When investing, one of the first principles is to have a diversified portfolio.
- You want to have some bonds because they are incredibly stable, which insulates you from risk if something bad happens in the stock market.
- You want to have some stocks so that if the economy takes off, you can make serious money.
- You want to have some international investments so that, if things go sideways in your country, you’re insulated.
You get the idea.
Now, have you ever thought that your fundraising program is essentially your “fundraising portfolio”? Because the same principle is true in fundraising – you want to be diversified:
- You want to have a good in-person relationships with major donors because that’s where most of the money is.
- You also want to be good at direct response fundraising (mail, email and phone) because not every major donor will want to meet with you, and because you can inexpensively talk to lots of donors at the same time.
- You want to be good at events because there are some donors who will only go to events.
So, now that you’re thinking of your fundraising program as your “fundraising portfolio,” I have three questions for you today:
- What’s in your fundraising portfolio?
- Is your portfolio diversified? Does it both insulate you from risk and give you a great chance at growth?
- Is your portfolio appropriate for your size? (For instance, spending money on “awareness” is appropriate for a $25m organization, but ill-advised for a $1m organization.)
Two Quick Stories
Here are two real-life examples of how a lack of diversification can be harmful…
Example #1 — Five months into the pandemic, a large national organization called us. They were already $20,000,000 behind budget for the year because they primarily raised money at events… but couldn’t do events because of the pandemic. Their organization didn’t know how to raise money through the mail and email, and were hair-on-fire-scrambling to learn how.
Example #2 — Up in Canada right now, because of the Canadian Post strike, it’s tough for nonprofits who rely on the mail because they can’t send letters to their donors! So the organizations who don’t have strong relationships with individual major donors, and/or strong email fundraising, are in real trouble.
Now, if you’re a smaller nonprofit, most of us don’t have large enough budgets to just say “Let’s diversify our revenue streams” and go do it the next year. Diversifications takes both time and money.
But as you plot your growth, diversification of revenue streams should absolutely be a goal.
