5 Tips You Need to Know to Survive Funding Volatility

It’s no secret that nonprofit organizations face funding challenges. One of the biggest challenges is volatility. Donors give and often do not renew support. Sometimes, that’s the fault of the charity. Other times, it has nothing to do with what a charity does or does not do. For example, funding from government sources, whether contracts or grants, can go up or down depending on political whims and changing priorities.

Recently, I was doing research for an article I was developing for the January issue of Advancing Philanthropy, the magazine published by the Association of Fundraising Professionals. While doing that, I identified five tips that can help all nonprofits better cope with funding volatility despite the fact that the article focuses on poverty-fighting charities.

Let me explain. As I wrote in my article:

Globally, poverty has been on a sharp, steady decline. ‘In 1990, 37 percent of humanity lived in what the World Bank defines as extreme poverty; today that number is 10 percent,’ writes Gregg Easterbrook, author of It’s Better Than It Looks: Reasons for Optimism in an Age of Fear. Yet, even given that good news, nearly one billion people continue to suffer in extreme poverty around the world.

In the United States, poverty has also been on the decline while individual purchasing power has been on the rise. For example, ‘On the first day of the twentieth century, the typical American household spent 59 percent of funds on food and clothing. By the first day of the twenty-first century, that share had shrunk to 21 percent,’ Easterbrook reports. ‘US poverty has declined 40 percent in the past half-century.’ Still, despite the enormous economic progress, poverty continues to darken the lives of millions of our fellow citizens.”

While charities continue their efforts to combat poverty and its effects, government funding is becoming increasingly unreliable. With the national debt over $22 trillion and climbing, the federal government is contemplating cutbacks. Already, some state governments have been cutting back funding to charities.

Here are five tips that poverty-fighting charities are embracing that all charities would be wise to also adopt:

  1. Streamline Organizational Mission. Each nonprofit organization should review its mission statement periodically to avoid mission drift and ensure that it remains focused on priorities relevant to society’s needs.
  1. Remain Nimble. When planning, every nonprofit organization must develop contingencies for unexpected, significant changes in government or private funding.
  1. Diversify Funding Streams. Savvy nonprofit organizations ensure they receive support from a variety of sources. Funding diversity offers some protection if one of those funding sources withdraws support.
  1. Seize New Opportunities. Charities must remain receptive to fresh opportunities. Even during the height of the Great Recession, many nonprofits were able to raise more money because they identified and seized new opportunities.
  1. Work Collaboratively. Through collaboration, nonprofit organizations can leverage their strengths, mitigate their weaknesses, and attract private support. This is good for charities, and it’s good for those the organizations serve.

You can learn more by downloading a free copy of my Advancing Philanthropy article, “The Fight to End Poverty: What Every Charity Needs to Know.” I thank AFP for allowing me to share this article with you. If you’re an AFP member, I encourage you to also checkout the many other insightful articles in the January 2019 issue of Advancing Philanthropy. If you’re not a member, I hope you’ll consider joining AFP, the world’s largest association nurturing fundraising professionals.

What is your organization doing to cope more effectively with funding volatility?

That’s what Michael Rosen says… What do you say?

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