What Are The Different Sources Of Funding For Nonprofits?

When it comes to different sources of funding for nonprofits, it can be a bit overwhelming. We’ll break down some of the best sources of funding, and help you work out which are a good fit for your organization,

It’s recommended to not have more than 30% of your funding coming from one source, so diversity is essential. But so is choosing the right kind of funding, because not all sources work for every nonprofit. 

So what are the different sources of funding for nonprofits? Let’s find out!

6 Different Sources Of Funding For Nonprofits

Donations

Donations are one of the biggest sources of funding for nonprofits and can be a good base for your funding model. This includes both small donations and major donations.

One of the key things about individual donations is that you want them to be recurring, rather than just one-offs. A great way to do this is to have an easy-to-set-up debit order option on your website. This way, people can sign up once to keep donating every month. 

Try to help people donate without having to put in too much effort for maximum success. 

You can also send out donation messages to encourage people to donate. 

Garnering donations involves building good relationships with your donors. If people feel connected to your nonprofit, they are more likely to donate. 

The biggest problem with donations is that they can be unreliable or inconsistent. That’s why it’s important to have other funding sources. 

You also need to keep track of the data around individual donations. For example, people tend to give more around the holiday season. Tracking the data allows you to start to predict the ebbs and flows of donation funding. 

Events And Fundraisers

Events and fundraisers are an excellent way to both build a community around your nonprofit and have some great funding opportunities. They are a good one-off way to bring in some money. 

There are many different types of fundraisers that you can do, from community picnics to online events.

As an example, you could host an online auction to get people to bid for exciting items. This is a great way to encourage people to give money because they feel like they are getting something back and doing good at the same time. 

Ticket sales for events can also be a good source of revenue. Remember that people will often be willing to pay more if they know the money is going to a good cause. 

Grants

Another way that you can bring in money for your nonprofit is through grants. These can be provided by either the government or private organizations.

The benefit of grants is that they are normally large sums of money that can be useful when working on a particular project. You may also be able to find grants that repeat and get the grant on a more regular basis.

One of the downsides is that grant applications take a lot of time and skill, and you will often not get the grants that you apply for. Grants are also not a consistent flow of income, and therefore you need to apply for them wisely.

Check out this list of various grants to see if any are aligned with your mission that you can apply for. 

Corporate Sponsors

One important resource of nonprofit funding is corporations. In today’s world, companies take their corporate social responsibility (CSR) very seriously. Because of this, they are more likely to partner with nonprofits.

Sometimes, you will be able to get philanthropic funding, which is a donation with no strings attached. What is more likely is some sort of event or project sponsorship. This means working more closely with the company and associating your name with theirs. For this reason, it is important to only work with companies that align with your nonprofit’s values.

Getting funding is not worth it if the corporation does things that are not in line with what your organization is working towards. 

Two other ways that you can get resources from companies are matching employee donations and in-kind gifts.

Several big corporations have a policy where they will match donations made by their employees if the employees fill in the correct forms with HR. You can try to raise awareness of these policies.

Corporations may also offer in-kind gifts, where they donate things that they have. This isn’t direct fundraising, but it can be a useful way to get resources like office equipment or items to auction off. 

Membership Fees

Membership fees are a funding source that only makes sense in very specific cases. You could build membership from people who have benefitted from your organization. This works well with nonprofits operating in hospital or university settings.

It’s important to have an incentive for people to become members. This may simply be the intrinsic reward of doing good or there may be certain perks associated with membership.

However, membership perks can become expensive. Make sure that this is a viable choice for your nonprofit before committing to it. 

You would need to ensure that there was sufficient interest in the membership and that any perks you offer cost less than the revenue you are generating. You’d then have to look at the margins to decide if this is worth it. If not, perhaps shift your focus to recurring donations instead. 

Selling Goods And/Or Services

Depending on what field your nonprofit is in, there may be opportunities for you to sell goods or services. This does tend to work better for larger nonprofits, like Goodwill.

However, it is an option worth exploring, even for smaller nonprofits. You could combine this with other funding sources, such as hosting fundraising events. 

If you do decide to use this funding source, be sure to carefully check the tax regulations around your specific situation. Regulations can be different depending on what you are selling and how you are selling it.

Conclusion

There is a wide variety of sources of funding for nonprofits, and you can pick and choose the combination that works best for your organization.