specific to each nonprofit.

If you are interested in learning more about nonprofit business models, I highly recommend reading the article. It offers some very insightful questions to consider when selecting a funding model.

What did you think about the 10 funding models and having fewer streams vs diversifying?