Many nonprofits in the United States have borrowed the investment strategy known as “diversification”.
An individual investor would never put 100% of their assets into the stock market or in any one single investment. Financial advisors always recommend asset allocation. A mix of stocks, bonds, property, cash, and gold are examples of a diversified portfolio.
Diversifying funding streams to add a measure of strength to one’s portfolio. Well managed nonprofits have also utilized this approach. They do not put themselves in a situation where all their funding comes from only one source.
When I was growing up in Detroit, my family had a family membership to the Jewish Community Center, which was funded by The Jewish Federation of Detroit. This was a community center that for a minimum fee-for-service, offered a world of benefits. The campus consisted of a swimming pool, a gym, weight room, basketball court, a theatre and stage for student performances, an arts and crafts center, and a cafeteria. It also included a baseball diamond and a summer camp.
The current COVID-19 orders to stay at home have eliminated the fee-for-service revenue stream. As this pandemic continues the single source of revenue has proved to be large foundations and a few wealthy donors.
According to a recent article by Molly Boigon in the Forward.
“Cancellations of in-person programs – professional development, convenings, retreats, trips and more – will adversely affect organizations’ participation and engagement numbers, ” read an open letter to grantees signed by huge philanthropies like the Jim Foundation and the Paul E. Singer Foundation. “We understand that these types of benchmarks often associated with grants will not be reached and will adjust our expectations to reflect the reality of the times.”
Nonprofits that are dependent on fee-for-services are presently in a very difficult situation. They need to apply for the new loans offered by the Small Business Administration and also reach out to private sources for assistance.
GrantWatch remains an excellent resource to locate and apply for COVID-19 grants.
Nonprofits that are directly involved are raising money to help those people that are directly impacted by COVID-19, are very busy doing urgently needed work. However, what of the non-essential COVID-19 fundraising. Most experts advise that they continue with donor cultivation during social distancing.
Everyone has canceled dinners, galas, and even wedding parties, and switched to Zoom or other virtual events.
If you are a nonprofit, cultivate your large philanthropic sources, but diversify. Nonprofits that want to survive should go after an abundance of smaller donations, apply for a multitude of large and small grants, and create crowdfunding campaigns.