Diversification is key for nonprofits and service agencies; particularly in uncertain political and economic environments.  While this might seem obvious, there are a few considerations:

1)       Are you able to receive money from multiple sources? Different types of income require different transactional infrastructures. A large donor base needs care and feeding and federal contracts need reporting and compliance and grantwriting of a particular type. Each stream of income has its own transactional costs in other words and so there is a tradeoff with establishing a new stream. You don't want to wait until application time to be ready to receive money! We can help you with proposals of all types.

2)       If you have a consistent revenue source, grow the relationship to the extent possible.

3)       More funders are requiring that grantees work towards "getting to scale".  You can't get there without diverse funding sources.  

4)       The best source of funds for a nonprofit has three key characteristics. First, it yields a lot of dollars. Second, it is unrestricted. This is important partly because a nonprofit can shift this money to cover the loss of other funding. Unrestricted funds are important is that they can give a nonprofit the financial capacity to respond nimbly to economic and political challenges. The final, crucial characteristic is that the source is "internally diversified." That is, it comprises in itself a number of individual sources that are not dependent on one another-so if one disappears or goes down in value, the others aren't affected.

5)       Private individual donations and revenue from program expenses are the best type of unrestricted funds.  We can help you develop fundraising campaigns and think about programming strategically.

Source: Adapted from Nonprofit Quarterly