A heart
attack and two strokes away from insolvency.
That’s the
way the precarious financial situation of a charity was once described to me.
That charity
was so dependent on the generosity of a few people that if they were suddenly
unable to donate, the work of the organization would be over.
Thoughts about
that charity came to mind when I learned that the magazine PacificStandard was shutting down after ten years due to its main funder pulling out.
The magazine,
which reported about social justice and environmental issues, was dependent on a
foundation for the majority of its $3.5 million annual budget.
The reason
given was the foundation was no longer in a position to fund the magazine, or
any of the other charities it supported.
The loss of
the publication, and the jobs that were lost, is lamentable. Yet it proves once
again the danger of being overly-reliant on one source of funding—be that
individuals, foundations or governments.
Over my
career, I’ve seen the good and the bad of large gifts.
On the plus
side, they make so much important work possible. On the negative side, they can
lead organizations to become lazy in actively seeking new donors to make sure
they don’t end up like Pacific Standard.
As anyone who
does fundraising knows, you forget the donor pyramid at your peril: Lots of smaller givers on
the bottom supporting the fewer larger donors on the top.
The idea
behind the pyramid is that the larger and steady base should allow an organization to
weather the loss of a large donor or two near the top—even if the loss really hurts.
Ten thousand
people giving $100 is better than one person giving $1 million, in other words.
Especially if
that large donor might soon have a heart attack or stroke.
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