How do nonprofit organizations generate revenue?
Corporations and companies sell products or services to make a profit and return dividends to their investors. Nonprofits raise donations to invest in their communities by providing services and programs.
Actually, there are several ways to secure donations. A nonprofit should not depend on an angel donor. A diversified revenue structure demonstrates financial stability because the organization has not limited its fundraising strategy.
According to the Giving Institute’s annual report
about 79% of all donations are from individuals and bequests,
19% from foundations, and
4% from corporations.
This report tells us that a successful, stable nonprofit should have broad and long-term support among individuals.
Individuals not only support your direct mail and social media appeals; they also support your special events, and may even shop at your resale store. Individual donors can also support your organization with gifts of stock and other securities and with vehicle donations if you give them the chance. A loyal donor’s final gift is a bequest. Clients support your organization by paying program fees.
Private and family foundations remain stable sources of income when your mission matches their area of interest. Corporations will still pay for event sponsorships, and government grants are viable resources for some nonprofits.
Earned income through social enterprise programs is yet another way a nonprofit can generate revenue. For example, a restaurant that trains young people to be chefs and restaurant managers is also an excellent place to eat with a loyal clientele. The revenue generated by the restaurant supports the training programs.
If you have a lovely or unique building, then venue rental may be a social enterprise option. Consider all your resources when planning your fundraising year. Brainstorm with your team, talk with your donors, and don’t limit yourself or your success.
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching, grant writing, and fundraising services for our nonprofit clients. We specialize in small to mid-size organizations because we understand your challenges. Please contact us for more information.