Navigating Uncertainty: Why Nonprofits Must Diversify Funding and Deepen Supporter Engagement to Thrive

Nonprofits face an ever-changing landscape filled with economic downturns, environmental disasters, shifting donor priorities, and evolving government policies. While these challenges often highlight the vulnerabilities within the sector, they also underscore the importance of resilience and adaptability. Nonprofits that diversify their funding sources and better understand their supporters are better positioned to not just survive, but thrive.

Learning from the Past

Historical data reveals that organizations with diverse revenue streams tend to fare better in times of uncertainty. For instance, during the 2008 financial crisis, many nonprofits relied on individual donors to offset funding losses. Similarly, the COVID-19 pandemic demonstrated the power of a diversified income:

• 45% of nonprofits gained new donors in 2020.
• 38% of major donors increased their giving despite economic instability.
• Peer-to-peer campaigns saw a 24% increase in average donation size.

The Risk of Relying on Government Funding

Over-reliance on government funding can expose nonprofits to risk. A recent example is the 2025 freeze on federal grants and loans, swiftly rescinded after a backlash. Yet, the uncertainty surrounding the administration’s funding priorities—particularly for DEIA initiatives, climate programs, and international aid—reinforces the need for diversification. Government funding can be unpredictable, and nonprofits must seek alternative sources of support.

Expanding Your Donor Base

A diverse donor base helps build a stable financial foundation. Consider these strategies for expanding your donor reach:

• Seek New Individual Donors: Cultivate relationships with new supporters, encourage recurring donations, and engage major donors to create a predictable revenue stream.
• Engage with Corporate Partners: Explore sponsorships, matching gift programs, and in-kind donations. These partnerships expand visibility and bring in additional funds.
• Event Fundraising: Host events such as galas, walks, or auctions, which raise money and increase community engagement.

Deepen Your Understanding of Your Supporters
Understanding your supporters is crucial to building deeper relationships and maximizing engagement. Ask these questions:

• How well do you know your supporters beyond their touchpoints (e.g., are they also volunteers, fundraisers)?
• Do organizational silos limit your understanding of different supporter segments?
• Why do your supporters give, and how does that vary across groups?

Gaining insights into your supporters’ motivations and context can uncover opportunities to deepen engagement. For example, regular donors might feel disconnected from the impact of their contributions. Tailoring your email strategy with more personalized impact reports can encourage them to increase their donations or become more involved in other ways, like volunteering or organizing fundraisers.

Exploring Alternative Funding Avenues

Diversifying income means thinking beyond traditional donations:

• Online and Peer-to-Peer Fundraising: Crowdfunding platforms and peer-to-peer campaigns help reach a wider audience by empowering supporters to fundraise within their networks.
• Planned Giving: Encourage donors to include your nonprofit in their estate plans to secure future support.
• Earned Income Initiatives: Offer fee-based programs, workshops, or sell merchandise to generate income and deepen connections with your mission.

Strengthening Grant Strategies

While grants are vital, relying too heavily on them is risky. Explore:

• Private and Foundation Grants: Apply for multi-year grants from foundations or corporations aligned with your mission.
• Diversify Grant Types: Apply for a variety of grants from different sources to increase your chances of securing funding.

The Benefits of Diversification

A diversified funding strategy offers several benefits:

• Financial Stability: Reduced dependence on a single funding source provides protection against economic fluctuations and policy changes.
• Increased Reach: By tapping into different funding streams, you can connect with a broader donor base and amplify your impact.
• Enhanced Sustainability: A mix of revenue sources ensures your nonprofit’s long-term viability, helping you weather uncertain times.

Revisit Your Email Strategy and Unlock Your Supporter Network

Email strategies are often underutilized but can offer substantial returns. Experiment with different approaches to improve engagement and increase donations. Research shows that people are more likely to donate when asked by friends and family, so consider methods like group giving or peer-to-peer campaigns to harness the power of social networks. Additionally, explore payroll giving and corporate partnerships to maximize donor potential and corporate involvement.

Explore New Giving Models and Partnerships

Younger generations, especially Gen Z, are less likely to commit to fixed monthly donations, but they are open to flexible giving. Offering flexible regular giving options or allowing donors to set donation pledges could encourage more sustained support. Similarly, consider offering subscription-based products or collaborating with influencers on platforms like TikTok and Instagram to broaden your reach.

Strategic Planning and Execution

Diversification and engagement require thoughtful planning. Start by:

• Analyzing your current funding sources to identify gaps.
• Allocating resources to develop new fundraising strategies.
• Engaging with supporters to keep them informed and connected to your mission.

Looking Forward

In an unpredictable environment, proactive strategies are essential for nonprofit success. By diversifying funding sources and deepening engagement with supporters, nonprofits can build a strong foundation to face uncertainty and continue driving positive change. Together, we can foster a resilient nonprofit sector that thrives despite the challenges ahead.