As a nonprofit employee, you work tirelessly to make sure each fundraising goal is met, your org’s programs are running smoothly, and every event goes off swimmingly. But between the constant hustle and never ending to-do list, you’re never guaranteed to make budget, thus prompting you to have to do it all over again, sooner, and with less cash on hand. This cycle can be vicious, cause burnout, and possibly cause you to close a program or not be able to help those in need. And no one wants that!
You need to protect your organization from donor fatigue, inflation, and a possible recession. That is why building multiple revenue streams for your nonprofit is key! Here are some ways to diversify your nonprofit’s revenue streams:
Investments (stocks, bonds, etc.) are a great way to set your nonprofit up for long-term success. If you have a decent chunk of change that you can temporarily part ways with (most investment portfolios have time stipulations where the money needs to be locked into the fund for a period of time), you should seriously consider investing it for the future.
Get your board involved in creating an investment strategy and investment policy statement (IPS), pick the authorized agents (usually the director and someone from the finance team), and then fund the account with the extra cash. Don’t forget to shop around and ask questions of the different financial institutions so that all board members are comfortable with the choice. By opening a brokerage account, nonprofits can also receive major gifts in the form of stocks/bonds as donations or legacy gifts. This option benefits both the nonprofit as well as the donor because it allows for tax-efficient charitable giving for the donor and income tax-exemption for the nonprofit.
Another way to benefit from investments is through a donor-advised fund (DAF). DAFs are accounts opened up by donors with a third-party investment company. The donor chooses how to invest the money, when to give a grant, and who to give the grant to. Your org can take advantage of this by ensuring your Guidestar profile is up to date, mentioning DAFs on your website, and during your fundraising campaigns.
While sales might not be the first thing you think of when you think nonprofit, earning income outside of your mission can be a lucrative way to make more money – you just might need to think outside the box to see it. Consider everything from your physical location (building and parking lot) to programs/services already structured to your staff’s knowledge and expertise. Can you rent out a room in your facilities when you are not using it? How about repurposing a training to local companies? What about having your staff speak at an event or write a blog? These are easy ways to charge for things you already have within reach.
Two additional ways to sell include:
- Creating merchandise and selling it online and at events
- Charging a small fee-for-service
Just remember that any money earned outside of your mission is taxable and needs to be reported at the end of the year. Please seek a CPA’s advice when applicable.
Applying for grants can be cumbersome but it is worth it! If you don’t have a development director, consider making a shared list of the most commonly asked application questions and your answers to them. Then when you or another employee is applying for a grant, you can copy, paste, and tweak the response to fit the question instead of constantly creating the same variation of responses. There are tons of governmental and private grants for nonprofits to take advantage of, so don’t sleep on this!
Corporate partnerships can provide nonprofit organizations the unique opportunity of creating multiple revenue streams while simultaneously reaching people outside of their donor base that may become donors themselves. Here are 3 ways nonprofits can partner with corporations:
- Corporate sponsorships
Research local corporations that like to get involved in your community and ask them to sponsor one of your events or create a custom sponsorship that fits their needs! You can incorporate monetary donations, items/goods donated, volunteer hours, and more.
Cause-marketing is when a company donates a portion of sales (from a specific product or over a specific time period) to a nonprofit and markets the donation & org to their consumers to promote the partnership. This is probably the most difficult corporate partnership to obtain, especially on the nonprofit side, as most brands/companies that want to partner with an org already have a high-profile nonprofit in mind. Don’t let that stop you from shooting your shot though! Reach out to local and national brands that you love and pitch them a solid plan including how much each sale could impact your nonprofit and the people you serve. Another idea is to ask local grocery stores (or other high-traffic stores) to do a round-up campaign where customers are asked to round up and donate the change to your org.
3. Corporate matching
By far the easiest corporate partnership is getting set up for a corporate matching program. On the nonprofit side, you should research and register with third-party matching gift programs to ensure your nonprofit is findable. You also should brush up on the nonprofit requirements of major corporations such as confirming donations from their employees, providing 501(c)(3) documentation, and creating an account on their designated platform.
Yes, we know what you’re thinking. You can’t offer memberships; you aren’t a trade organization. We are here to tell you you can – you just need to make the membership worth it! Consider what “perks” a member will gain by donating on a monthly or annually basis. Will they play a role in the organization? Will there be members-only events or unique volunteer opportunities? Perhaps members-only newsletters and merchandise? When you are thinking through this, don’t be afraid to reach out to your top donors and volunteers to ask why they like your organization and what will make them be even more involved. You can even consider making tiered membership levels to accommodate even more donors.
As you can see, there are plenty of ways to diversify your org’s revenue. Some of these things you may be doing for free already and others only take a few extra minutes to implement. So take this blog to your next board meeting and discuss these options to find a few that fit within your strategic plan. While you’re at it, consider how an all-inclusive fundraising, marketing, and operations software will impact your bottom line as well. UncommonGood is the software platform and community that helps you to think like a nonprofit and act like a business. Want to learn more?