Hi everyone. Please grab your favorite beverage and sit down, because we need to discuss the idea of “diversified funding.” It is one of those concepts—like putting out campfires fully and not microwaving metal—that is just taken as gospel. Funders ask about it all the time. Development staff create plans around it. Fundraising gurus hold workshops about it. EDs look at what percentage of their revenues come from grants, and if it’s too high, start panicking.
I don’t like it. I think the whole concept is problematic and it’s time we move away from it. Yes, I know the main argument for having diversified revenues. What if you rely too much on a foundation, and that foundation decides—like foundations often do—to shift priorities? Well, you and your nonprofit are screwed. Just like with buying stocks (whatever those are)—it’s bad to have all your eggs in one basket and whatnot.
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