Mixed income strategies

Previous chapters have explored, within the framework of benefits theory, why SPOs often pursue one of several different varieties of income as their primary source of sustenance. As such, organizations have been cited that depend on fee or earned income, contributed income, governmental support or investment returns for a large proportion if not most of their revenue. These primary source-reliant SPOs pursue essentially different logics in building their business models. Nonetheless, in most cases, such SPOs also supplement their support from other sources. Moreover, as this chapter emphasizes, many SPOs are even more diversified, relying primarily on no one source and dividing their dependence among alternative sources more evenly. There are several factors that may lead to this pattern of finance. As organizations grow, they become more capable of administering more than one type of income. For example, in the aggregate, smaller organizations are much more contributions-dependent while larger ones are more fee dependent (Boris and Roeger, 2010) suggesting that many SPOs that begin with a contributions base ultimately find markets for their services as well. Moreover, as SPOs inventory their assets and capabilities they may find some of them underutilized and potentially capable of generating income in one manner or another. For example, attractive physical assets of arts or cultural institutions allow them to generate rental income, or intellectual resources of educational institutions permit them to generate new income streams through public lectures, training programs or consultation services. A desire to manage risk through diversification may also motivate these strategies, a subject discussed in Chapter 11.