Philanthropy & Funding

Put at Least One Egg in Another Basket

For-profit companies preach and employ diversification—and it would behoove nonprofits to have diverse revenue portfolios, as well. Research shows that nonprofits relying primarily on donations experience more financial volatility over time than those who also pursue other income sources.

Diversify. In the business sector it’s gospel that a more diverse portfolio is more financially stable. But “there hasn’t been a lot of work done specifically on nonprofits to look at how this [revenue] concept applies to them,” says Keely Jones Stater, a sociologist affiliated with the University of Connecticut.

Stater and coauthor Deborah Carroll, an associate professor of public administration and policy at the University of Georgia, looked at all the nonprofit organizations registered with...

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