What This Episode Answers

Most growing nonprofits aren't underperforming because their funding is too concentrated — they're stalling because they've adopted a borrowed script about what a "healthy" nonprofit funding model is supposed to look like. In this episode, Brooke Richie-Babbage challenges the prescribed funding hierarchy and explains why the organizations that scale don't diversify in the traditional sense. They identify the one funding model that fits their strengths and build deep infrastructure around it. Depth beats breadth.

Key Questions Answered

• What is the "right" funding model for a growing nonprofit?
• Is relying on foundation grants a sign of poor nonprofit financial health?
• Does revenue diversification actually help nonprofits scale?
• What did the Stanford Social Innovation Review "10 Nonprofit Funding Models" study find?
• How do nonprofits decide which funding model to build around?
• Why do strong fundraising programs stall when leaders try to diversify?
• What questions should a nonprofit CEO ask to identify their core funding model?

Episode Description

There's a dominant story in the nonprofit sector about what financial health is supposed to look like: individual donors at the top, foundation grants as a supplement, earned revenue as a bonus — and a quiet message that if you still depend on grants, you haven't figured it out yet. Brooke Richie-Babbage takes that script apart. Drawing on the Stanford Social Innovation Review's landmark research on how large nonprofits actually grew, she shows that scaling organizations didn't spread risk evenly across revenue sources. They found the one model that played to their strengths and built the systems, relationships, and infrastructure to run it exceptionally well. For nonprofit CEOs trying to break through the $1M, $2M, and $3M ceilings, this episode reframes funding strategy as an act of design — not a checklist of activities someone told you to do.

What You'll Learn

• Why the prescribed nonprofit funding hierarchy — individual donors over grants over earned revenue — isn't supported by the research on how organizations actually scale.
• What the Stanford Social Innovation Review's "10 Nonprofit Funding Models" study reveals about depth versus diversification, and why scaling comes from running one dominant model well.
• Three questions every nonprofit CEO can use to identify which funding model actually fits their organization — and how to build a Capital Engine around it.

Key Takeaways

• The pressure to diversify often starves the revenue source that's already working. This happens because "diversify" gets interpreted as one prescribed model, so leaders underfund the engine producing real results to chase a model that was never theirs.
• Organizations that scale build depth, not breadth. They don't spread revenue evenly across grants, individuals, government, and earned income — they identify the one model that gives them strategic leverage and build the infrastructure to run it as well as possible.
• A funding strategy is an architecture, not a wish list. The Design Deficit isn't usually the wrong revenue mix — it's the absence of any intentional model at all, a collection of fundraising activities with no clear answer to which mountain you're actually climbing.

Want to work together?

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