Income portfolios and resilience

The keys to income resilience strategies for nonprofits in crisis are redundancy and decoupling. Within the framework of benefits theory nonprofits can make their basic decisions about the composition of their income portfolios to reflect their logical sources of support. This provides the foundation for diversified income portfolios customized to each organization's particular mission and services. There are at least three levels at which income diversification can be pursued. The first is to balance distinctly different sources of income - principally earned income, gifts and grants, government funding, gifts-in-kind, and investment income - guided by benefits theory. This is likely to be the most impactful option, given that these sources tend not to vary perfectly in tandem over time or in a crisis. A second level is to diversify sources within such categories, e.g., contracts with multiple government agencies, or grants from multiple foundations. This can be helpful, although multiple sources are likely to be subject to the same stresses and to react in similar ways in a crisis. Third, nonprofits can develop new sources of income, especially if they can identify underutilized assets with income-generating potential, or natural sources they have not yet fully exploited. Finally, within broad categories of income, nonprofits can also find options that are at least partly decoupled or less sensitive to sudden crisis impacts, such as memberships, subscriptions and sustaining donors whose income streams are slower to react to downturns in an organization's activity.