How Nonprofit Organizations Can Diversify Their Financial Resources

Forbes

2 days ago

Hard times force nonprofits to get creative when it comes to financial matters. With unpredictable economic conditions often influencing both individuals and organizations to assess current budgets and rein in unnecessary spending, this can limit the amount of money going toward organizations that largely depend on the support of others.
While it can be difficult to explore other avenues, investing in varied funding sources effectively enables nonprofits to thrive amid market changes. Below, 18 Forbes Nonprofit Council members offer strategies nonprofit leaders can leverage to diversify their financial resources to keep their organization thriving in a tight and uncertain economy.
1. Start Simple And Focused
Everyone is talking about, or thinking about, revenue diversification right now—or they should be. Our best tip on beginning work toward that goal is to start simple and focused. Pick one new revenue source to target, or leverage an existing strength. Too often, organizations try to grow two to three sources at once, limiting their ability to grow any one source deeply. Set realistic goals with a targeted focus. - Matthew Gayer, Spur Local
2. Take A Big-Picture View Of Financial Resources
A tight and uncertain economy is a good opportunity to take a look at all aspects of your financial resources. Is your bank giving you the best interest rates? Can you find a bank with less fees and better terms? Establishing a line of credit as a bridge for when cash flow is tight is also good to have in your back pocket. - Tara Chalakani, Preferred Behavioral Health Group
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3. Identify Fixed Organizational Costs
Get a strong handle on your fixed costs to identify areas for savings. Conduct concurrent market assessments to ensure that you understand the environment and the competition. Talk to your customers, listening to their pain points and their needs. Aspire to do a few things well, and don't overextend your resources. Finally, hold fast to the cut-before-you-add rule. - Deb Callahan, National Fenestration Rating Council
4. Get Creative
Now more than ever, it's time to think creatively. How can we use resources that are readily available? How can we find ways to adapt them to fit our present and future needs? What collaborations and alliances can we foster to help inspire more community support? Engaging supporters in these conversations sooner rather than later will help to yield new ideas, which can lead to more diversified revenue. - Randy Wong, Hawaii Youth Symphony
5. Reimagine How The Organization Operates
I would advise folks to reimagine and repackage their events, appeals, and outreach while also conceiving new ways to deepen board accountability for fundraising. Assessing the nature of your services is also an exercise worth engaging in every couple of years. Determine if you are addressing a need that is perceived as urgent across the philanthropic community. Be open to reimagining impact. - Danielle Moss Cox, Oliver Scholars
6. Invest In Your Staff
A big part of fund diversification is ensuring the organization has enough gen-ops dollars coming in the door. The problem is that not enough fundraisers have been trained on how to lead investment-level conversations that yield larger, gen-ops gifts. The time is now to invest in your staff to ensure they gain the skills needed to fundraise in a way that smooths out cash flow problems and builds a sustainable future for the organization. - Sherry Quam Taylor, QuamTaylor
7. Build An Earned Revenue Model
Building an earned revenue model that closely aligns with your existing mission or program delivery can reduce dependency on philanthropic decision making, which can fluctuate significantly from year to year. This creates a more predictable line item for longer-term planning and sustainable projections. - Arthur Mills, IV, Mills Management Group
8. Develop New Fundraising Channels
Commit to developing one new fundraising channel. Start small and run experiments, such as applying for a first grant or running a bounded peer-to-peer campaign. Grow that channel incrementally over time. The average nonprofit relies on two or fewer fundraising channels. Strategically cultivating new channels every one to two years creates new sources of revenue and de-risks through diversification. - Scott Brighton, Bonterra
9. Expand Your Target Audience
We've seen that nonprofits who treat funding like audience development tend to weather uncertainty better. It's not just about new revenue streams but about building the right relationships and telling your story in a way that helps funders see themselves in it. Diversify who's in the room, not just where the money comes from. - Michael Bellavia, HelpGood
10. View Attention As Currency
Treat attention like currency. In a tight economy, funding follows focus and our inclination can be to retreat. Diversify not just your revenue streams but your relevance. Create content that clarifies, stories that resonate, and partnerships that expand reach. When you become essential to more people, you attract not just donors but champions, collaborators, and unexpected sources of capital. - Cherian Koshy, Kindsight
11. Communicate The Importance Of Your Organization
Nonprofits are fortunate to have many avenues to develop financial resources. Individual gifts, grants, corporate sponsorships, and events all provide platforms for effective development. Always provide the best choice for philanthropic and marketing dollars. People and businesses have always remained philanthropic, so remind them why your nonprofit is the best choice. - Aaron Alejandro, Texas FFA Foundation
12. Form Long-Term Donor Relationships
It is critical to identify and sustain long-term relationships with individual donors, corporate sponsors, and strategic partners. This requires consistent, targeted communication about the mission, vision, and priorities to keep stakeholders engaged and valued. Using data to align fundraising with organizational goals strengthens the organization's financial resilience. - Bishan Nandy, University of Illinois Hospital & Health Sciences
13. Adopt A Zero-Based Budgeting Approach
It can be scary, but zero-based budgeting is essential. We all need to be good stewards of the finances we receive. That means ensuring that every dollar spent and hour worked is directed toward our mission and having an impact. Just because we funded something doesn't mean we continue to do so in perpetuity. Zero-based budgeting demands we take a close look at programs and separate the needs from the wants. - Patrick Riccards, Driving Force Institute
14. Avoid Limiting Your Actions
Don't put all your eggs in one basket. Mix it up with grants, individual donations, corporate giving, and even earned income if it makes sense. As important as relationships are, revenue streams are just as important. In hard economic times, the organizations that survive are usually the ones that planted multiple seeds in the ground. - Gregory Johnson, Foundation for the Mid South
15. Consider Matching Gifts
Don't overlook matching gifts. Billions in corporate matches go unclaimed each year. A simple tweak to your donation form and engaging workplace champions can unlock major revenue. Ensure your largest gifts are matched, as small changes here can yield big returns, especially in a tight economy. - Luciana Bonifacio, Save the Children
16. Avoid Leaning Too Heavily On One Source
Make sure each funding source is no more than 40% of your annual revenue. This will require exploring other funding sources, including individual donations, corporate engagement and sponsorships, private grants, events, merchandising, donor advised funds and more to provide balance throughout your fundraising and revenue generation functions. This is easier said than done, but you need to start somewhere. - Victoria Burkhart, The More Than Giving Company
17. Move Beyond Traditional Fundraising Methods
One key strategy is to diversify beyond traditional fundraising by integrating mission-aligned earned income streams. For example, consider digital services or tools that can serve the community while generating revenue. This reduces dependency on donations and builds resilience in uncertain economic times. - Yujia Zhu, FASSLING.AI
18. Ensure Philanthropy Remains A Priority
One powerful strategy is to keep philanthropy front and center in all revenue streams. Instead of chasing entirely new dollars, unlock what's already there. Add different giving options wherever possible, such as round-up gifts. Or consider tapping into existing charitable giving through donor-advised fund contributions. Show donors how their extra support impacts and extends your mission, especially in uncertain times. - Karen Cochran, Philanthropy Innovators