Diversifying your revenue is how a small team ends up running five things badly.

Saturday morning, a rented meeting room above a credit union, chart paper taped to the wall because nobody could find a working whiteboard marker.

The newest board member joined in March. He does commercial lending, he has read the financial statements more carefully than anyone else in the room, and around half past ten he asks a question that lands like a dropped tray. What percentage of your revenue comes from the provincial contract?

Sixty-two, says the ED.

He isn't unkind about it. He says he wouldn't approve a loan to a business with that much of its revenue sitting with one customer, and he's right, and everybody knows he's right. Somebody picks up the marker. DIVERSIFY REVENUE goes on the chart paper, underlined twice, and the room drives home feeling like a decision got made.

Eight months later: a monthly giving program with nine donors, seven of whom are staff. A corporate sponsorship deck, seventy percent finished, in a folder called Sponsorship FINAL v3. And the provincial contract sitting at sixty-four percent — up two points, because the annual appeal went out five weeks late.

Nothing on that list is anyone's fault. The flip chart was the problem.

He was right about the risk

Start with the part that's true, because I don't want to talk anyone out of it.

If one funder is sixty percent of your revenue, you are one decision away from a layoff. Not a decision you make. A decision made by a program officer you've met twice, or by a deputy minister reorganizing a portfolio in a way that has nothing to do with you. It arrives by email in March, it's polite, it thanks you for your important work, and by the second read you already know whose position goes.

You know the name. The percentage is abstract until you know the name, and then it never is again.

Concentration is a real risk. The flip chart was still the problem.

Why "diversify" turns into nothing

Each kind of money is its own trade, with its own equipment and its own timeline. And its own hours, which is the part nobody prices at the retreat.

Grants are almost always restricted, rarely pay core salaries, and get decided mostly on criteria fit before anyone reads your prose. The money also arrives late. If the problem is that one funder could vanish in March, a grants push answers it with project money that lands in the fiscal year after the one you were trying to rescue.

Events cost fifty cents or more to raise a dollar at many organizations, once staff hours are counted honestly. Good for visibility and for new names. Expensive as a revenue strategy, and the golf tournament is usually where a small team's spare capacity already went.

Major gifts take twelve to eighteen months to secure and about four qualified prospects for every gift you're counting on, with roughly seventy percent of the work in relationship-building — carried by the ED or a board member, because there's nobody else to carry it. Strongest long answer to concentration. Will not arrive this fiscal year.

Monthly giving renews at about eighty percent a year and usually arrives unrestricted, which makes it the closest thing to predictable revenue a small shop can build. It also needs a donation form that works, a processor, receipting done properly, and somebody who notices when a card expires in February.

All four are worth doing. The trouble is arithmetic. A two-person development shop that adds a stream doesn't acquire two more people — the hours come out of whatever is already running, and what's already running is almost always the annual fund and the donor follow-through, because those are the only things nobody will notice you dropped for eight months.

Then they notice. AFP's Fundraising Effectiveness Project puts sector-wide donor retention near 43 percent, which means half your donors leave in an ordinary year — and replacing them is the most expensive work on your calendar. Take your attention off the follow-through for two quarters and that number quietly gets worse. The damage surfaces a full year later as a flat total everyone blames on the economy.

A small team adding a revenue stream isn't adding a stream. It's deciding which of the ones it already runs will get less attention — and deciding it by accident, in August, when something has to give.

What it looks like when the team is four people

Fewer sources, chosen deliberately, along two axes almost nobody uses at a retreat: when the money arrives, and what it's allowed to pay for.

If your two biggest sources both land in the fourth quarter and both come restricted, you have one risk wearing two names. Two sources that behave differently — one that renews on its own in monthly instalments and pays salaries, one that arrives in a lump in a year you worked for it — is real diversification, even though it's fewer lines on the page.

The shape I'd argue for in a shop under about $1.5M:

One predictable unrestricted engine. Monthly giving sitting on top of a properly run annual fund. It's unglamorous, it never makes the retreat agenda, and it's the money that covers rent and salaries and renews without anybody having to win anything.

One relationship-driven growth line. Major gifts, most often. Slow, personal, twelve to eighteen months out, and the only thing on the list that can move a percentage by an amount that matters. Start it the year before you need it, which means now.

The honesty to retire what leaks. The tournament that nets nine thousand dollars on two hundred and forty staff hours has to come off, and saying so costs somebody politically — usually the ED, usually in front of the board member who founded it. That conversation belongs at the retreat far more than the flip chart does. Deciding what a team can genuinely run is most of what goes in a fundraising plan.

One more move gets skipped almost every time. Go back to the concentrated funder. Ask about multi-year. Ask what it would take to get a portion unrestricted, and who sits in the room when the renewal decision gets made. Sixty-two percent with a signed three-year agreement and an ED who has the program officer's mobile number is a different animal from sixty-two percent renewed annually by a committee you've never met. Same percentage. Completely different risk.

Three numbers, and you can have them by Thursday

Pull last year's revenue by source. Work out what share came from your single largest funder, and what share came from your top three together. Most EDs guess the first within five points and are wrong about the second by fifteen.

Then the number nobody has: what share of this year's projected revenue renews without a new decision from anyone. No application, no committee vote, no gala to sell, no ask to make. Monthly donors, multi-year agreements, an endowment draw, the one corporate sponsor who has renewed nine years running without being chased. That figure is usually far smaller than the room expects, and it's the one that predicts whether next year hurts.

There's no magic threshold and I won't invent one. An organization at eighty percent from a single funder can be perfectly safe — twenty-year relationship, multi-year agreement, real trust in both directions. Another at thirty-five can be in serious trouble because the money is a one-time pilot and the program officer who championed it retires in June. The percentage is where the conversation starts.

What it shouldn't start is a chase. When the answer to concentration becomes apply to everything, try everything, say yes to every stream, that's usually a scarcity mindset writing the strategy, and it burns the same two people every time.

Back to the chart paper

The version of that retreat worth having is slower and less satisfying. Same question from the same board member. This time the ED answers it fully — sixty-two percent, when they renew, who decides, and what the eleven weeks after a no would actually look like. Then one line goes on the wall: the two sources being deepened this year, the hours each one needs, and what comes off the calendar to pay for them.

Nobody writes DIVERSIFY. Somebody writes down what's coming off.

If you want the page that forces that decision, that's the free Doable Fundraising Plan template — it makes you split the goal into restricted and unrestricted before you pick a single approach, and it caps you at three. If the harder question is whether the program underneath the numbers is sound, the free organizational diagnostic works that layer. When the board wants an outside read on where the exposure actually sits, that's the fundraising plans and audits work.

Open last year's financials tonight and calculate the top-funder percentage. Then go find out when they decide.