A nonprofit should balance their funding sources between donations and grants. They need to use equal effort in achieving funds from both.
I have worked with many nonprofits and almost all of them rely on either donations or grants for the majority of their funding. Yes, they get involved in the other funding source, but most of their focus is on the one. This can be dangerous if funding stops for that one. There is no fallback position.
Nonprofit managers focus on donations or grants mostly because it is easier for them and they have been doing it for years. The managers have a system worked out, contacts made, relationships built, and a history to use from.
Also, the other way looks difficult and needs to be learned.
Mostly, I see personalities driving the decision of which source to use. Those who are more social and extroverted will look at donations because it means speaking engagements, picture taking, and attending events. Those less interested in asking people for money will rely on grants.
Both types of people could be successful for years using one source of funding, until something stops the one funding source.
Changes in the economy or society can stop donations and not affect grants or vice versa. To prevent a loss of funds, nonprofits should make the effort to learn and use the other. Having a diverse line of funding is always good. They also provide more opportunities for funding.
The nonprofit I’m working with relies more on grants than donations. I’m working on changing them. But it is difficult because they have rarely held fundraising events or asked the public for funding. They ask, why change when grants are being approved? Because one day the grants may stop coming.
(I’m their grant person.)