Unlike traditional businesses that generate profits for growth, nonprofits must find creative ways to sustain their operations and fund their mission-driven work. From securing donations to hosting fundraising events and exploring grants, nonprofits face the unique challenge of diversifying revenue streams to stay afloat.
So, how do nonprofits make money while staying aligned with their overarching purpose? Discover the primary revenue streams your nonprofit can tap into and how to manage your budget to thrive financially.
Revenue Streams for Nonprofits
A single income source isn’t enough to support a nonprofit, which is why most nonprofit organizations diversify their revenue through donations, grants, events, and service fees to build a stable financial foundation.
Donations
Donations often form a substantial portion of a not-for-profit entity’s funding. Individual contributions, whether small monthly gifts of $10 or larger annual pledges of $1,000 or more, come from supporters who believe in the organization’s mission. These recurring donations help create a reliable cash flow, providing stability for ongoing programs and initiatives.
Corporate donations involve larger commitments, often connected to specific campaigns or programs. Businesses can contribute financial support, in-kind donations, or matching gifts to engage their employees in philanthropy.
In addition to regular financial support, major gifts from wealthy donors or foundations — often $10,000 or more — can fund transformative projects. These contributions allow nonprofits to take on large-scale initiatives, such as constructing new facilities or launching extensive outreach programs.
Grants
Grants are a crucial funding source for nonprofits, especially for large-scale projects and initiatives. Whether federal, state, or local, government grants are typically geared toward programs that serve the public good, such as education, healthcare, or community development.
For instance, the Community Development Block Grant (CDBG) supports projects to revitalize low-income areas, enabling local organizations to support their local communities.
Private and foundation grants come from philanthropic organizations dedicated to specific causes, such as environmental conservation or the arts. These grants provide organizations with targeted funding to advance their mission-driven projects. For example, the Ford Foundation awards grants focused on social justice, poverty alleviation, and human rights, aiming to reduce inequalities and foster lasting change.
Fundraising Events
Fundraising events are essential for many not-for-profit organizations. Popular options like gala dinners and auctions bring donors together for a memorable evening where they can bid on exclusive items or experiences. These events raise funds and strengthen donor relationships, creating lasting support for the organization’s mission.
On a more community-focused level, nonprofits often host walkathons, charity runs, spaghetti dinners, or neighborhood cleanup days, where supporters can participate in a fun, active way. These gatherings encourage community engagement and spread awareness while raising funds for important causes.
Membership Fees and Subscriptions
Many nonprofits implement membership fees and subscriptions into their financial plan, forming a steady revenue source. By offering unique benefits, like exclusive access to events, educational resources, or member-only newsletters, they create value for supporters.
For example, arts centers or botanical gardens often have membership programs, including free or discounted admission, early event access, and behind-the-scenes tours.
Advocacy groups and not-for-profit organizations focusing on education often provide subscription-based resources, like research reports or online workshops, catering to members who want specialized knowledge and closer involvement in the organization’s work.
Program Service Revenue
Generating income through mission-aligned services or products can be an effective strategy for nonprofits. For instance, organizations focused on mental health may offer counseling services on a sliding fee scale, making them accessible to a broader community and generating funds.
Education-focused groups might host paid workshops or classes to support their initiatives. Museums and cultural centers often use ticket sales for guided tours or special exhibits to help fund their ongoing programs.
This approach allows not-for-profit organizations to sustain their operations while providing meaningful services to the public.
Investment Income
Another way nonprofits generate earned income is by investing their savings or reserve funds to build a sustainable revenue stream. Depending on the organization’s financial strategy and risk tolerance, these investments can range from low-risk bonds to diversified portfolios.
Many nonprofit organizations allocate a portion of their funds into conservative investments, allowing them to earn a steady return over time. This investment income supports ongoing programs and improves financial stability, helping the organization fulfill its mission without relying solely on donations or grants.
Sales of Merchandise or Publications
Many nonprofits increase revenue by selling branded merchandise, books, or educational materials that align with their mission. For instance, environmental organizations may sell items to promote sustainability, such as branded, reusable water bottles or tote bags. Museums and historical societies may promote their latest exhibits by selling books, prints, and other souvenirs at gift shops.
Thrift stores are another common way for nonprofits to make money. These stores sell donated clothing, furniture, and other goods at affordable prices, with profits directed toward funding the nonprofit’s programs and outreach. This generates funds and provides affordable shopping options for the community.
Budget Breakdown for a Nonprofit Organization
Establishing a budget is crucial for nonprofits to stay organized and make the most of their resources. When nonprofits know where their money is allocated and how much they spend on staff salaries, program expenses, and fundraising costs, they can plan strategically.
A well-defined budget allows nonprofits to track spending, adjust as needed, and maintain financial health. Here’s a breakdown of typical expense categories:
Category |
Subcategory |
Description |
Administrative Costs |
Salaries and Wages |
Staff compensation packages (including benefits) to keep the organization running efficiently. |
Office Expenses |
Costs for office supplies, utilities, rent, and other administrative necessities. |
|
Program Costs |
Program Delivery Expenses |
Expenses related to delivering services or executing key projects aligned with the mission. |
Educational Materials and Outreach |
Costs for publications, promotional materials, and outreach efforts to support programs. |
|
Fundraising Expenses |
Event Costs |
Expenses for event venues, catering, marketing materials, and hiring guest speakers. |
Marketing and Outreach |
Marketing efforts, both online and offline, aimed at attracting donors. |
|
Technology and Infrastructure |
Software and Platforms |
Investments in point of sale (POS) software, donor management software, CRM systems, and other digital platforms. |
IT and Web Maintenance |
Costs for website maintenance, cybersecurity, and ongoing IT support. |
|
Miscellaneous Expenses |
Emergency Funds and Contingency Budgets |
Funds for unexpected expenses or emergencies to maintain financial stability. |
Build a Strong Financial Foundation for Your Nonprofit
How nonprofits make money differs from conventional businesses; profits aren’t distributed to founders or shareholders. However, nonprofits like thrift stores still need sufficient income to cover operational expenses and advance their mission. Revenue sources often include donations, fundraising events, grants, investments, and the sale of goods or services — all of which help maintain and grow their impact.
ThriftCart POS can help your nonprofit store stay on top of all your money-making efforts. From advanced inventory management features to roundup donations at the register to donation scheduling for easier in-kind donations, ThriftCart has everything you need to grow and manage revenue.
Book a demo today and discover how ThriftCart can support your nonprofit organization.