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One Basket with Too Few Eggs

Donor diversity is the key to having a sustainable funding stream and a nonprofit with a high level of sustainability.

You want your donor base to reflect your community.  If 15% of your community is one ethnic group then you want 15% of your donor base to be that same ethnic group regardless of whether the group is also the same percentage of your client base.  The work your nonprofit does is for the benefit of the whole community even if your nonprofit only serves one segment (immigrant youth for instance).  Therefore, you need to think about diversity across the whole spectrum (age, economics, ethnicities, faith, gender, education, health, professions, geography, etc.).

In our equality-conscious society we often limit our thinking to just the human condition.  Additionally, you must intentionally broaden your thinking to include businesses (large and small), clubs, and associations.

It is unnecessary for each group to share equally in your funding.  However, you do need each group to participate.  Participation is more than a token gift.  Large corporations are happy to provide a token gift to just about every nonprofit in the community.  Their token gift is a good starting point but it is important for you to cultivate the relationship.  Their token gift is like the donor who gives $25 every year because you ask.  Neither relationship is sustainable during the tough times (yours or theirs).

Next Step:

Evaluate the diversity of your nonprofit

Determine which types of donor diversity will be most advantageous

Review your appeal for support

Determine how to change your appeal for support to ensure it is relevant to more groups or customized for each group

Assume a token gift implies permission to cultivate a deeper relationship

Since changes in our society and economy seldom hit each group with the same force, a broad donor base helps to buffer your nonprofit during difficult times.  That alone is a good reason to have a broad and fully diversified donor base.

One of the reasons nonprofits have very narrow donor bases with very limited diversity is because nonprofits are unable to create a compelling argument for support from each group.  Put another way, it says the nonprofits with a narrow donor base have been unable to make their services seem relevant to some groups.

The lack of relevance says that long-term sustainability may be less than is currently perceived.  It is doubtful that any of us could have predicted the changes in our communities over the last 10 years.  However, every nonprofit has been affected by the changes.  Some were unlucky because their narrow donor base provided an insufficiently buffered.  Now is the time to diversify and create a better buffer.

Take It Further:

What other forms of diversity (skills, funding sources, etc.) will help to buffer your funding stream from the winds of change?

How often should your nonprofit review its funding diversity?

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