5 ways Nonprofits make money | Nonprofit Fundraising

When most people think about non-profit  fundraising they tend to think about the   same things: Donations and grants. But there  are many different ways nonprofits can raise   funds and bring in revenue and it's important to  understand all of them so that you can identify   which methods will be the best fit for your  organization's unique model and programs. So   in this video I'm going to share five of the  common ways nonprofits can generate income   welcome or welcome back to my channel!  I'm Amber Melanie Smith. I'm a non-profit   founder and executive director who also makes  these videos here on YouTube to help others   on their journey to make a social impact whether  that is through starting a non-profit or a social   enterprise or socially conscious business or  just getting out there and volunteering and   leading positive change in your community as  always I hope that you find this video useful   and helpful don't forget to give it a like and  subscribe to my channel for more content like this   i also have a website FounderToFulltime.com  where I offer some non-profit trainings and   resources if starting a non-profit is the path  that you're going down. okay so let's get into   these five methods that nonprofits can use to  bring in money and as I'm going through these   i really want you to be thinking about what makes  your organization's situation unique what are some   of its strengths what assets do you have in your  community that could play a role in helping you   fundraise what are some of the unique programs or  do you have a unique model that could be conducive   to designing a special sustainable fundraising  practice for your organization keep all of those   things in mind as we go through these and if it's  helpful you can think of this as what does your   organization do better than anyone else are  you really skilled at mobilizing volunteers   are you really good at creating compelling  emotional stories and social media content   are you in a situation where you have access to  an affordable store front where you might sell   items so just be kind of inventorying  these strengths and assets as we go so   the first method nonprofits can use to raise money  is one of the most commonly known ones and that   is individual donations but i'm also talking about  donations that are small and large so you got your   five dollar gifts or your five thousand or five  million dollar gifts and then we have one-time   individual donations and recurring donations maybe  you have folks who are willing to and are donating   every month or every quarter that would be  recurring donation so these donations are   of course financial gifts of any size and in  this case i'm specifically talking about from   individual people not businesses or grants but  specifically from individuals while a lot of   people assume grants make up a large portion  of contributions to non-profits it's actually   more likely to be individual donations individual  donations make up about 70 to 75 percent   of the charitable contributions coming into  nonprofits in the united states each year   so that really underscores the importance of  having an individual donor program one with   specific goals and messaging to attract people to  donate to your cause and especially getting people   to agree to become recurring donors because being  able to count on donations every single month   is so helpful for planning and projecting your  future financial capacity one thing that i hear   from nonprofits a lot is that it's very daunting  to start up an individual donor program if you   don't already have one or some experience with one  already so i have another video that i can share   that talks more about in-depth how to do this from  scratch so you can check that out it's called how   do you even begin raising money the second type of  income source i want to talk about for non-profits   is grants but there are many different types of  grants you've got your private grants you've got   your corporate grants you've got your government  grants you've got your family foundation grants   there's so many different types and there's  nuances and ways you would find and locate   and apply for each different type of one of them  now to get our definition straight grants are of   course financial contributions made specifically  by a grant making organization and that could   include any of the ones that i mentioned just  now your family foundations local state or   federal governments etc and i was alluding to  this before when talking about some of the most   common types of contributions for nonprofits  and the perception that grants are a big part   of nonprofit funding that's not actually true  within the pool of charitable contributions   grants are only making up about 16 for nonprofits  in the united states if you're looking for more   detail on each of the different types of grants  and grant making organizations that i mentioned   as well as some information on how to find each of  these types of grants and some of the nuances with   applying for each type check out my other video  called six types of grant makers actually i'm   sorry six types of grants for nonprofits but you  get the idea and how to find them now the third   type of income for nonprofits that i'm going to  talk about is probably my favorite if you can   have a favorite type of nonprofit income and it  is earned income now earned income is money that   nonprofits can raise through the sale of goods or  services yes nonprofits can sell goods or services   this is something that is very misunderstood most  people that i hear from in the general public   assume nonprofits have to rely solely on donations  or grants to get by when in fact if done correctly   they can use the earned income method to  supplement those other revenue sources the catch   is that how the process by which you sell your  goods or services and the goods or the services   themselves must align with your organization's  mission very directly the act of selling those   things has to further your organization's public  serving mission i'll explain a little bit more   what i mean about that but when i'm talking about  this i'm talking about things like program fees so   let's say you um there's a non-profit  theater and you want to buy a ticket that is   a sale of a good or a service you're buying a  ticket to their show and the non-profit is going   to use the money from the ticket sales to further  its mission of spreading um the love of the arts   and of the theater so it is directly aligned with  its mission as one example so program fees fees   for service or in some cases even contracts with  a government entity now despite the misconceptions   i talked about earlier earned income makes up  almost half of all non-profit revenue in the usa   and if you're sitting there scratching your head  and doing the math because i previously said 70   for individual donations and 16 for grants i was  talking about those being a portion of charitable   contribution meaning gifts that are tax deductible  but earned income is not a donation it is the sale   there's an exchange of goods or services so this  is not considered a tax deductible donation when   someone gives your non-profit money through  an earned income model it is not a donation   it's a sale so a couple of things that are  important to know about earned income that i   alluded to a little bit before you can't just sell  anything you can't just randomly sell t-shirts   that have nothing to do with your mission it has  to be program fees fees for service or contracts   that further your actual mission so i have another  video with lots of examples of this at work called   15 earned income ideas that you can check out  to really wrap your brain around how this works   but in essence think of it as the theater example  that i shared with you or sometimes red