Want to Diversify Your Funding? Stop Guessing.
- Erica McWhorter
- 3 days ago
- 2 min read
Why your "funder dependency" is the most important number you're probably not tracking.
You Should Know This
"We need to diversify our funding." If you've been in a nonprofit leadership meeting, you've heard this phrase. It's the go-to strategic priority for 9 out of 10 organizations. And it's a good one. But for most, it's just a feeling. It's a nervous reaction to the fear of "What if our biggest funder pulls out?"
But here's the hard truth: You cannot create a diversification strategy if you don't know your starting point. "Stop Guessing" isn't just advice; it's a requirement.
What's Going On
Most leaders think the first step to diversification is to start prospecting—to go out and find a bunch of new, random funders. This is a waste of your most precious resource: your time.
The actual first step is analysis. Before you look for a new funder, you must understand your current funders.
What percentage of your revenue comes from your Top 5 funders?
What is your true funding success rate?
What is your mix of Restricted vs. Unrestricted funding?
What is your blend of Renewable vs. One-Time funding awards?
What are your total potential award obligations (cash match and reimbursements) for your funding this year?
If you can't answer these questions in 5 minutes, you're just guessing. You're trying to build a new house on a foundation you've never inspected.
Why This Matters
This data is your map. Without it, you're driving blind.
If your funder dependency is 80%, your strategy isn't "find new grants"—it's more like "find 10 new small, unrestricted funding sources, like individual donors, to build your base."
If your grant success rate is only 20%, your strategy isn't "write more proposals"—it's probably "stop applying to cold prospects and build relationships first."
If 90% of your funding is restricted, your new strategy should include "find funders who explicitly support general operations."
The data tells you what to do. It stops you from chasing shiny objects and focuses your limited capacity on the work that will actually build a more sustainable and resilient organization.
What's Next
This work starts with a simple, structured process: prospect research. But not just a list of names. It's a true alignment check.
To help you get started, I'm sharing one of the tools from my new Toolkit: the Funder Prospecting & Alignment Checklist.
What Else You Should Know
My mission is to help values-oriented leaders move past organizational noise and focus on strategic clarity.
If you need ideas or support to streamline or improve your processes, please reach out. From Fundraising Audits to Strategic Planning and Systems Design for Organizational Capacity, I’ve helped leaders see the path forward.
Let’s talk about how I can help you achieve your values-oriented goals.
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