Diversifying Revenue Streams

I have never seen an organization that feels it doesn’t need more money. Every day, I see non- profits, charities, municipalities, member organizations, and others struggle to generate more revenue. They continue to do the same old thing, but expect to get different results. Some call that insanity, but in many organizations, they call it “risk management.”  I say if you continue to bang your head against the wall, you will continue to get a headache. Go figure!

So, why to these organizations fail to diversify revenue streams? Why do they keep focusing only on the pledges for their run or walk, or on third party events and annual appeals? Why do municipalities just continue to raise taxes and user fees and wonder why citizens become annoyed? Why don’t they look elsewhere for revenue and gradually generate a new revenue stream or enhance one that is not performing to its potential? Oh yes, they call it “being cautious.” Sometimes cautious organizations let the world and competition pass them by and end up broke. If I recall correctly, Eaton’s department stores failed to believe that the impact of the advancement of American retailers was real. Where are they today?

Sponsorship is such an alternate revenue channel. It is not the only one, but it is a choice. Organizations need to take the calculated risk and do an inventory asset valuation or program assessment to determine if sponsorship is a profitable revenue channel for them-or a channel at all. Sponsorship marketing for most-not all, but most-organizations is a viable revenue channel that can raise anywhere from an additional $150,000 to $1.5 million or more per year for the bottom line. Does your organization truly know what it has to sell and what revenue it can generate each year? Would this not help in budget forecasting? Would this not possibly help to generate more money to further your mission or deliver more services?

I have been on the road a great deal recently. I have delivered many presentations, but was so impressed with one organization. It was a municipality. It has clearly identified that it needs to find alternate revenue channels. It knows that taxes and user fees cannot continue to escalate. So, it has done its research to review five new revenue channels, of which corporate sponsorship is one. It is not the only one; it may not become one of the two or three that it decides to focus on over the next five to seven years, but it is one of the five. I applaud this municipality. It is thinking outside the norm. It is not living with its head in the sand thinking the revenue generation problem will just go away. It is being proactive to determine its own fate and future. Well done! More organizations such as charities, non-profits, municipalities, and sport organizations need to undertake such research to determine if sponsorship is a viable channel for them. They need to learn the short- and long-term costs and benefits. They need to understand their specific revenue opportunities through sponsorship. 

They need to quit banging their heads against the wall to make their headache or revenue woes go away!  

These are just one person’s thoughts. Yours are welcomed as well. Please add your thoughts or comments below. Thank you for reading and your feedback. 

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