For nonprofit professionals, identifying funding sources and deciding on the right funding model for their organization is one of the most challenging tasks at hand. Making decisions about the right approach to handling nonprofit finances is not easy.<\/p>\n
Every organization needs money to stay afloat. Nonprofits are no exception to this rule. Money is a frequent topic of conversation amongst nonprofit professionals, and discussions about finances become even more heated during economically unstable times.<\/p>\n
On one hand, there is seemingly a multitude of funding models to choose from \u2013 which can create some confusion. On the other hand, some nonprofits still feel \u2018stuck\u2019 and limited in their options.<\/p>\n
Bridgespan defines a “funding model<\/a>” as a methodical and institutionalized approach to building a reliable revenue base that will support an organization’s core programs and services.<\/p>\n In essence, a nonprofit “funding model” combines different funding sources into a constellation unique to every nonprofit. For example, one nonprofit might be funded 50% through grants, 30% through events, 15% through a membership program, and 5% through in-kind donations. Another one might be 70% funded through a major donor program, 20% through direct mail fundraising, and 10% through events. Different types of nonprofits are suited to different funding sources, depending on their mission<\/a> and programs.<\/p>\n While it’s a common practice among most nonprofits to seek funding from multiple sources, research has shown that 90% of the largest nonprofits have embraced funding models built around a single dominant source of revenue.<\/p>\n We often hear it’s good to “diversify revenue streams<\/a>.” But it can be hard to know what this really means in practice.<\/p>\n Bonus Resource:<\/strong> Watch this comprehensive playlist<\/a> filled with podcasts and webinars from nonprofit experts on trending funding sources and strategies for nonprofits:<\/p>\n
\nHow to choose the right funding source for your nonprofit?<\/h2>\n