At a time of economic downturn, nonprofit businesses share one particular characteristic that presents the greatest challenge of all -- their heavy dependence on third-party funding.
In general they provide services to individuals irrespective of their ability to pay. Consequently a nonprofit's economic viability and financial security is not directly related to how good a job it is doing for its 'customers' or 'clients'. Rather a nonprofit's sustainability is significantly dependent on the generosity of third-parties: they look to the individuals, corporations and governments who support their community goals to subsidise the services that they provide.
The paper is based on a presentation given to a workshop jointly hosted by DVA Navion and the Asia-Pacific Centre for Philanthropy and Social Investment at Swinburne University of Technology (a founding partner of CSI) on 28 April 2009 in Melbourne.