Dr. April Willis, Principal Business Consultant & Coach at April Willis Consulting, LLC.
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One of the greatest challenges for nonprofit organizations relates to funding. Oftentimes, nonprofit organizations provide free or low-cost services to communities in need and they struggle to fund those services. However, just as with most businesses, there are opportunities in the nonprofit world to diversify revenue streams. If nonprofits can secure multiple sources of funding, they not only look more appealing to potential donors, but they also operate a more sustainable model that is not solely dependent on one source of funding. Let’s explore ten go-to sources of funding for nonprofit organizations:
1. Private Grants
Private grants are one of the most common sources of funding for nonprofit organizations. These are generally found through grant research on databases or through local charitable resource hubs. Private grants usually involve a competitive application process and can take up to six months for a response (although the average is 30 to 90 days). Private grants are also usually restricted, meaning you can only spend the funds according to the grantor’s funding priorities. Usually, grants will specify funding in the following categories:
- Capital (buildings, vehicles, items you can hold/touch)
- Capacity (salaries, scaling programs, materials, supplies, overhead)
- Programs (program delivery, administrative expenses, materials, portion of utilities)
- General Operating (any expenses, unrestricted)
2. Government Grants
Government grants typically come with significantly more red tape than private grants. Oftentimes posted as a Request for Proposals (RFP), government grants are more complex in the level of detail required in the application and are held to a much higher reporting standard. Since government grants award public dollars, there is a level of oversight in spending that usually is not present with private grants. In fact, nonprofit organizations may choose to forego a government grant due to the complexity of the reporting alone. Additionally, many government grants may also operate on a reimbursement model, meaning they will pay the organization back after the funds have been spent. If a nonprofit is not in a position to make payments upfront, then this model would be another reason to pass on some government grants.
However, there are many government grants that can be complete game changers for nonprofits because they usually come with the opportunity for annual renewals, indicating an ongoing source of funding, if the nonprofit can meet or exceed all reporting requirements.
3. Fee-For-Service
Contrary to popular belief, nonprofits are allowed to charge for services. Nonprofits are not expected to operate at a loss. However, the fees should be considered low to average, not a premium rate. Additionally, nonprofits may still offer their primary services to the community for free or low cost but may also offer ancillary services or products or help offset the costs of their primary offerings. For example, a food bank may provide free sack lunches on the weekend, but they may also sell a cookbook, offer paid cooking classes and partner with another nonprofit to provide food at a low cost to a homeless shelter. All of these additional streams of revenue can help cover the costs of their primary services while still operating in alignment with their core mission.
4. Local Business Sponsors
Create opportunities for local businesses to support your nonprofit work. Create a one-pager with three tiers of support, with each tier providing certain benefits ranging from social media shoutouts, logos on your website, logos on your swag materials, speaking opportunities at events, free tickets to an event, etc. Get creative and find ways to collaborate with your for-profit partners!
5. Corporate Partnerships
Similarly to the local business sponsors, identify ways for corporate partners to support your mission. National corporations usually have a page on their website related to giving back to their communities. Apply through those pages, but also make local connections because your chances of being awarded funds from large corporations are always increased if one of their employees serves on your board or can advocate for your cause.
6. In-Kind Donations
Rather than asking for checks, determine what supplies/materials/talent you need, and approach organizations and individuals who may provide those needs at no cost.
7. Give/Get Board Requirements
Determine a reasonable amount to require of each of your board members each year. From $100 to $5,000, set a dollar amount that board members for your organization would be likely to support. Allow them to either donate (give) or secure donations from friends/family (get). This can not only help with revenue diversification, but it can also increase your chance of earning grants that want to know the board financially supports the organization.
8. Events
Events require the most work, but they can absolutely pay off. A few ideas for revenue-generating events may include:
- Annual gala
- Golf tournament
- 5K (can also be virtual)
- Concert
- Silent auction
- Vendor fair
- Fashion show
- Bake-off
- Holiday-themed Event
9. Giving Days/Social Media Campaigns
Ensure your online giving platform is optimized and then engage in Giving Tuesday and other local giving days. Create social media campaigns for each giving event and promote it for at least two weeks leading up to the day. Consider aligning your giving day based on your cause (e.g., Autism Awareness Month, Teacher Appreciation Week, National Rare Disease Day, etc.).
10. Member-Led Fundraising
Establish fundraising goals throughout the year and create fundraising campaigns led by your clients or members. For example, a nonprofit sports organization may ask each athlete to raise $250 by the semi-finals. This may also include crowdsourcing with platforms including GoFundMe and online individual fundraising trackers. Incentivize members/clients to participate by offering prizes/awards for most money raised, most creative fundraising, highest number of contributors, etc.
Hopefully, this exploration of nonprofit funding sources helps you in creating a comprehensive revenue model for your organization. The money is out there, it’s just a matter of creatively accessing the funds.
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