Diversify Now

I just don’t get why, after the past seven years,  any nonprofit would need a lesson in the essential importance of having diversified funding streams. If you are one of those who has not yet learned that lesson, have a board member who is a slow learner or have an executive director who didn’t get the memo, let me share some true stories –  all just from the past week alone!

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Example One:  newly-elected mayor of Patterson, New Jersey, who assumed his position this past summer, calls back the grants awarded to nonprofits under the previous administration; says the money is needed for repairing potholes.  I truly get the need to repair its streets.  But calling back grants already awarded, after programs have been implemented and some funds have been spent?  And exchanging meeting basic needs—food, education, shelter, health, etc.– of the people of Patterson for better roads that no longer force drivers to be a bit more careful, slow down some, use more precaution?  Really?  He considers that a good trade?  (It reminds me of one of my favorite books when I was a small child:  Was it a Good Trade? by Beatrice Schenk de Regniers.  The refrain in the story was, “Was it a good trade?  Was it a bad trade?  Was it a good trade—hey?”)

Example Two:  The Mayor of Miami-Dade, Florida,  proposed—and the County Commissioners have since approved—a budget that included a 10% cut in funding of nonprofits providing social services in the county.  In introducing the proposed budget, he said, “When I was elected mayor, you tasked me with transforming the way our government serves the public.  This proposed budget is one more step along that path, focusing on our core missions of public safety, services for our youth and the elderly, and street level services that touch and improve people’s lives.”  While it is true he did revoke the cut for some nonprofits, this still seems like an odd way to serve his identified core missions.  Another important message to nonprofits that not all of them get:  not everyone views the world through your eyes!

Example Three:  The Griswold (Connecticut) Ambulance Service will end a 70-year tour of service.  It seems the funding from the town of Griswold dropped from $90,000 to $20,000 over the past several years.

While these three stories are just from the past week, hundreds more like them appeared in media outlets over the course of this year, alone.  And the stories all have one thing in common:  they all involve government dollars.  Some dollars that are being taken back, or not given out in the first place, are redistributed federal dollars; some are locally collected tax dollars—or not collected to make tax-paying local residents happy, but only for the short run.  They won’t be happy when the reduced—or closed—programs can’t respond to the human needs of their communities.  Oh, but that’s for another day.  See that can being kicked down the road?

Do you need yet more convincing?  Foundations are perhaps more of a mixed bag.  While “Giving USA 2014” says that foundation giving increased by 5.7% in 2013 and the Foundation Center’s annual “Foundation Giving Forecast Survey” says foundation giving in 2014 will be a “few points” ahead of inflation, reality shows us that this giving is being more strategically distributed, thereby cutting out or off organizations that had, to a great extent, been on a foundation teat.  Just as it is hard for too many organizations to recognize that the government trough will not always be there—because it always has been—this, too, is the thinking when it comes to foundation dollars.  But look and ask around, and you will see the reality of 2014:  just because you have received in the past, do not count on receiving in the future.

Sticking with “Giving USA 2014” data, the largest factor contributing to the increase in charitable giving in 2013 was individuals, with an estimated increase of 4.2% and an annual household contribution of just under $3000.  Not back to pre-recession levels, but slowly moving in the right direction.  There is double good news in those seeking to diversify funding sources by increasing their individual donors:  while absolute dollars are not at pre-recession levels, individuals are still giving in the same proportions to their total income as they did pre-recession.

Opportunities abound for diversifying funding relying on the traditional nonprofit funding streams.  But staff and board have to be willing to do the work to expand beyond “what we’ve always done/gotten.”  The expectation of “always” needs to be jettisoned and quickly replaced with a new modus operandi or risk ending up like the Griswold Ambulance Service.  So wake up everyone, and start diversifying now.