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