Relying on a single source of funding is one of the biggest risks your organization can take.
We see it more often than we’d like. An organization finds a funder they love — or a grant program that’s been reliable year after year — and they build their entire budget around it. And then the funder changes priorities. The program gets cut. The grant cycle ends.
And suddenly, a significant percentage of the organization’s funding disappears.
This is not a hypothetical scenario. It happens constantly, to nonprofits and small businesses alike. And while no one can fully prevent it, a diversified funding strategy can protect you from the worst of it.
What Diversified Funding Actually Looks Like
Funding diversity means your revenue doesn’t come from a single source — or even a single type of source. A well-diversified funding portfolio might include:
- Government grants (federal, state, or local)
- Foundation grants (private, community, or corporate)
- Earned revenue (fee-for-service, product sales, memberships)
- Individual donations or crowdfunding (for nonprofits)
- Sponsorships and partnerships
- In-kind support (donated goods, services, or expertise)
The goal isn’t to have all of these at once. The goal is to not be completely dependent on any one of them.
The 30% Rule
A good rule of thumb: no single funding source should represent more than 30% of your total budget. This threshold gives you meaningful protection. If one source disappears, you lose 30% — painful, but survivable. If one source represents 80% and disappears, you may not recover.
As you evaluate your current funding mix, ask yourself: What happens if my largest funder doesn’t renew? Do we have enough of a runway to pivot? That question should shape how aggressively you pursue diversification.
Grants Are Part of the Strategy — Not the Whole Thing
This is something we tell every client and every workshop participant: grants are a powerful tool, but they work best as part of a broader funding strategy. They’re not designed to be the only leg your organization stands on.
Think of grants as one important revenue stream among several — one that you pursue intentionally, strategically, and consistently. When paired with earned revenue, donations, or partnerships, grants can help you grow and sustain. When they’re your only source of income, they become a single point of failure.
Start Building Now
If your funding is currently concentrated in one or two sources, don’t panic — but do start moving. Here’s a simple three-step approach:
- Map your current funding: List every source of revenue you have, the amounts, and what percentage of your total budget each represents.
- Identify gaps and risks: Which sources are most at risk? Which types of funding are you missing entirely?
- Set a diversification goal: Pick one new funding stream to develop in the next six months. Pursue it with the same focus you’d give a major grant application.
Diversification doesn’t happen overnight. But every step you take toward it makes your organization more resilient.
The Organizations That Survive Are the Ones That Plan
We’ve worked with organizations at every stage — from those just starting to seek funding to those with decades of experience managing complex budgets. And in every case, the ones that navigate the hard moments best are the ones that planned ahead.
You don’t need a perfect funding strategy. You need a thoughtful one.
Let us help you build it. Explore our 1:1 strategy sessions at gwsolutionsllc.org.
