A Reminder about Funding Overdependence

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February 13, 2014; SeacoastOnline

A report from Portland, Maine about the closing of a city-run clinic that provided healthcare for 2300 homeless people each year should remind us that wherever possible, we should guard against overdependence on one source of funding. The clinic’s fate was decided when it lost a federal grant that provided approximately a third of its annual budget of $1.8 million.

The $680,000 grant will be redistributed to the Portland Community Health Center, but city officials are worried that this will not meet the special needs of homeless patients. And although the clinic was not formally a nonprofit, it provides a reason to take a moment to stop and reflect.

NPQ has written quite a bit about revenue mixes in nonprofits. Some of these articles can be accessed here: Jon Pratt’s classic “Analyzing the Dynamics of Funding: Reliability and Autonomy” and “In Search of Sustainable Funding: Is Diversity Really the Answer?” from William Foster, Ben Dixon, and Matt Hochstetler.—Ruth McCambridge

  • Richard Freedlund

    This is a topic I have evangelized about for quite some time. Too many organizations put all their eggs in one basket, so to speak, and when that source dries up, they have to scurry to make up the loss or end up going under. I see that happening more and more here in Illinois where the state is billions behind on paying nonprofit contractors for services rendered.