Diversifying Nonprofit Income

The Business Weekly section of the Reading Eagle (based out of Reading, PA) did one of those things that local papers are so good at: they wrote about local news in a way that’s actually quite useful to people who aren’t local. In this case, they have a piece about two local charities: Bethany Children’s Home and Opportunity House. Both of these organizations have diversified their revenue streams in order to prevent a reduction in federal grants.

It’s the “diversifying revenue streams” that classifies this as a business article. Their point, and it’s a good one, is that sometimes nonprofits should think like for-profits, which at a certain size, tend to look for multiple income streams in case one doesn’t do so great.

It’s fine for a small business to focus on manufacturing one specific item, but if demand for that item drops, or doesn’t keep pace with growth, or material prices go up, it can tank the company. That’s why you diversify in such a situation.

Nonprofits can benefit from the same thinking. Federal and state grants can dry up or be awarded to other organizations. Donations rise and fall with the economy. But thrift stores, which you’ll notice are frequently run by nonprofits, tend to weather economic downturns really well.

That’s probably why Goodwill and the Salvation Army have been using them for so long. It’s also what Opportunity House is doing in Reading now, with their new OppShop store that allows them to keep items out of landfills while employing underserved people. Bethany Children’s Home, which helps abused and neglected children, has been operating a dairy farm since 1873. Bethany Children’s Home has also operated its own freshwater spring since 2012.

It really boils down to this age-old advice: don’t put all your eggs in one basket, even if you’re a nonprofit.