Is your nonprofit ready to earn income?
“What?? But we’re a nonprofit. We can’t earn income!”
Oh, yes you can! Just because you are a nonprofit organization does not mean that you cannot earn income. Nonprofit doesn’t mean ‘no’ profit. It simply means you take the profit and put it back into the organization.
However, you do have to make sure that anything you do to earn income directly relates to the mission of your nonprofit. For example, if your nonprofit is an animal shelter and you start raising revenue by providing human resource services for solo entrepreneurs, it may not be a good fit. Offering pet rentals for connecting with senior citizens may be a better way of raising revenue.
Of course, if you do find something that is a great income generator and isn’t related to your mission, your nonprofit may still be able to do it, but it might not be ‘tax-exempt’ income; i.e. you may have to pay taxes on it.
Before we get into earned income, if you would like more information about other types of revenue for nonprofits be sure to check out episode 90! There is an amazing FREE downloadable included! www.grantwritingandfunding.com/90.
As with anyone wanting to get income for offering services or products, first the nonprofit needs to develop a business plan!
Eek! Even a nonprofit needs a business plan?
Yes! Actually, you should’ve developed one before you became incorporated, but it might not have happened or maybe your nonprofit has changed a lot since that amazing day!
So what do you need to know?
Well, what your nonprofit can provide and what the market will pay for. This is the basic supply/demand model.
We aren’t going to go into a crazy business plan, but I am going to give you some examples so you can get some ideas for your nonprofit! Try to keep in mind the idea of supply and demand as you read through these.
I might share something that sounds amazing and you think would work for your nonprofit, but first test it on a small-scale before you invest crazy time and money into it!
According to MissionBox, a fee-for-service approach for nonprofits is defined as “nonprofit uses its earnings to support its mission and prioritizes benefit to the community over profits. Your organization can grow financial sustainability with a fee-for-service model.”
Case Study: YMCA
They are a hybrid as they offer Membership programs (see below) for their services. These services include workout classes, community classes, a gym, etc.
- Classes on gardening (or other specialized skill! Painting, etc)
- Human resources
- IT skills
I see a lot of 501(c)6 nonprofits utilizing the basic membership service approach. For example, a Chamber of Commerce, Lions Club, etc. may charge individuals, nonprofits, and corporations a fee to enjoy the membership of the organization.
I typically see fees for membership at a flat rate. Other times, there is a sliding fee based on how much revenue your business has, or how many individuals in your business or nonprofit will benefit from the membership. Advantages of individuals, nonprofits, and businesses signing up for memberships could be specialized training, networking, advertising, and other opportunities.
Case Study: Guam Women’s Chamber of Commerce
I serve on the board at the Guam Women’s Chamber of Commerce and our operations are mainly funded through membership dues. This provides funding for the executive director and other types of administrative costs.
- Other types of incentives for membership fees include the members getting:
- A monthly magazine
- Weekly newsletter
- Discounts to fundraisers or affiliates organizations
- Member-only events
Think of art museums, nature societies, or other nonprofits that offer these types of memberships. Maybe you have an animal shelter and include a membership where members get monthly pictures of the animals, free admission to the annual doggy 5K race, or other exclusive or informational opportunities.
This is commonly associated with universities, but you could also think of this if your nonprofit is (or can!) offer any knowledge sessions.
Nonprofit colleges and schools do charge tuition fees! Just because it is a nonprofit college doesn’t mean it is dirt cheap tuition fees, either!
Case Study: Many USA Universities
- University of Southern California
- Georgetown University
- Boston University
- University of Boston
To name a few. Check out more!
Speaking Engagements / Appearances
Your executive director, people who serve on your board of directors, or even some of your volunteers probably have amazing stories!
Of course, all won’t necessarily be offered a financial contribution to be speakers, but some might be. Building up to speak at national or international conferences can include a nice side income. But even speaking at local trade associations or chambers can produce some money.
Case Study: Bethany Hamilton
Bethany is a surfer from Hawaii who lost her arm during a shark attack while surfing. I actually remember this day as I lived on O’ahu at the time and the word traveled very quickly (even though she was on a different Hawaiian island). Even though she lost her arm, she returned to surfing and has won many competitions.
She also started a group, “Friends of Bethany” where they have speaking engagements and conferences. They charge fees for some of these events/speaking engagements to fund their efforts of helping other amputees and shark attack survivors.
Get paid to speak at the following:
- National Conferences (in your field)
- Rotary Clubs
- Chamber Events
- University Events
- City College Events
- Here’s a Directory of Associations
Renting out Space
Does your nonprofit have a building or physical space? Are you utilizing the space at all times? Well even if you’re not, your are paying for rent 24/7!
If you aren’t utilizing the space at all times, you may consider renting out some of that unused space! You could rent out to other nonprofits or individuals to run workshops, AA groups, training, or even baby showers!
Maybe your office is closed on the weekends, but a smaller house church would love to rent out your conference room on Sundays? Or maybe you have a beautiful garden area outside (or real quick want to create one!) and you can rent it out for weddings or photoshoots?
Get creative with your ideas!
Case Study: Elizabeth Street Gardens
Elizabeth Street Gardens is a beautiful garden area in New York City. The gardens have been there for 200 years and provide a great nature feel for the urban dweller. It offers an escapism to nature, a place that holds art, educates children, grows vegetables, and brings the community together.
The Elizabeth Street Garden raises funds for their garden by hosting events and photoshoots to protect and preserve the Garden, and according to their website the money raised, “goes directly towards our efforts to save the Garden for the community; Legal fund, PR, free public programming, and Garden operations & maintenance.”
- Renting out to freelance consultants who need office space or workshop space
- Renting out to specific groups or other nonprofits; such as churches, AA groups, etc.
- Renting out spaces to businesses that require additional space
- Renting out to individuals for baby showers, weddings, bridal showers, funerals, birthday parties, etc.
- Renting outside areas for car washes, photo shoots, weddings, etc.
I hope those case studies and examples really inspired you with different ways you can raise money for your nonprofit or the nonprofits you work with!
Don’t forget to grab the FREE downloadable from last week’s episode!
Next week, we will discuss developing goods/product ideas for nonprofits to sell that can help bring in even more funding!
List of Sources and Data
- Tax Implications for Nonprofit Business Activities
- Fee for Service: Business Plan Must-Haves for US Nonprofits
- Three Examples of Nonprofit Businesses
- 25 Most Affordable Large, Private, Nonprofit Bachelor’s Colleges
- Bethany Hamilton
- Anchored in Love Conference
- Directory of Associations
- Nonprofit Law Blog
- Lost in Space: Managing Facility Rental Risks
- Elizabeth Street Garden