Unlike for-profit businesses, nonprofit organizations do not exist to make money. Rather, they exist to serve and support a cause. They do not sell goods or services to make a profit. However, they do still need capital to drive their work and fund their programs. They also need to pay their staff and pay for resources they need to run like office space, equipment, etc.
How, then, do NPOs make money? Below, we will outline some of the primary ways that nonprofit organizations make money.
Here are seven ways for nonprofit organizations to raise funds for their operations.
Donations form a substantial part of the nonprofit income. Charity organizations rely on philanthropy and giving to make much of their money. Donations are key to this.
Many nonprofits establish several options for people to give to their organization. This includes:
This method of making money for a nonprofit depends heavily on the organization’s network. The more people know about and support your cause, the more donations you can collect. Nonprofits will, therefore, invest much in building a network of donors and supporters.
Although NPOs cannot sell products for profits, they can sell products relating to their work and cause. They can offer products as long as the revenue contributes to the organization’s purpose. Otherwise, the income can be subject to tax and compromise the company’s status as a nonprofit organization.
Your NPO can offer branded merchandise on your website, at events, and on your social media. Examples of products you can consider selling include t-shirts, stickers, tote bags, branded stationery, cups, etc. Read our article on 11 Top Things To Sell In A Fundraiser for more merch ideas.
It’s not enough to just brand items with your NPO name, however. You have to prove the money goes to furthering your cause to avoid taxes.
Volunteers are important people in the network an NPO builds. Although they do not always bring in a direct income to non-profits, they are ways to leverage volunteers to raise money.
They can, for one, participate in selling your merchandise. Consider the well-known example of Girl Scouts selling cookies. Volunteers sell the cookies and the money goes to charity.
You can also create volunteer programs that offer services to your community to make money. Simple things like having days where volunteers mow lawns or offer face painting can become opportunities for community engagement and fundraising.
Ask your volunteers what skills they have and are open to offering. If you have a yoga teacher in your program, why not have a once-off yoga class?
Your volunteers also offer you valuable time and labor. They support your company team and allow you to spend available funds on other vital work for your cause.
According to the US Bureau of Labor Statistics, volunteer hours were worth $122.9 billion in economic value between September 2020 and September 2021. The current value of a volunteer hour is $31.80.
A grant is a large amount of money that funds longer-term NPO programs or initiatives. Grants are a big method of making money for nonprofits. NPOs and charity organizations can collect a large part of their annual budgets through them. This includes funding from corporations, private foundations, public foundations, state or government funds, or local community institutions.
There are also different kinds of grants that your NPO can apply for which support different aspects of your operations like:
Although these grants and sponsorships are similar, sponsorships generally support once-off or short-term campaigns, events, or programs. They also may often include an exchange between the sponsor and the NPO, like free advertising.
Nonprofits can make money from financial sponsorships. However, they can also get other forms of sponsorship such as unique coupons, products, services, etc. They can then sell these or auction them off to raise money for their company.
NPOs can get sponsorship through a sponsorship request letter or by visiting potential partners in person.
A good fundraising event can bring in tons of money for charity organizations. They are the basis of how many non-profit organizations make money.
An annual fundraising gala or event is a key event on many charity calendars. By hosting one, NPOs make money by selling tickets, running auctions and other activities, receiving donations, getting sponsors, and more.
However, a once-off gala night is not the only event an NPO can host. You can have various events throughout the year like walkathons, webinars, contests, etc. There are many fundraising event types to choose from.
Consider hosting events around days that matter to your community like public holidays. Valentine's Day, for example, can be a great time to hold a local charity festival. Think kissing booths, food and flower stalls, and the like. Make money by selling tickets, charging for stalls, costing each activity, selling merchandise, and more.
Fundraising campaigns can combine several different ways to make money. You can host campaign-themed events, start a digital fundraiser, get project-based grants, and more.
#GivingTuesday is a wonderful example of a time when you can start and run a widespread campaign.
NPOs take advantage of the philanthropic drive of the day by running social media campaigns, hosting events, etc.
A campaign can be an all-in-one opportunity to make money through a mix of avenues.
There are many ways for nonprofits to make money. Above are only seven of the basic methods that are tried, tested, and popular amongst charity organizations. There can be certain opportunities to increase your revenue.
However, don’t be afraid to innovate around them. Include them in your plans while still staying creative and coming up with your own ideas to fundraise. As long as you stay true to your cause, you’re bound to be successful.
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