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Diversity: A Key Pillar for Sustainable Organizations in the Wake of Potential Economic Recovery

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Sharif Shamroukh
June 25, 2021

The nation has been suffering from the effects of the pandemic for almost 16 months, and several signs lead to the belief that normalization of activities and getting back to pre-pandemic schedules is likely to resume as of this upcoming fall season if no more waves of COVID-19 occur at the time. This is anticipated, with the help of three government stimulus bills to help the economy be stable and put food on the table. At the same time, millions of Americans suffered from unemployment and kept many businesses and nonprofit organizations functional while serving their long-lasting missions; the question becomes how organizations can sustain their activities during economic uncertainty and beyond? Further, how may organizations overcome the possible decline of resources to meet their financial obligations?

In this regard, it is essential to highlight the latest annual giving report in the United States for the year 2020, which was published recently by Giving USA and showed a 3.8% increase of charitable contributions from the previous year, totaling $471.4 billion in donations. Although there was a significant increase in giving from various sources, the circumstances that the whole nation faced during this difficult time bring to the light several concerns that encourage the decisionmakers of any organization to be prepared for such difficult times to meet each organization’s mission.    

The unprecedented times during the ongoing pandemic showed that relying on a single source of income for nonprofits would not serve the long-lasting missions. Therefore, organizations are encouraged to build a resource development strategy based on a diversity of funding sources to support their mission-related work. By doing so, the organizations would have dynamic interactions with internal and external environments and would enhance their behavior to reach strong resource dependence that relies primarily on diversity. While building the intended resource development strategy, organizational leadership should make any necessary alterations to the organization’s structure and purposes so that its internal environment becomes ready for the diversity of resources and capable of exchange with different markets. This way, the organization would resist dependence on a single source of revenue. It may have more chances to survive for a longer life, which is the core concept of a sustainable organization approach.

For example, think about the competition concern that many nonprofits experience while applying for grants, since many nonprofits rely upon predetermined streams of income to sustain their programs and services. Therefore, revenue diversification would reduce potential failures and promote successful revenue achievements for the organizations by obtaining the right assortment of sources that assures revenues and reduces vulnerabilities. Also, dependency solely on external resources would not give nonprofit organizations the ability to achieve long-term sustainability since economic circumstances may change. The organizations would be affected directly by economic changes; therefore, the concept of diversity of resources may be a safe escape for nonprofit organizations’ financial needs, and dependency on a single channel of external resources only would affect this approach.

The nonprofit organizations with various resource development approaches have more chances to achieve steady revenues and likely to be sustained throughout their existence. Hence, the diversity approach is strongly recommended for nonprofit organizations that rely solely on government grants since government procedures and policies may change based on economic conditions and any political factor that may arise; therefore, when nonprofit organizations develop their strategic resource development planning that is based on diversity, the possible long-term sustainability of the organizations becomes more achievable and would help the nonprofit organizations meet their goals through achieving their designated missions. Though, diversity, in this regard, becomes the core motivator for decisionmakers or strategic planners of the nonprofit organizations towards emerging sustainable establishments.

Now, with several indications that are leading to possible economic recovery and normalization of activities—at least that’s what the officials of the government declared on several occasions—getting back to the pre-pandemic life is likely to happen; therefore, decisionmakers of nonprofit organizations should conduct an extensive review of all situations that occurred during the current pandemic to benefit from the downturns that lead to potential loss of distinctive resources, and to remember that the three economic stimulus packages that were issued by the government and included important fragments to help nonprofit organizations were intended to help nonprofits for temporary resistance of the pandemic-related developments. Therefore, nonprofit organization leadership should always consider the long-term strategies that aim to sustain their organizations’ existence, services and operations to succeed with their missions. Consequently, the diversification of resources as a core pillar for developing strategic resource development plans for nonprofit organizations would influence organizations’ strategic thinking and encourage their respected organizations to become more capable of achieving their desire for financial sustainability.

Author: Dr. Sharif Shamroukh is a Senior Lecturer at the American Institute for Philanthropy Advancement, and frequently writes about various public policy issues. Also, Dr. Shamroukh provides consulting services to nonprofit organizations covering a wide range of topics that help achieve their missions.

Contact Dr. Shamroukh via e-mail: [email protected] or Facebook / LinkedIn / Twitter @DrShamroukh

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