Financial Diversification is Critical for Non-Profits

Christmas is coming up and not only is it exciting to see a vacation within grasp, it is also exciting to look forward to the next year! 2018 already feels like it is here with a couple initiatives building momentum. Today I’ll talk about Thriving Non Profits.

 

 Thriving Non Profits program is launching its 3rd year of working with organizations to help diversify revenues to achieve greater stability, scalability and impact. Scale is partnering with the Victoria Foundation to expand the program and identify new and different ways to invest in non-profits.

That’s the elevator pitch! Now let’s go a bit deeper…

The non-profit sector’s traditional financial model of grants, philanthropy and government contracts is not keeping up with the need. There are diminishing returns within these financial vehicles—non-profits are experiencing donor fatigue, government contracts that are expensive to administer and stay static, and grants that are project based and short term. And the money is not enough to solve the issue. For example, last year, an organization we work with that is doing amazing work and showing impact got a federal grant to scale their model across 3 provinces. The amount? $150K. The goal? To prevent homelessness. It was last year’s largest investment and it is just not enough… and in the 14 grants I have written in the past 3 months, I am seeing a trend where although we are only allowed to request a percentage of the overall costs of the project from one funder, we are subsequently only being approved for a percentage of our ‘ask’. The asks are lean in the first place. Just a couple of examples that demonstrate how the money does not match the need. There are additional challenges around access to money that supports innovation, scaling or being able to respond to new opportunities adequately.

Our theory of change for Thriving Non Profits program is that financially diversified organizations have the ability to increase their scale and impact. The money matters. This requires a broader financial model that organizations can enact to generate multiple streams of revenues and diversify both risk and opportunity. Scale has developed this model for financial diversification, overlays it with a process to build enterprising ways of being and doing, and support the accompanying culture shift within an organization. The model is based on looking at positive deviance: what are healthy non-profits doing that is permitting them to thrive in today’s challenging environment? From this scan and personal experience, we came up with the Honeycomb Model of Financial Diversification: 

A financially independent and diversified organization is a powerful organization for change.