Introduction to Nonprofit Funding Streams

The number 1 problem we get questions about is funding. In the turbulent world of nonprofit financing, having multiple revenue streams isn’t just smart—it’s essential for sustainability. Why? As we explained in our prior blog post on nonprofit funding, using a coordinated funding approach helps protect your bottom line from challenging times and allows you to grow and thrive in times of uncertainty. In this comprehensive guide, we go beyond the essential nonprofit funding sources to identify 10 examples of nonprofit funding streams that will help you diversify and maximize your income, ensuring your nonprofit’s longevity and success.

10 Essential Nonprofit Revenue Streams

Since the first edition of this blog post released in February 2022, the list of possible nonprofit revenue streams has been the most shared resource for stage nonprofits of all stages and sizes. Why is that?

The truth is, there are only so many possible revenue streams for nonprofits. Funny enough, there are more for nonprofits than businesses. However, the trick is finding harmony between your revenue, the needs you meet, and the desires of the people you serve.

After many conversations about the topic, this blog is getting a face lift to add some new lessons learned in the past few years about additional funding streams making the list go from the original 6 to 10 nonprofit funding streams you must have.

Couple this knowledge with our original discussion of coordinated and braided funding streams and you’ll have a powerful tool to help you grow your nonprofit and sustain your work over time. Read on to get to the good stuff.

Leveraging Earned Income As a Nonprofit

Like a business, a nonprofit can generate revenue by earning income from selling goods, products, services, or other methods of bringing in the moolah. For U.S.-based nonprofit organizations, there is a caveat that means the earned income or revenue that your nonprofit generates through activities must be related to your mission. If the revenue-generating activities are unrelated to your mission, additional rules and considerations apply. We recommend reading more about earned income in this article and talking to your CPA for advice about your specific circumstances.

Examples of Nonprofit Earned Income

Membership organizations and museums sell tickets, why can’t you? If your nonprofit has events, a venue, or other assets that you can rent, generating income may be possible from resources you already own. These activities not only bring in money but also spread your mission.

Benefits and Challenges of Earned Income for Nonprofits

Benefits: Earned income can provide a steady revenue stream and increase your organization’s sustainability. It also empowers you to reinvest in your mission without relying on restricted funds (which we’ll discuss next).

Challenges: Developing earned income streams is like any business, it requires time, effort, and capital. Just like other parts of your work, you’ll need a strategy, a business plan, and a marketable product or service.

10 essential nonprofit funding streams- blog post by Wendie Veloz helps you raise money for impact with ease.

Leveraging Restricted and Unrestricted Funding

Restricted funding is labeled for specific projects or purposes. Grants, contracts, and event revenue can be examples of restricted funds that must to be used as dictated by the donor or funder. Unrestricted funding can be used at your organization’s discretion for operational costs or other needs. There are no restrictions about how these funds can be used so they’re extremely valuable to generate in tandem with restricted funds.

Strategies to Maximize Unrestricted Funds

As described in our last blog, tracking your funding streams is part of a coordinated funding approach. This ensures transparency and requires detailed tracking for restricted donations. Unrestricted funds are helpful for areas that need immediate attention or investment for long-term growth.

Aligned Funding Approach

Coordinating your funding means finding a balanced mix of restricted and unrestricted funds ensuring operational flexibility while adhering to donor requirements. Aligning your funding means there is harmony between your organization’s vision for growth, your fundraising strategy, your ability to implement and do the work, and the outcomes you can achieve.

When you take an aligned funding approach the goal is to find ways to achieve balance by tweaking the strategies to use resources while optimizing your organizational performance.

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10 Key Nonprofit Funding Sources

Overview

When it comes to nonprofit funding, diversification is your best friend. Think of it like your investment portfolio; you wouldn’t want all your money in one stock, right? The same goes for your nonprofit’s finances. Spreading your income across various funding sources stabilizes your revenue and creates new opportunities and partnerships.

In 2000, I started my first job in nonprofit administration as a development intern. As part of my training, I looked for a comprehensive list of all the organization’s funding sources. I quickly realized it was like searching for a unicorn, there was no such list.

