How (and why) to Diversify your Nonprofit’s Streams of Revenue
When starting as a nonprofit, you likely relied on individual donations from your board, friends, family, and community members to get your organization off the ground. But now, you may be one, two, five, ten, or more years into running your organization, and fundraising is still a significant challenge. First, please know that you are not alone.
Fundraising is arguably the most prominent challenge nonprofit leaders face. But it doesn’t have to be.
Do you rely on a few huge donors to sustain your organization? Or, perhaps you have been awarded the same grant a few years in a row that covers 30% of your organization’s annual budget, and you don’t know what you’d do without it. What happens when one of your largest donors can’t donate this year, or the grant you rely on decides to shift its focus areas?
It’s time to diversify your funding streams.
Diversifying your funding streams is critical to ensure the long-term sustainability of your nonprofit organization. You can mitigate the risk of losing financial support from a single source by relying on multiple funding sources. It also allows your organization to access new donors, supporters, foundations, churches, businesses, and more, expanding your reach and impact in the community.
Here are 7 ways to diversify your nonprofit’s funding streams of revenue:
Individual Donations - individuals provide a steady income stream for your organization. Increase individual donations by building relationships, engaging with the community, and effectively communicating the impact of your mission. (Starting a monthly donor program can also significantly increase this!)
In-Kind Donations - these donations can be just as valuable as cash, such as pro-bono legal or accounting services, office space, supplies, and volunteers. Contact churches, businesses, and community members who can offer these resources. It never hurts to ask. This can reduce operating expenses, freeing up resources to focus on your mission.
Program Revenue - many nonprofits think they have to give everything for free. This is not always the case. Charging (even a minimal amount) for the programs and services can create a sustainable funding source, help offset operating expenses, and create long-term financial stability. It can also promote self-sufficiency and bring dignity to your program participants.
Grants - private foundations and community grants can be significant financial resources for nonprofits. However, securing grants requires a strong proposal and effective grant management. You must identify appropriate funding sources, craft a strong grant proposal, and effectively show how your mission aligns with the grantor's priorities.
Corporate Sponsorships - identify potential corporate (business) partners in your community whose mission and values align with your nonprofit’s. Reach out to them with a clear and compelling proposal for collaboration, and demonstrate the impact that their partnership will have on the community. (This can include churches, too!)
Fundraising Events - while they can be a lot of work, in-person fundraising events (1-2 per year) provide an opportunity to connect with supporters in person, share updates about your organization, and generate excitement around it. Events can also create a sense of community among supporters and donors and help to build a lasting relationship between your organization and its supporters.
Online Campaigns - have you ever heard of Giving Tuesday? This online campaign brought in $3.1 billion for nonprofits worldwide in 2022. You can spread your message and engage supporters innovatively through your nonprofit’s online platforms, such as Facebook, Instagram, email marketing, and other digital tools. This can help to bring in donations from a broad range of supporters and create a sense of community around your cause.
As someone who has been involved in the nonprofit sector for many years, I know firsthand how challenging it can be to fundraise and sustain a nonprofit organization. However, I have also seen the incredible impact that nonprofits can have when they can diversify their funding streams and build a strong community of supporters.
This is why I created the Nonprofit Fundraising Plan, a comprehensive guide to help nonprofit leaders navigate the fundraising landscape and create a sustainable funding plan for their mission.
By leveraging the ideas and best practices in this guide, you can take your fundraising efforts to the next level and achieve greater impact and success. Thank you for your hard work and dedication to making a difference in the world. Together, we can build a more sustainable and impactful nonprofit sector.
