Module 5: November 12, 2021
Income-related Resilience Strategy
Instructor: Dr. Dennis R. Young, Georgia State University, Case Western Reserve University
The structure of an organization’s revenue is also related to its resilience. Having fixed sources of revenues (that do not vary with output) such as investment income can protect against sudden losses of “variable revenue” that is contingent on producing output. Semi-variable revenues which are less vulnerable to reductions in output than ordinary sales revenue, such as memberships and subscriptions, can also be helpful. Having diverse sources of revenue can protect against the loss of any particular revenue stream. In the COVID-19 crisis, for example, earned revenue from fees and marketplace sales have been extraordinarily vulnerable, whereas in prior crises such as the financial collapse of 2008-2009, philanthropy and returns on endowment were especially hard hit. Except for “perfect storms” in which all sources of income are comparably affected simultaneously, diversification can serve as a protection in a crisis.
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