Monday, January 31, 2011

Why Reduced Government Funding is a Good Thing

You, like many nonprofits, are facing a cut or one of many cuts in your funding from government agencies. To many this is unwelcome news. While I see much handwringing by nonprofits about reductions, cuts can also be a blessing in disguise. Why? For many reasons, here are four:

1. Re-Invent Yourself. Reductions are an opportunity to decide how you wish to be funded. Government funding is only one of seven major nonprofit funding streams. Often, nonprofits chose it by default or because the money arrives in large attractive chucks. Is this the ideal way for you to be funded? This is a chance to examine the options and choose your ideal path.

2. Farewell to Restrictions. If you are tired of being unable to serve people who need it, because they fail to meet funding restrictions, more flexible funding with fewer restrictions is a “yes!”

3. Less Unnecessary Work. Perhaps your nonprofit is unique, but almost all nonprofits find that government funding requires extra work that you wouldn’t do (it doesn’t improve your outcomes) except to comply with the rules and retain the government money. If you can shift this effort into productive outcomes, it’s worthwhile.

4. Closer to Your Community. Getting your income from large chunks of government money, especially from state, province or federal sources, often isolates nonprofits from local market influences and needs. Growing diverse income sources will bring you in touch with these needs, demand new partnerships, innovative thinking and create greater income stability.

Why is reducing government funding is a good thing? In short, it opens up new possibilities. With creative effort and hard work, you can overcome the reductions you face. Before your current government funding shrinks further (it will!), take steps to grow your future using the resources you have now. If you wait, you risk having to start from dead stop. The sooner you begin the sooner you will be to say, “Reducing government funding was one of the best things that ever happened to our nonprofit.” Contact Karen for help.

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