The nonprofits that got big got focused

Somebody has told you to diversify your revenue. Maybe it was a consultant, maybe it was a board member who read something, maybe it was the funder who cut your grant and suggested you spread the risk next time. The advice arrives with the confidence of settled wisdom, three legs on a stool, never put your eggs in one basket, and you nodded because arguing with it sounds like arguing with gravity. Then you went back to your desk and tried to figure out how an organization with two full-time development staff is supposed to run five revenue programs, and the advice stopped being wisdom and started being homework nobody was going to help you with.

The research says the opposite of the advice. Bridgespan published "How Nonprofits Get Really Big (2024)" on June 20, 2024, looking at 297 US nonprofits founded since 1990 that reached $50 million or more in annual revenue, and the headline finding, in their own words: "Over 90 percent of the organizations in our study had a dominant revenue category such as corporate or government that accounted for at least 60 percent of the organization's total revenue." Not a balanced portfolio. One category carrying most of the weight, in more than nine out of ten organizations that made it to real scale.

The obvious objection is the right one: those are $50 million organizations and yours is not. A pattern found among the very large tells you nothing reliable about a $3 million youth services agency, and anyone who waves that gap away is selling something.

The same shape shows up at your size

Bridgespan went back and looked. Their November 12, 2025 study, "How Small and Midsize US Nonprofits Get Their Funding," randomly sampled 175 nonprofits from a pool of 28,725, working across civil rights, environment, and youth services, matching Form 990s with NTEE codes and adding audited financial statements plus interviews with 15 leaders. What they found at the small and midsize end rhymes with what they found at the top: 74 percent of those organizations raised most of their revenue from a single funding category, the dominant category averaged roughly three quarters of total funding, and only 11 percent ran a genuinely mixed model.

The two thresholds are different, and the difference matters. The 2024 large-organization study defined a dominant category as one supplying at least 60 percent of total revenue. The 2025 small-and-midsize study set the bar at 50 percent. Those are not the same measurement, and you should not read the 74 percent and the 90 percent as two readings of one instrument. What you can read across both studies is the shape: at $50 million and at $3 million, in the sample Bridgespan drew, the normal condition is one revenue category doing most of the work while the others fill in around it. The diversified organization is the exception, not the standard everyone is being measured against.

What the studies do not say

Neither study establishes that concentration causes scale. Both describe survivors, organizations that were already there when the researchers went looking, which means the concentrated ones you can see may simply be the concentrated ones that made it while their peers folded quietly and never entered the sample. The 2025 study covers three sectors, not the whole nonprofit universe, and 15 percent of its sample lacked publicly differentiable funding data. Anyone who tells you the data proves concentration works has read the press release and not the method.

What the data does establish is narrower and still useful: the diversification chorus is not describing how successful organizations are actually built, and it has never had to prove that it was. That is enough to stop treating "add another revenue stream" as automatically prudent, which is the specific pressure you have been under.

Diversify inside the category, not across categories

Ali Kelley, who co-authored both studies, states the recommendation precisely: "We suggest diversifying within a category of revenue, not across three or more categories." That sentence is the whole strategy. It is not a license to stake everything on one funder.

Diversifying within a category means your earned revenue does not depend on one contract, one payer, or one program. If your fee-for-service work is your dominant category, the risk you manage is concentration inside it: four school district contracts instead of one, two payer types instead of a single reimbursement stream, a training line that sells to employers as well as to peer institutions. You are still building one engine, and you are building it so no single component can stop it.

Diversifying across categories is the thing that actually hurts you at $2 million or $8 million, because each new category is a new operating discipline. A membership program is a retention business. Government contracting is a compliance business. A product line is an inventory and working capital business. Every one of those needs someone who understands it, systems that track it, and a real share of your executive director's attention, which is the scarcest asset in your building and the one nobody puts on a budget line. Adding a fourth small stream to three existing small ones does not spread your risk, it spreads your two best people across four disciplines and calls the result a portfolio.

What this means for the earned revenue you already run

Most organizations we work with already have the dominant category and do not see it that way, because it is sitting in the appointments, enrollments, and memberships they have been running for years without ever treating them like the business channels they are. The clinic that fills 70 percent of its slots. The certificate program that sells out and has never had its pricing revisited. The membership base that gets an acquisition push every fall and no retention work at all. That is a category with room in it, and the honest question is not whether to add something new but whether the thing you already run is being operated anywhere near its capacity.

The version of concentration worth pursuing has a precondition, and it disqualifies plenty of organizations. Concentration is a strategy for an organization with a category that can plausibly become dominant. If your earned revenue is $40,000 against a $4 million budget and nothing about the model suggests it could reach $1 million, then focusing on it is not strategy, it is optimism with a plan attached. Say that out loud in the board meeting before you commit a year to it. The organizations that get this right are the ones willing to conclude that a given channel cannot carry the weight, and to say so early, when the decision is still cheap.

For everyone else, the move is unglamorous and it works: pick the category you already have the most claim to, find the ceiling of what it can produce, and build the operational discipline to get there. One category run properly beats four run partially, and it beats them on revenue, on staff sanity, and on the thing your board actually cares about, which is whether next year's budget holds without another emergency appeal.

If you want to know whether your earned revenue can become a dominant category, we will tell you what the numbers actually support, including when the answer is no.