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Bridgespan says to concentrate. It's asking the wrong question.

claudiotancawk
Aug 24
3 min read

In its 2024 study, Bridgespan examined 297 nonprofits that grew past $50 million in annual revenue and found they didn't diversify their way there. More than 90 percent had a dominant revenue category, with one source type accounting for an average of 90 percent of total revenue.[1] Bridgespan's core guidance, repeated consistently since, is to build depth inside a category rather than spread thin across several. However, its more recent work acknowledges the value of a strong secondary stream, typically 20 to 30 percent of revenue, for weathering disruption.[2]

 

That is a real finding, backed by real data, and it deserves engagement. The problem is not Bridgespan's numbers, but the question those numbers were built to answer.

 

 

What "category" actually measures

Bridgespan sorts nonprofit revenue into six buckets – government, philanthropy, program service fees, corporate, individual giving, investment income – and measures concentration within them, not the number of buckets an organization touches. Youth Villages built scale primarily through state-government funding spread across multiple states and government departments.[3] City Year layers a substantial government base under real philanthropy and corporate revenue.[4] Both count as "concentrated" in Bridgespan's framework. Both scaled.

 

The category count is a proxy. What it stands in for, without measuring it directly, is whether one funding relationship depends on the same decision as another.

 

 

Categories are not risk

Government revenue does not all run on the same clock, as state contracts vary in fiscal year, funding source, and political exposure. A program funded by a state's own tax base does not move on the same schedule as one built on federal matching funds. But where contracts share an upstream dependency, the diversification is smaller than the contract count suggests. When federal appropriations logic shifted in 2025, it reached every organization whose funding ran through federally dependent programs at once, regardless of how many separate agencies or line items sat underneath them.[5] Ten contracts diversify counterparties. They do not diversify exposure to the funding stream those counterparties draw from.

 

The same holds inside philanthropy, though the claim is narrower than it first appears. An organization drawing grants from twenty foundations diversifies away funder-specific risk, one board's shifting priorities, one relationship going cold, one grant cycle ending. What twenty foundation relationships may not diversify away are broader forces affecting philanthropic markets: asset values, tax policy, donor priorities, or sector-wide shifts in giving. Those forces need not affect every funder the same way, creating correlated exposure. Last year, the largest gifts grew 34.7 percent while mid-size gifts fell 1.5 percent, small gifts fell 2.8 percent, and micro gifts fell 7.9 percent.[6] Twenty foundation relationships reduce idiosyncratic risk. They do not eliminate the correlated risk above them all.

 

 

The question Bridgespan didn't ask

Concentration within a category correlates with scale, by Bridgespan's own numbers.[7] But scale and resilience are different measurements, and this study was never built to measure the second one. An organization holding three revenue categories that move on the same shock – three flavors of government money, say, or a foundation grant paired with a corporate sponsorship tied to that same foundation's donor – has diversified its ledger without diversifying its risk. An organization holding two categories that do not move together, earned revenue and philanthropy, for instance, can be structurally more resilient than one holding three that do.

 

The variable that matters is correlation, not count. That is harder to build than a pie chart with three slices instead of one, which is probably why the count version of this finding survives the trip from a 297-organization dataset into a webinar slide.

 

 

The actual prescription

This blog post does not argue for spreading funding across every available source. Bridgespan is right that chasing logos for their own sake is not a strategy. It argues for something more precise: the goal was never three revenue streams for the sake of three. It was revenue streams with different underlying risk drivers, streams less likely to fail for the same cause, at the same time, for the same organization.

 

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Endnotes

[1] Bridgespan and Stanford Social Innovation Review, "What It Really Takes to Scale a Nonprofit," 2024. https://ssir.org/articles/entry/big-nonprofits-funding-revenue 

[2] Bridgespan, "Nonprofit Organizations Achieve Significant Scale by Focusing on Concentration, Not Diversification," press release, 2024. https://www.bridgespan.org/press-releases/nonprofit-organizations-achieve-significant-scale-by-focusing-on-concentration-not-diversification; and Bridgespan, "Funding Strategies for Uncertain Times: Practical Guidance for Nonprofits," November 2025. https://www.bridgespan.org/insights/funding-strategies-for-uncertain-times-practical-guidance-for-nonprofits 

[5] Chronicle of Philanthropy, "Federal Grants to Everyday Charities Fell 38% in Trump's First Months," 2026. https://www.philanthropy.com/news/federal-grants-to-everyday-charities-fell-38-in-trumps-first-months/ 

[6] Giving USA Foundation / Benefactor Group, "Giving USA 2026 Annual Report on Philanthropy and Giving USA 2026 Webinar Presentation," June 2026. https://benefactorgroup.com/giving-usa-2026/ 

[7] Bridgespan and Stanford Social Innovation Review, "What It Really Takes to Scale a Nonprofit," 2024. https://ssir.org/articles/entry/big-nonprofits-funding-revenue 

 

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