People just seemed to know exactly where the money came from every year, but there was no clear guide for someone who didn’t know how nonprofit funding worked to learn from. That was a long time ago (clearly I’ve been around a while) but the question “How can I grow my revenue?” remains a critical one for all impact organizations. This list of over 10 nonprofit funding sources is your map to solve the problem “you don’t know what you don’t know about funding”

We’ve already touched on the often-forgotten revenue stream—earned income. These unrestricted dollars are a game-changer. Now, let’s dive into the other nine ways your nonprofit can (and absolutely should) be raising money.

4.1. Individual Donations

Individual donations are contributions from supporters who believe in your cause and are willing to invest in your mission.

Strategies: Telling your story helps you personalize your outreach, tell compelling stories, and show donors the tangible impact of their contributions.

4.2. Grants

Grants can come from various sources, including government agencies, private foundations, and corporate entities. Each grant or funder has its unique application process and requirements.

Application Tips: Tailor each proposal to align with the funder’s priorities. Highlight the measurable impact of your project and provide a clear, concise budget.

4.3. Corporate Sponsorships

Businesses support nonprofits by providing financial or in-kind support in exchange for marketing benefits or the opportunity to fulfill their corporate social responsibility goals.

Partnership Strategies: Research companies that align with your values and mission. Approach them with a clear proposal that outlines mutual benefits, such as brand visibility and community impact. This is easier if you are both using the DPTD framework and speaking the same language. Read on to learn how.

4.4. Events and Fundraisers

Fundraising events range from charity galas and silent auctions to community fun runs and online giving days.

Planning Tips: Start planning early, secure sponsorships, and promote your event widely. Focus on creating memorable experiences that resonate with attendees and inspire future support.

4.5. Membership Programs

Membership programs provide a consistent revenue stream and build a loyal community of supporters deeply invested in your mission.

Creation Tips: Offer different membership levels with unique benefits. Regularly update members on your progress and involve them in your activities to keep them engaged.

4.6. Crowdfunding

Regulation crowdfunding involves raising small amounts of money from a large number of people, via a regulated online platform to support specific projects or initiatives.

Platform Suggestions: Use platforms like (insert platforms from Devin) to reach a broad audience and mobilize support for your campaigns.

4.7. Major Gifts

Major gifts are significant donations from individuals or entities, which can be a substantial portion of a nonprofit’s revenue.

Cultivation Tips: Invest time in building and nurturing relationships with potential major donors. Showing the impact of their contributions and recognizing their support in meaningful ways.

4.8. Planned Giving

Planned giving involves donors making arrangements to leave a gift to your nonprofit in their will or through other financial planning tools.

Types of Planned Gifts: Bequests, charitable remainder trusts, and gifts of life insurance policies.

Promotion Tips: Educate your supporters about the benefits of planned giving and provide clear, simple instructions on how to include your nonprofit in their plans. Provide tutorials or instructions on how to give planned gifts on your website.

4.9. Live Streaming

Live streaming allows you to broadcast events or content in real-time over the internet on your desired platform, engaging supporters and raising funds.

Take Action: On our podcast, Dorothy O’Dell emphasized the importance of authenticity in live streaming, encouraging nonprofits to use real-time interactions to build genuine relationships with their audience. By showcasing their mission and the impact of their work in a transparent and engaging way, nonprofits can foster trust and drive deeper donor engagement.

Dorothy O'Dell Steaming for A Cause on the Social Impact Level Up Podcast

How to Create a Diversified Funding Plan Using the DPTD Framework

Introduction to the DPTD Framework

Our DPTD Framework—Dollars, People, Time, and Donations—gives nonprofits a holistic approach to funding and resource requests, covering all aspects of your organization’s needs. Nonprofits can use this framework to support requests for donations, board commitments, and other asks to cover the overall needs of the organization. This framework was designed to be partnered with our marketing and communications tactics that leverage messaging specific to the donor’s interests and preferred ways to give.

