Securing a stable and diverse source of income is vital to sustaining the mission and social impact of non profit organisations. Significant risk looms where a charity is overly dependent on a single source of funding, such as a large donor or government grants. Or gaming.

If a charity’s financial well-being hinges on a solitary income stream, it is exposed to external events – government budget cuts, stock market losses (impacting donor investment funds) and regulatory change.

A snapshot of RSL sub branch performance (see previous post) highlights the risks of income dependancy, in this case gaming revenue. Over reliance also risks compromising a charity’s independence and ability to pursue its mission. It stymies flexibility and long-term planning. In a nutshell, charities should adopt the following strategies:

• strategic planning: an ambitious strategy for social impact backed by a financing plan and project to diversify income over time. This could include grants, individual giving, corporate partnerships, market mechanisms and social enterprise.

• build a strong fundraising program: invest in a case for support and a program that engages individual donors, sustains relationships with major supporters, and leverages digital fundraising tools.

• grow financial reserves: build up capital reserves to weather unexpected financial challenges. Having reserves can help bridge funding gaps in times of crisis.

• board engagement: engage your board of directors in financing efforts. Board members can leverage their networks and expertise to identify new funding opportunities.

Charities are at their most effective and impactful when they have the financial stability and flexibility to pursue their mission.