Donors are far more likely to continue to support organisations that are well governed and supported by a variety of funders and sources of money. Diversification means that your NPO diversifies or finds its funding from a wider range of supporters or donors.
Why is it risky to have only one donor?
- Your NPO and its beneficiaries are totally dependent on one source of funds.
- Donors may change their focus of interest every few years and move away from supporting your kind of NPO.
- Donors may have less money to give and need to cut down on some of their commitments.
Therefore you should have a number of donors to ensure your organisation can survive any funding crisis and be confident it can deliver its services in the long-term.
In an economic recession where some funders are stopping or cutting down on funding, it is wise not to be dependent on only one funder or source of funding. Diversifying also means finding other forms of income, for example by charging for some of your services or selling your publications where this is possible.
Helpful questions to start diversifying your NPO’s funding
- Who currently funds your organisation? Make a list of all your funders.
- Have you thought about approaching other funders? If yes, who? If not, what steps can you take to raise funding from a wider range of sources?
- Do you have other forms of making money? What are these and how can they be expanded or improved?