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I wanted to say "Dancing with the Dragon" but that
smacks too much of kung fu and I overuse dance as a metaphor. However, I have
come to believe that, in nonprofit revenue strategy development, diversification
is not all good news and that board members should work with CEO's to travel
with caution in this direction. On the surface, multiplicity of funding sources
has inherent goodness: if one source runs dry, the doors of the organization
can remain open. Your organization, in this posture, is not as beholden to the
whims and internal budget soundness of: the Mrs. Warbucks family or the
We Care About Caring Foundation or the Great Community Service Ideas Division
of your local state/provincial government.
On the other hand, each funding source can come with restricted use covenants,
so to speak, and a dozen different sources can mean a dozen different programs
with separately designated resources and a dozen different program manager
personalities for the CEO to keep in harmony with the mission and even each
other. If one of these revenue sources dries up, your organization risks
experiencing a group of un-served customers, unpaid employees and a very sad
program manager! The Diversification Dragon has now become ill and its fiery
breath has singed you.
The wisdom, as almost always, is in the balance. Of course, the more sources of
unrestricted funds you have, the more flexibility (and capacity to
manage fluctuations in overall funding levels) that management has to pursue
the mission which the board has refined, adopted and stands guard over. As
guardians of the sacred service niche, trustees must keep the Diversity Dragon
happy. A board that talks about revenue source diversification strategy
throughout the year, not just at the budget adoption meeting, helps to keep the
Dragon healthy (and its breath less flammable!).
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Board Tech Blog 