5.1. Dollars

Assess Financial Health: Review your current financial status to identify strengths and gaps. Use this information to inform your funding strategy. Develop a plan to use the funding streams above to get the dollars in the door so you can do good.

Strategies for Growth: Explore new funding opportunities and optimize existing revenue streams. Set realistic goals and track your progress regularly.

5.2. People

Stakeholder Engagement: Foster relationships with donors, volunteers, staff, and community partners. Engage them in your mission and keep them informed and involved. People help you get your mission done by volunteering.

Skill Development: Invest in training for your team to enhance their fundraising and operational skills, ensuring they are equipped to support your funding strategy.

5.3. Time

Time Management: Prioritize tasks and allocate time effectively for fundraising and operational activities. Use tools and processes that streamline workflows and reduce inefficiencies. Time is sometimes needed from other professional services to support your mission.

Planning and Scheduling: Create a detailed timeline for your funding activities, ensuring you have the resources and capacity to meet your goals.

5.4. Donations

In-Kind Contributions: Leverage non-cash donations such as excess goods, products, or rentals (space) to support your operations and reduce costs.

Maximize Impact: Use donations strategically to fund programs that align with your mission and demonstrate measurable outcomes.

Integration

Integrate the DPTD framework into your overall funding plan, ensuring that all aspects of your funding strategy are aligned and working towards your nonprofit’s long-term success.

Dollars People Time and Donations (DPTD) Framework by Wendie Veloz helps social entrepreneurs give and receive support.

Common Mistakes to Avoid When Seeking Nonprofit Funding

Avoid these common mistakes that take nonprofits off course and threaten your sustainability.

  • Seeking Funding from Misaligned Funders: Seeking funding from sources that don’t align with your mission can lead to conflicts and dilute your impact. Use our SAVEE framework to evaluate potential funders and ensure alignment with your goals before applying.
  • Too Generic: Avoid using a one-size-fits-all approach to funding. Tailor your strategies to the unique needs and strengths of your organization and the feedback of those you serve.
  • Overly Long or Short: Find the right balance in your communications. Too much information can overwhelm, while too little can leave your audience uninformed.
  • Lack of Personal Touch: Personalize your engagement with donors and supporters. A meaningful connection and the right experience can turn a one-time donor into a lifelong supporter.
  • Ignoring the Audience: Keep your audience in mind when crafting messages or planning activities. Tailor your approach to resonate with their interests and values.
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Aligned Funding Resources

  • Books: Download our Revenue for Impact Guidebook to learn more about our funding frameworks.
  • Webinars: Check out our past webinars on funding and grant writing in Our Store.
  • 1:1 Coaching: Click here to get personalized coaching that aligns with your funding strategy and organizational goals.

Frequently Asked Questions

Where do most nonprofits get their money? Most nonprofits rely on individual donations as their primary funding source, which provides significant financial support and stability. However, as explained in this post, nonprofits can access up to 10 revenue streams to get income.

What are examples of sources of funds for nonprofit organizations? Nonprofits often receive funds from individual donations, grants, corporate sponsorships, fundraising events, membership programs, and more. Diversifying these sources helps ensure a steady flow of revenue.

What is the largest source of funding for the nonprofit sector? The largest source of funding for the nonprofit sector typically comes from individual donations, which play a crucial role in supporting nonprofit activities and programs. Cultivating individual donors can help build a strong foundation for other fundraising strategies.

What is the largest source of revenue for nonprofits? For many nonprofits, the largest source of revenue is earned income from mission-related activities, such as fees for services, product sales, or other business ventures. For others, grants, contracts, and donations are the largest source of revenue. Each organization should tailor their strategy according to many factors including resources available, donor behavior, and donor base.

New Episode Dropping 7-12-24

Grow and Sustain Your Work

Funding is important to sustain your work. But how can you make your ask my creative? How can you get what your organization really needs?

In this episode, we dig into 10 nonprofit funding streams plus how to apply the DPTD framework discussed in this blog post.

Listen to the podcast episode for more insider funding information to grow your nonprofit.

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