According to a recent analysis, mega nonprofits that rapidly scaled up did so by pursuing one big funding stream rather than a diversity of streams. On the one hand, this idea is consistent with Jim Collins' advice of "doing what you do best". On the other hand, this idea flies in the face of the generally offered advice that a nonprofit does best to avoid over dependence on any one funding source, primarily because funding sources can be unreliable.
The authors of the study suggest that pursuing one stream "can better attract the resources neeeded to fuel programmatic growth and avoids spreading resources thinly across a variety of funding opportunities." The authors also suggest that a sustainability strategy is better determined early in the life of the nonprofit.
Two different lessons arise for me from this study. One is that an effective sustainability strategy is one based solidly on market research. The second lesson is that a sustainability strategy is just that: a strategy developed to achieve a particular goal. Developed as a part of a straegic plan and revisited with each new plan or sooner, determining a sustainability strategy is an important fiduciary act of the board -- one that obviously can have a large impact on the organization's future.
The study, Why More Nonrpofits Are Getting Bigger, can be found in the Spring 2012 Stanford Social Innovation Review: www.ssireview.org.
Comments