10 Questions Board Members Should Ask About Funding

Nonprofits that rely too heavily on one revenue stream are vulnerable to sudden disruptions.  Diversified revenue streams provide stability, flexibility, and long-term sustainability.

As a board member, you don’t need to be a fundraising expert, but you do need to understand where the money comes from and how that mix affects your organization’s resilience.

Here are 10 questions to ask, and why they matter:

How many funding sources do we currently rely on and what percentage of revenue does each represent?

 Why it matters: If 60% of your revenue comes from one government grant or one private foundation, a shift in priorities or politics could put your entire organization at risk.

What to do: Ask for a visual breakdown of funding streams (grants, donations, events, earned income, etc.) and discuss whether there’s healthy balance.

What would happen if we lost our largest funder tomorrow?

Why it matters: Many nonprofits never ask this question until it’s too late.

What to do: Request a contingency plan.  Does the organization have reserves?  Could programming be scaled back without collapse?  This is where finance and strategy meet.

Are we actively cultivating new sources of revenue each year?

Why it matters: Even if current funding is stable, the landscape can change quickly. Cultivation ensures you’re not caught flat-footed.

What to do: Encourage a pipeline mindset.  Are new individual donors being brought in?  Are new grant opportunities being explored?  Is the board helping with introductions?

Do we understand the difference between restricted and unrestricted funding?

Why it matters: $100,000 restricted to a specific program is very different from $100,000 that can be used to pay rent or staff.

What to do: Ask for a breakdown of how much of your annual budget is flexible.  Strong organizations aim to grow their unrestricted base.

Are we tracking the return on investment for each fundraising stream?

Why it matters: That annual gala may raise $50,000 but cost $30,000 and hundreds of staff hours.

What to do: Evaluate fundraising activities like a business would. If it’s not paying off financially or strategically, reconsider.

Do we have a donor retention strategy, not just a donor acquisition plan?

 Why it matters: Keeping a donor costs less than finding a new one.  But retention requires consistent stewardship and communication.

What to do: Ask what the organization is doing to thank donors, report impact, and build long-term relationships.

Have we explored earned income or fee-for-service opportunities?

Why it matters: Fee-based programs, social enterprises, or licensing can bring in sustainable revenue, if they align with mission.

What to do: Encourage the organization to explore mission-friendly earned income (e.g., training programs, consulting, sliding-scale services) if it fits your model.

How are we preparing for shifts in the funding landscape (e.g., government cuts, donor fatigue, economic downturns)?

Why it matters: Disruption is inevitable, economic, political, even generational. The organizations that plan ahead are more resilient.

What to do: Ask leadership what risks they’re watching and how the organization would pivot if needed.

Are we communicating our financial story in a way that builds funder confidence?

Why it matters: Funders invest in organizations they trust.  Transparency, good governance, and results all matter.

What to do: Review how your impact and finances are presented in reports, on your website, and during funder meetings.  Are you telling a confident, mission-aligned story?

Does our strategic plan include revenue goals and diversification strategies?

Why it matters: Revenue planning should be part of strategic planning, not an afterthought. Growth requires fuel.

What to do: Make sure the board is reviewing financial goals as part of the overall strategy.  Are there plans to grow major giving?  Launch new services?  Apply for larger grants?

A diverse funding base isn’t just about money; it’s about mission protection. The more stable and flexible your revenue, the more freedom your organization has to innovate, respond to community needs, and survive unexpected challenges.

As a board member, your questions and your willingness to help can make all the difference.