cross   will charge a fee for training people in CPR but  the act of training people in CPR furthers their   public serving mission they're simply charging  a fee to the public for that service so i hope   that that helps you think about this a little bit  more but when you're thinking about these models   thinking about what are those unique assets and  things that your organization does really well   or has access to that might help you develop an  earned income idea another thing to consider is   that at least in the united states the IRS doesn't  really want you to generate all of your revenue   as a non-profit through an earned income strategy  otherwise you're too much like a private business   and would be competing with the business sector  so the IRS is going to want you to demonstrate   that still at least a portion of your revenue  as a non-profit is coming in through those tax   deductible charitable contributions or grants  the fourth type of income strategy i'm going   to talk about for nonprofits is sponsorships so a  sponsorship is a little different than a donation   and this is why a sponsorship is when a person  business or organization is offering support   usually for a specific event program or it  could be in some cases for the organization   overall but they are expecting  something in return for that support   it could be recognition it could be some kind  of special access to something you're doing um   but there are a lot of nuances with sponsorships  there's nuances for everything as you can tell   that you really need to be aware of to launch an  effective sponsorship strategy for example because   the entity is receiving something of value in  return for their support to your organization   they cannot count their entire contribution  to your organization as a tax deductible gift   instead they will have to subtract the market  value of whatever they received in return   from the total of what they gave you and only the  remainder is tax deductible if you're looking for   some tips on how to actually find and ask for  corporate sponsorships have no fear another   youtube video is here i have one called how to get  corporate sponsorships and i hope that you check   that out and the fifth and final common income  model for nonprofits that i'm going to talk about   is fundraising events fundraising events are of  course events that take place within a specific   finite amount of time that invite your supporters  and followers to come participate in some kind of   activity or gathering there are so many  different types of events you've got your   5ks you've got your fancy dinners and your galas  you've got your virtual trivia events there's   lots and lots of different types to choose from  now fundraising events can bring in revenue from a   lot of different sources it can be through ticket  sales it can be through sponsorships of that event   you can ask for simple donations as part of the  event as well now events are usually a go-to   fundraising strategy for a lot of organizations  but one thing that's really important to consider   is the return on investment for those events  the thing with events is they take a really   long time to plan and depending on how big they  are can be very complex and sometimes expensive   i mean imagine if you're having a  fancy dinner you might have to pay for   a venue and tables and chair rentals or audio  visual equipment or an mc and then of course   there's the catering and the food um and the  list could potentially go on and you might   think to yourself well i'll just get all that  stuff donated but i can tell you that's a little   harder than it seems and with event planning the  rule of thumb is you should be prepared to have   to pay for everything and hope for a donation  another thing is the most successful events are   going to be held by organizations that already  have a decent sized audience that's because you   need people to actually come to the event so you  need to have an audience to market the event to   knowing that only a small portion of your total  audience is probably going to be available   or interested in coming to that event at all so  spending the time in your fundraising strategy   to build up an audience is a critical part to  basically lay the groundwork for success for any   of the five things that i've talked about and one  more thing about events they can vary in success   by organization size sometimes events are  a really good choice for smaller or startup   organizations because they're also a tool you  can use to introduce new people to your cause   and build a relationship and build community with  those people and sometimes they're also good for   very large organizations because the prospect of  having to spend money to put on the event is not   as big of a deal for them because they have the  money to invest in the first place and they also   might have a really large audience size it's those  middle-sized organizations that have to think   really hard about their event strategy and if it's  worth it to put on something fancy or if there are   more cost effective ways of raising money i will  say virtual events have taken off in the past   couple of years during the pandemic and those  can definitely cut down on some of those event   overhead costs but we also might see varying  levels of audience engagement at those events   so if you're going to do a virtual event just  be thinking hard about how are you going to keep   people entertained and building community  and connecting emotionally to your cause   through that platform i bet you're wondering  if i have another youtube video that goes more   into depth about events and the answer is yes here  it is how to plan non-profit fundraising events i   hope you enjoy okay that's what i have today what  do you think i hope that if there's one thing you   got out of this video today it's that fundraising  is not a one-size-fits-all thing for non-profits   across the board every organization has to think  through what the best fit is going to be for them   and really develop a strategy that makes sense for  their community their resources their assets etc   for some organizations the earned income model  might be the biggest way you bring in revenue   for others it might be individual donations and  for yet others it might be government contracts or   grants i'd love to hear what do you think is the  best method for your organization what are some   things you're interested in trying out definitely  share in the comments below and if you're starting   a non-profit or need resources to help you figure  out how to build a sustainable fundraising plan   check out my website FounderToFulltime.com where  i have those trainings available and hopefully   they're helpful to you if you're looking for  other resources and funding opportunities and   other opportunities to learn more about the social  impact world i have a newsletter that you can   subscribe to i will leave the link for that in the  description below so you can join that newsletter   anytime and opt out anytime as well final  thing i have a group on Facebook called   "change the world or bust"! We've got a couple  thousand folks from around the world and they're   having good conversations about their own social  impact and or non-profit journeys and i hope   you can join me there and that's all i have for  you today thank you so much for watching - bye! you

Channel: Amber Melanie Smith

Views: 29,364

Keywords: nonprofit fundraising, fundraising ideas, fundraising for nonprofit, fundraising ideas for nonprofit organizations, how to raise money for charity, fundraise for nonprofit, nonprofit fundraising ideas, non profit, nonprofit organization, nonprofit fundraising 101, how to fundraise for a nonprofit, nonprofit grants, how do nonprofits make money, non profit organizations, how to raise money

Id: nlwl3-O2JX4

Length: 16min 10sec (970 seconds)

Published: Sun Jul 03 2022