In the early days, an organisation usually fundraises in ways that most suits the founders or people involved at that time. Or sometimes the type of organization lends itself to certain methods of money making. Many young organisations tend to then stick with that method (or a couple at most) putting their funding model at risk.
I know of a few cases when a charity has had a large corporate sponsor and there has been little time spent on other types of fundraising. Then, one day, the corporate changes its community investment model and doesn’t renew the partnership. The charity, who once felt they were sitting pretty, is now left with a big shortfall on the balance sheet.
There are other examples too where a charity may have limited income streams. They may be mostly Government funded, or they may have lots of philanthropic grants. Whatever the situation, having most of your funding eggs in one (or even only a couple) of income baskets is quite risky.
An organisation that relies on lots of events for income can, over time, put a lot of pressure on its supporters to continually attend functions. Whilst one that is primarily funded by philanthropic grants often has limited opportunity to grow administration support and organizational capacity because the grant money is tied to projects and must be acquitted correctly.
This is why a diversified funding model is very important.
A diversified funding model is when an organisation has a number of methods of generating income. Obviously, the chosen methods still need to suit the charity, but there are plenty out there to choose from.
This could include philanthropic grants, Government grants (local, state and federal), events, individual donations, merchandise sales, bequests, major gifts, raffles and lotteries, online donations, regular giving and many more.
Organisations that have more methods of funding reduce their reliance on only one area. This ensures a robust fundraising program. So if you cause is currently only relying on one or two income generating areas, make sure you start making plans to diversify.
See you in the pond,
The Fish Chick.