“Nonprofit organizations often get confused by their own title. By definition they are established to achieve a community out come as opposed to make a profit for commercial reasons,” Matt Brannelly says, founder of Orbit NFP Hub. “Their goal is to carry out charitable activities and make an impact. This can be protecting children, preventing animal cruelty, giving out scholarships, organising free workshops and educational programs and many more” he adds.
The word nonprofit also indicates that these entities are given tax-exempt status and all revenue generated by them are used to benefit the public. They also do not usually make money the traditional way but that doesn’t mean they don’t make money at all. They generally generate money from the state and federal government and donations from other parties. They also acquire money from foundations and selling of products and services.
Before going further, note that Orbit NFP Hub is founded by Matt Brannelly. It’s a social enterprise established to help NFPs decrease costs and create new revenue streams with advice from industry experts. With that said, read on as Matt Brannelly takes us through various ways how nonprofit organizations create revenue.
Grants are non-returnable funds given by the government, philanthropic organisation, trust, or cooperation to a nonprofit organisation. They are generally granted to them by applying for the grant made available by those entities. They also seek grants from private foundations and these grants are often given for the funding of a specific project, explained Matt Brannelly. However, to avail of this, it takes a lengthy process and it is for a limited time .
Nonprofits make profits through donations. These donations are used by the organisation to fund their event and achieve their goal. Research has shown that individual donation makes up a large proportion of nonprofit organisation income. Funds given by foundations and other corporations are usually for a specific event. This is why most nonprofit organisation build a close relationship with their supporters and allow them to interact with them freely. These supporters have also proven to be the best volunteer and they often stick around for a long time. Nonprofit organisations also encourage their individual donors to attend their events, make either recurring donations, or donate online and many more ways.
A fundraising campaign is a campaign that happens for a specific period with a defined main goal. A nonprofit organisation uses fundraising campaigns to create awareness about their goals and most importantly the program they are currently asking for donations. They also generate income by receiving bequests from their supporters and also organising events such as galas.
This can either be a one-time thing where a foundation or company donate to the organisation for a specific project. Or a situation where a nonprofit organisation collaborates with different corporations through cause-related marketing. This is a win-win situation as the organisation get the funding they need for their project in exchange for marketing the corporation’s goods and services.
Nonprofit organisations often plan commercial activities to earn profit but their methods are entirely different from private organisations. They make a profit by organising activities that are related to their goal. For example, a nonprofit dancing school may sell tickets for people who come to watch their performance. And a nonprofit museum can have a shop that sells art-related items to make a profit. These strategies are one of the best ways that the organisation can make money as long the business is linked to the organisation purpose. Moreover, conferences can also be a great platform to make money by selling items such as books, clothes, ticket and promotion items.