Fundingdepend

Fundingdepend is a term used in nonprofit governance and research administration to describe the degree to which an organization depends on external funding sources for its operating revenue. It combines the concept of funding dependence with resilience, highlighting not only the share of revenue from outside sources but also how diversified and stable that funding is over time. The concept is applied by boards, executives, and researchers to assess financial risk and sustainability.

Core components of a Fundingdepend assessment include funding mix concentration, donor diversification, and revenue predictability. Funding mix concentration measures the share of total revenue attributed to top funders or funder categories, often using concentration indices. Donor diversification tracks the number of funders and how evenly contributions are distributed. Revenue predictability analyzes year-to-year variability, considering multi-year awards, grant cycles, and potential funding gaps.

Applications: Boards use Fundingdepend to inform strategic planning, risk management, and fundraising strategy. By identifying reliance on a small set of funders, organizations can set diversification targets, pursue new revenue streams such as earned income or memberships, and explore collaborative funding arrangements to reduce exposure to funder decisions.

History and adoption: The term emerged in nonprofit governance discussions in the 2010s and gained traction in practice during the 2020s through governance guides and consultancy reports.

Limitations: Fundingdepend does not capture mission alignment, grant quality, or the strategic value of particular partnerships. An excessive focus on diversification can hinder mission-focused collaborations or cause resource misallocation. It should be used alongside other performance and impact metrics.