3 ways to diversify your nonprofit’s revenue streams

By Doris Hotz, CPA

This year’s federal funding cuts have presented unprecedented challenges for nonprofits—and plenty of uncertainty. One thing, however, has become clear: It is no longer sustainable to rely on a single grant or program.

As your nonprofit looks ahead, it’s important to consider new ways of bringing in revenue. Here are a few examples of what this could look like in your organization.

1. Identify scalable services.

It can be difficult to be all things for all communities. Concentrating your efforts on a service for which you have the most expertise and capacity is a great place to look for ways to expand and find new sources of revenue.

A scalable service should be one in which you have a meaningful advantage over other organizations, such as highly experienced staff members or specialized programming expertise. You may also want to consider services with a high demand or need—perhaps a service for which you are the sole provider in your area.

Most important, you will want to ensure any services you are seeking to expand are financially beneficial to the organization.  While it is not always straightforward to determine “what if” scenarios related to a specific program, doing so is a must to ensure your organization is growing in a healthy way.

2. Explore alternative funders.

Seek out new funders that may be interested in your services. This could mean researching and networking with other state or federal agencies, health plans, or private or corporate donors or grants.

One way to find funders is to tap into your professional networks. Organizations that work with the nonprofit community can be sources of information, too. For example, in Arizona where I’m based, one such organization to consider connecting with is AZ Impact for Good, a statewide association dedicated to serving the needs of Arizona’s nonprofit organizations.

You can also find a wealth of information about available grants on state and federal department websites, and even via donor networks and websites. You may also consider working with a grant writer who has experience in knowing what information specific funders are looking for in grant applications. This should greatly increase your chances of success.

3. Partner with other organizations.

Joining forces with other organizations could allow you to expand a program or further your mission in a way that provides a mutual financial benefit. Funding sources may even give preference to proposals that are provided as a collaborative effort between nonprofit organizations.

For example, if your organization provides housing for low-income families, another nonprofit who has expertise in delivering mental health services might be a good partner to demonstrate a full-service approach.

While we all know this, it is important to remember the power of attending industry conferences and seeking out forums in which you can engage in discussions with other nonprofit leaders. In other words, get out there and keep an open mind.

Forge a path to a more resilient future

If your nonprofit is overly dependent on one or two funding sources, this can be a risk in the event of significant funding changes—something many organizations experienced this year. Even if your organization receives funding from several grants, if they all come from one department or are all federal or all state, this could be a vulnerability.

The more you can diversify your nonprofit’s funding sources, the more resilient your organization will be in the years ahead.

As you consider your next steps, know the team at Abdo is here to help. Our nonprofit advisors can assist you with evaluating your programs from a financial perspective to identify where opportunities for growth may be and can shine a light on the path ahead.

To learn more about how we empower nonprofits, contact us today.