I’m obviously on an income kick as of late, and I have one more thing that I’m thinking about regarding income to get out of my system… at least for the moment. And that is the question about which income preferences: all else being equal, is it better to have one major donor or multiple donors giving smaller gifts? Actually, why not throw a real number here to make it real: is it better to have one donor give $100,000 or 20 donors giving $5,000 each?
I’d have to go with multiple donors giving smaller gifts, and here’s why: you’re sunk if the major donor pulls out, while losing one $5,000 donor would hurt but wouldn’t be catastrophic. The major donor scenario creates what we refer to in finances as “concentration risk.” All the revenue is concentrated in one source.
The reality is that organizations typically have a diverse group of donors, the investors, sustainers, and tippers that I discussed two posts ago. However, as you look at your fundraising strategy and budget your income, be thinking about how this might be relevant to your ministry. Is your ministry reliant on one major donor? What would happen if they stopped giving? Does the ministry have enough sustaining givers? If not, why not? If you do have a good pool of sustaining givers, could one or more be convinced to up their support so that the ministry can fund new and important outreach initiatives?
So be thinking about your income in terms of how giving is concentrated among givers and think about how to diversify and encourage prudent giving.
And this wraps up what I’ve been thinking about in terms of income recently. There’s more to come in the future, I’m sure, but these have been on my mind for the last few weeks and I needed to put them out there. Thanks for reading, and drop me a line if you have thoughts or questions. I don’t have comments on the blog, at least not yet, but you can reach me via the contact form.