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One of the strongest predictors of a not-for-profit\u2019s long-term survival is multiple revenue streams. Many organizations with only one or two found that out that the hard way when they failed during the 2008 recession. The same is likely to be true for nonprofits that do \u2014 or don\u2019t \u2014 survive the current novel coronavirus (COVID-19) crisis.<\/p>\n
Road map to diversification<\/strong><\/p>\n Financially stable nonprofits have a good mix of revenue sources, with no one source accounting for more than 25% or 30% of the budget. If you aren\u2019t there, take steps to achieve the proper mix:<\/p>\n Perform and present your initial evaluation.<\/strong> Your board should evaluate current revenue streams as well as future plans and associated expenses. You can help board members understand the benefits of diversification by presenting them with multiple scenarios where costs are compared to revenues with and without current revenue sources. Nudge reluctant directors to embrace greater diversification by showing them how eliminating a revenue stream could jeopardize your mission.<\/p>\n Determine additional revenue sources.<\/strong> Consider a wide range of potential sources, weighing the pros and cons of each, including implications for staffing and other resources, accounting processes, unrelated business income taxes and your organization\u2019s exempt status. In addition, assess how well aligned potential sources are with your mission. For example, has that foundation grant you\u2019re thinking about pursuing ever been awarded to another nonprofit serving your population? Does the company that has proposed a joint venture engage in practices that don\u2019t jibe with your nonprofit\u2019s values.<\/p>\n Develop strategies for each new source.<\/strong> You don\u2019t want to put all your eggs in one basket, but you also don\u2019t want to depend on too many \u201cbaskets,\u201d because each new revenue stream will require its own strategy. Executing too many implementation plans can strain resources. Therefore, each plan should include initial and ongoing budgets, as well as any new systems, procedures and marketing campaigns that will be needed. It also should have a timeline.<\/p>\n Review and adjust as necessary.<\/strong> Take the time at the end of every month \u2014 don\u2019t wait until year end \u2014 to closely review each revenue source. Is it living up to expectations? Is it costing more than expected or falling short of revenue projections?<\/p>\n Patience is crucial<\/strong><\/p>\n The current pandemic environment has curtailed everything from major gifts to corporate giving, fundraising events to individual donations and foundation grants, so your nonprofit is likely hurting even if you have multiple revenue sources. But as society and the economy begin to recover, look for ways to make your organization more resilient. Diversification is an excellent way to do it. Contact us.<\/p>\n \u00a9 2020<\/em><\/p>\n <\/body> One of the strongest predictors of a not-for-profit\u2019s long-term survival is multiple revenue streams. Many organizations with only one or two found that out that the hard way when they failed during the 2008 recession. The same is likely to be true for nonprofits that do \u2014 or don\u2019t \u2014 survive the current novel coronavirus […]<\/p>\n","protected":false},"author":3,"featured_media":14716,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-14717","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-not-for-profit"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14717","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=14717"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14717\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=14717"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=14717"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=14717"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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