COVID-19 had a profound effect on the operations of nearly every organization. Nonprofits saw the need for their services grow, while the types of public and private funding available to them often expanded, too. But as pandemic-era sources of support have faded, nonprofits need to explore new funding avenues to balance and diversify their revenue streams, so they can continue to survive—and thrive.

A variety of government grants continue to offer valuable funding at the federal, state, and local level. Nonprofits that address issues like homelessness and food insecurity can be especially successful at securing grants in the current environment.

If your nonprofit has an established program in place for pursuing government grants, it probably makes sense to keep that operation going. But if your organization hasn’t yet sought out government grants as part of its overall revenue strategy, keep in mind that finding the right grants and applying for them can be a relatively overwhelming task without a seasoned grant writer on staff—and the return in funds may not match the investment in salary. Hiring a grant writer on contract may be more cost-effective.

Since government grants are dependent on a changing political landscape and the varying priorities of elected officials, overreliance on them can be risky in a long-term funding strategy. Grants also come with reporting requirements that can be very time-consuming, and they often have restrictions that require specific performance milestones and limit the programs on which the money can be used.

While grants can be an important part of an overall funding strategy, an approach that offers more options and greater promise right now is earned revenue.

Many nonprofits aren’t used to thinking of themselves as a business and miss opportunities to create income within their stated objectives and missions. Here are some I’ve seen of organizations that have successfully leveraged their skills to generate earned revenue:

• A popular, religion-based youth organization that offers programs that build healthy spirit, mind, and body has multiple earned revenue streams that range from athletic and arts classes to gym memberships to budget accommodations. The range of revenue sources enhances the organization’s financial stability while fulfilling its mission.
• An organization that provides education training to help people with developmental disabilities get ready for employment is partnering with a for-profit organization to hire those individuals for selected positions. A small portion of the new employees’ wages goes back to the nonprofit, building revenue while furthering the organization’s objective of helping its clients join the workforce.

Take a close look at what your organization is doing and the services you’re providing. Is there something you do—perhaps provided in partnership with local government or a for-profit organization—for which the public or a business would be willing to fund?

For nonprofits in a healthy financial position, now is the time to think about ways to use that capital to ensure long-term success. Just as an individual might open a savings account, then a money market account, then invest in stocks as funds grow, this is a great time for nonprofits to consider all their banking options. An investment strategy that generates additional yield on extra capital helps nonprofits build on their success—and ensures they can remain successful and keep fulfilling their mission into the future.

As the nonprofit funding landscape changes, Aldrich is your partner in anticipating and preparing for new developments. If you’d like to discuss ways to better balance your organization’s funding sources for greater stability and success, let’s talk.