Income diversification for charities: how not to put all your eggs in one fundraising basket 

When you work in fundraising, it’s easy to lean too heavily on one source of income or a handful of major donors.

In fact, research suggests that over half of UK charities receive at least 90% of their funding from a single income stream.

It might balance the books, but a lot of organisations don’t realise how vulnerable they are until a major grant ends or a high-value donor fades away. The gap it leaves can be hard to fill. 

“A deliberate strategy to diversify organisations’ fundraising income is essential for growth”

- Charity Digital

The only real way to manage this risk is to think forward and reinforce your foundations by spreading the risk across multiple charity income streams. That way, if one source of funding dips, you’ve got others to fall back on. 

It sounds like a lot to do. Especially when you’ve got a small team and limited budget. But remember: the goal of income diversification isn’t to chase every income stream. It’s to build a strategic mix that plays to your strengths and will help your organisation grow over time.  

To do this, you need to:

1. Raise funds ACROSS different income streams 

A healthy funding portfolio can’t rely on individual giving alone. It doesn’t matter if you mix in trusts, corporates, events, legacies or major donors. What matters is that you’re using different sources to build resilience and reduce risk. 

2. Build diversity WITHIN different income streams

Even if you’ve spread the risk across multiple income streams, dependence within any one of them can leave your organisation exposed.

Let’s say one third of your income comes from trusts and foundations. If most of that income comes from just one or two organisations, you might still face a gap when one grant ends – which is why it’s important to balance your portfolio with a mix of small, medium and high-value funders. 

When you’re in the thick of things, taking time out to focus on income diversification can feel like a luxury you can’t afford, especially when there are faster ways to bring money in now.

But, in my experience, short-term funding only solves short-term problems. Long-term resilience comes from investing in steady, strategic growth – even if it feels counterintuitive at first. 

The key is not to build every income stream from scratch, but to use your fundraising data to help you make the most of the opportunities you already have.

Step 1: Look out for “growth signals” 

Income diversification starts with understanding your current mix. Not just the headline figures, but the details. This has two benefits. First, it helps you identify and manage potential risks. It will also help you spot “growth signals” and areas of fundraising that are ripe for expansion.  

For example:

• You’ve got two or three committed trusts on your books
  
  That tells you something important: you already know how to secure and manage grant funding. You’ve got proof of impact, existing relationships, and funders who can act as references. Instead of starting from scratch, you can use these early wins to help build a broader and more resilient trust fundraising portfolio.
  
  
• You’ve got a strong pool of regular givers
  
  Regular giving is about more than predictable income – it’s a sign of loyalty and trust. Supporters who give monthly are a natural starting point for a legacy giving programme, so take this opportunity to start extending the relationships you already have.
  
  
• You’ve got engaged local businesses
  
  Strong support from local businesses can be a springboard to bigger opportunities. The experience, relationships, and success stories you build locally can help open doors to larger Charity of the Year partnerships or cause-related marketing campaigns.

Step 2: Strategise for income diversification 

Your trustees might expect an overnight fundraising miracle, but every seasoned fundraiser knows that building up a new charity income stream takes time. That alone is a good reason why diversification shouldn’t be treated as a side project, but built into your fundraising strategy.

Start by looking at where you are now, then think about where you want each income stream to be in one, five and even 10 years’ time. Use this foundation to create a clear activity plan, set realistic targets, and track progress along the way. That way you know income diversification activities will get the time and attention they need to succeed. 

Step 3: Put your data to work  

It’s harder to make decisions based on guesswork. If you really want to grow and diversify your income, being able to centralise, rotate, and drill down into your data is invaluable.

Yes. it can absolutely feel like a mammoth task, especially if you’re facing a lot of pivot tables and Excel spreadsheets. But, if you have a CRM, take Donorfy for example, surfacing the data you need easily is what it's designed to help you do.

The dedicated team at the Migration Museum are a strong example of how you can use your CRM to not just manage existing income streams, but build new ones too ...

Success story: Moving with the times

It’s a familiar story. Before they moved to Donorfy, the busy Migration Museum team managed their fundraising, events, and donor relationships through a mix of spreadsheets and manual systems – none of which was particularly suited to the job. But with a major new project on the horizon, the team knew they needed a more streamlined and integrated approach to manage their growing supporter base.-

With Donorfy's dedicated “Opportunities” function, it wasn’t long before the team was using their new CRM to grow and manage relationships with trusts and foundations. 

But that’s just the start. 

As their fundraising gains momentum, they're also using Donorfy to help build an individual giving programme, and identify potential new donors by analysing event attendance.

They also plan to use the Campaigns function to support a major capital campaign – the perfect reminder that income diversification doesn’t have to be an impossible task. It’s about making sure you have the tools and strategy in place to expand on the opportunities you already have.  

Read their story in full

The fundraising landscape is changing. But change doesn’t have to mean instability. As we’ve seen throughout this series, the most resilient charities are the ones getting ready to respond – the ones open to change, willing to evolve, and prepared to embrace new ideas and tactics.

It won’t always be easy. But by putting supporters first and taking deliberate, systematic steps to diversify charity income streams, you can start building an organisation that isn’t just protected against change – it’s all the better for it. 

After all, we can’t predict the future, but we can prepare for it.