The Effects of NPO’s Revenue Diversification on Financial Vulnerability

This capstone project investigates whether revenue diversification leads to reduce financial vulnerability of nonprofit organizations. The findings of this study suggest that organizations with more diversified revenue portfolios have lower levels of financial vulnerability over time, which means that revenue diversification is a reasonable strategy for organizational stability. This study has also examined the effects of relying on specific restricted and non-restricted revenue sources on financial vulnerabilities of organizations. Although hypothesis was that the nonprofit organizations relying on restricted with instable revenue sources would have a relatively higher financial vulnerability compared to other organizations, the findings suggest different results. The analysis shows that nonprofit organizations’ dependence on restricted revenue sources can help manage financial vulnerability from the long-term and short-term perspectives. Our findings show that nonprofit organizations relying on restricted with instable revenue sources rather have lower financial vulnerabilities than other organizations