Thursday February 6- Diversify!

Hi !

I have spent the last week deciding how to write what I wanna say without upsetting some of you. I know how dedicated you are to your organizations and the last thing I want is to piss you off.

So I’m opening with this: What’s said below is not me being an asshole or even me venting. It’s me pleading with you- CEOs, fundraisers, Board members- to change. Now.

The pain point: Over reliance on one source of funding.

One solution: Diversification.

Let’s get to it.

But is the sky falling?

Nonprofit staff are problem solvers. You’re always dealing with problems, small and large.

However, sometimes problems become existential threats to our organizations. And although best practices exist, solutions are available and we know from history what to do, everyone runs around like the sky is falling.

Last week the White House issued an order to stop funding all federal grants. (Leave to the side those organizations that exist because the U.S. government is willing to pay to make the work happen.)

Nonprofits who are almost exclusively reliant on government funding were suddenly worried about meeting payroll, having to close services or worst case scenario, shut down operations. This is what happens when your organization heavily depends on one revenue stream. If a funder pulls their funding, you’re screwed.

And so until the order was rescinded 48 hours later, it was Chicken Little time.

The problem? This wasn’t our first time at the Crisis Rodeo.

We’ve been here before folks. Remember the financial crisis of 2007-2009? Remember when Bear Stearns was trading for a penny?

Or remember just recently when Covid hit and suddenly nonprofits who were heavily dependent on gala event revenue had no money coming in?

For whatever reason our sector refuses to learn from past experience. Plenty of NPOs continue to rely on one revenue stream to help power them.

Diversifying your fundraising portfolio? We don’t need to. Government will continue to fund us. Our one large donor will be there for us. Foundation X will always keep their support at its current level.

Sigh.

When you invest money for your retirement fund in the stock market, do you put it all in one stock? Of course not. You diversify! Yet for some reason- for decades!- there are organizations who continue to heavily rely on one main source of funding.

Forget understanding why they do that, I can never understand their Boards. The Board is responsible for the short and long term financial health of the organization. Why don’t they ask the CEO: Hey, what happens if this funder pulls their funding one day?

When the news broke last week, many people in our sector provided expert recommendations and immediate help. Updates on LinkedIn made sure nonprofits stayed on top of the news. Nonprofit lawyer Jess Birken- someone I suggest you follow and make use of her services- posted a great post with 5 key steps to protect your nonprofit in 2025.

A reduction or total obliteration of federal grants will affect ALL grants. That includes state grants, community and private foundations. I can’t tell you what will be but last week’s news should get you RUNNING towards figuring out how you’ll hit your fundraising goals this year and beyond if foundations give out less.

One way? Diversify your fundraising portfolio.

I was in the thick of it

If you’re wondering why I’m being critical and where my passion for diversification comes from, lemme take you back to March 1, 2007.

On that day I became CEO of a wonderful nonprofit. Dream job!!!!

Check the date above. I stood at the top of the staff pyramid as financial markets were getting ready to collapse. Fun times!

To make the situation worse was the revelation that Bernie Madoff was running a Ponzi scheme. This affected a whole bunch of nonprofits- especially Jewish ones- both in the U.S. and in Israel. Navigating those very choppy waters wasn’t easy.

Having gone thru that, I learned some very hard but useful lessons. Which leads me to today’s pain point: Relying heavily on one giving source.

To understand why spreading the revenue is a good idea, let’s look at a large institution and what happened when the Madoff news hit the airwaves.

My alma mater never really cared about me. Once a year I received a letter from the President asking me to donate to the university’s annual appeal but that was it. 

I’m not rich and so I wasn’t on their radar. Their almost sole focus was on the wealthiest alumni. They mattered. Me? 🤷‍♂️ 

They had a lot of funds tied up with Madoff and poof, that money was gone. In a very short time I started receiving more communications. The university hired a whole bunch of fundraisers- many my age- so they could connect with alumni like myself who had never given.

One day I was a nobody. The next I mattered a lot. They were scrambling, throwing all the ideas at the wall and praying something would stick.

This is what happens when you rely heavily on one giving stream. A diversified fundraising program means you have steady streams of revenue that continue functioning even when the Crisis Rodeo comes to town.

Back in April I wrote a post titled The Big Three. Based on anecdotal data I was critical of many in our sector who have decided to only chase foundation funding, corporate partners and major donors.

Other types of donors? We don’t have time for them.

And then we wonder why household giving is down every year and retention sucks 😡 

So what does a diversified fundraising portfolio look like?

• Explore new avenues: If your nonprofit is heavily dependent on federal grants, now’s the time to encourage your Board to start opening doors, to build and implement a corporate partnership program, to run a giving campaign, to encourage people to conduct friendraising campaigns on your behalf and ask your volunteers for a donation.

• Build it now: Know who keeps giving even in tough financial times? Small donors. Work on creating a monthly giving program. It’ll be a steady revenue stream you can count on (up to 90% retention!). Success won’t happen overnight but you should start TODAY.

• Marketing is your best buddy: Review your marketing efforts and utilize them better to assist your fundraising program. Check your website (is content up to date? Does it have stories, video and impact data?). Make sure your emails are hitting the mark and mobilizing people to take action. Create impact reports. Incorporate video into your content strategy.

• The king: Get working on a direct mail campaign (and pair it with email and social media). Direct mail is still king and it can be very helpful with acquisition efforts. And yes, do more than one mailing campaign a year!

• Say what you need: Now is not a time to be shy! Tell people about the need, what problem they can solve, the impact a gift will have. And if a boss tells you “we can’t ask that often” answer them with: Yes we can!

Last week many in our sector were shocked, surprised, immobilized. But the federal grant kerfuffle isn’t over. Odds are it’s just an opening salvo.

The time is NOW for diversifying your fundraising. Don’t wait. Enough relying on one revenue stream.

Your mission is to help people but know who’s really gonna be screwed because of your organization’s risky fundraising practices?

Your beneficiaries. And they certainly don’t deserve to be punished because of how your organization ran its shop.

I’m pleading with you. Take this pain point, diversify and transform your fundraising into a program that thrives.

🪨 Rock: A little of this and that

Here’s some great content for you to learn from:

1. 10 places to place a link to your online donation page (4 A Good Cause)

2. How to make a mid-level donor feel valued (Nonprofit Fundraising)

3. Ideas for segmenting and personalizing your emails (Higher Logic)

🖨️ Paper: Check before posting part deux

Pakistan Air posted the above on their socials a few weeks ago. Do you see it?

People online dumped all over this ad. It reminded everyone of 9-11 (plane flying toward the Eiffel Tower).

A reminder to double check before posting. If you’re going public with a campaign, ask “outside eyes”- people outside your organization- to review the copy and images. They might spot something you didn’t.

✂️ Scissors: Maybe you’ve been there

If you have elderly parents, you probably serve as their tech helpline representative. You’ve helped them figure out the hard stuff but also navigate things that may seem simple and easy to us.

So for all of you who help your parents with tech, go ahead and enjoy this short video. I loved it!

I’ll be back next Thursday. Have a great weekend!

P.S. I listened to Starship’s “We Built This City” on an endless loop while working on the enews. GQ called it the worst song of alltime. It was ranked number one on Rolling Stone’s list of worst songs of the 80s. (Screw them- great song!)

I guess this is what happens when you build a city on only one thing and don’t diversify 😉