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How Do Nonprofits Make Money: 8 (+1) Awesome Fundraising Ideas

13 min read

While non-profits don’t work on a profit-building foundation, they do need to generate some form of income to keep the organization going.

But how do nonprofits manage to make enough funds to pay for operating costs and support their core mission?

If you’re wondering how nonprofits make money, keep on reading.

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How to Fundraise for a Nonprofit: 8 Ideas to Make Money

To generate income, nonprofit organizations tend to rely on the support of outside sources or supporters. They usually work hard to find creative ways to encourage donors to make one-time or recurring in-person donations, donate online, through events, and more.

Below are a few of the most common strategies nonprofits use to make money.

1. Donations

Oftentimes nonprofits offer a donation section on their website where visitors can go and donate to support their mission. Many times, nonprofits have long-term donors willing to support their mission every month or year with their donations. Whether an individual donates $10 dollars a month or gives $4,000 in one check, donors are often a significant source of revenue for nonprofit organizations.

2. Grants

Nonprofits often rely on grants to facilitate or incentivize performance. These are a sort of award or gift given by an entity that doesn’t need to be paid back. These usually come from the federal government or private foundations.

Grants can be a great and easily-accessible way for nonprofits to raise funds. Grants, in some ways, are more reliable than other forms of fundraising and making money. Grants do not rely on the generosity of donors or members and offer a predetermined amount of money.

There are many grants available to nonprofits from both government and private organizations. To learn more about the availability of nonprofit grants, visit Grants website.

3. Membership program

Many nonprofits create a membership program to maintain a loyal, reliable base of supporters. Membership programs can provide additional bonuses and perks for registered members. These may include exclusive events and opportunities for members.

Having an active and supportive group of registered members also helps to ensure reliable income for the nonprofit. This is especially true if your organization charges a membership fee. Rather than soliciting donations, a membership fee can raise funds in exchange for the services provided by the membership program.

But a membership program can still be a reliable source of donations. Loyal members can form a supportive community who are willing to donate to your nonprofit consistently. On top of that, a large membership group can help grow your organization and recruit new members.

4. In-kind donations

Apart from monetary donations, nonprofits can also receive in-kind donations. They’re basically gifts made by an individual or company. It often involves a specific item or equipment needed by the nonprofit that the founders would’ve needed to invest money in otherwise. This helps them save money for more essential needs.

5. Sales

Often, nonprofits rely on selling donated items, handmade items, or a specific service to use the money for the organization’s mission. An example is a local nonprofit for the homeless community that has its own thrift store as a way to make a decent part of its revenue. Another example is a nonprofit that relies on education and decides to host classes for the community in exchange for some sort of monetary help.

6. Fundraising events

Many times nonprofits rely on fundraising events to earn money. A fundraising event can be a fun or unique experience that generates interest in your organization in addition to funds. A fundraising event can be a banquet or formal event or something fun and activity-based, like a 5K road race.

An event that caters to the interests of supporters of your nonprofit is likely to bring in more funds. So nonprofits should try to organize fundraisers based on their target demographics.

Figuring out how to organize a fundraising event for a nonprofit is also a challenge on its own. The first steps are determining your goals (how much money you want to earn) and the type of event. Other crucial steps to follow include setting a budget event, setting a date and time, and promoting the event or selling tickets.

Successful fundraising events achieve a lot for nonprofits. A fundraising event can make money immediately and also give the organization a list of potential donors for the future. On top of that, fundraising events are simply a great opportunity to have fun and raise awareness for your cause.

7. Email & text donations

Fundraising events are great as a one-time source of a large sum of donations. But nonprofits also need regular donations all year round to meet their annual goals.

One of the simplest ways to solicit these donations is by using email or text messaging. Having a mailing or messaging list for your nonprofit allows you to reach out to past donors periodically.

Those who have donated in the past are more likely to be willing to donate regularly. Reaching out via email or text message is a simple, no-pressure means of asking for those potential donations.

8. Publicity

It’s not uncommon for nonprofits to invest in paid advertising to spread awareness about their mission and encourage potential donors to support their cause.

Even if advertising campaigns require a sort of initial investment, they often have a high return on investment rate for nonprofit organizations, making them a reliable source of income.

Nonprofits may also invest time in free sources of publicity like social media or even a blog, which often work just as well.

A quick example of a successful marketing campaign run by a nonprofit was the “One day WIthout Shoes” by the nonprofit TOMS which rocked the internet and helped more than 20,000 children in developing areas receive a new pair of shoes.

Overall, It’s common for nonprofit organizations to identify and cultivate major donors and plan creative strategies to continually encourage them to support and form part of their mission.

To achieve this and generate income from donations, nonprofits encourage individual donors to make one-time or recurring donations, donate online, attend events, and more. Nonetheless, social media and paid advertising are also some of the most common ways nonprofits make money.

With this said, having a proper website and social media presence is also pivotal when it relates to donations and raising enough funds to cover operating costs.

How Nonprofits Can Use Social Media and Web Presence to Increase Donations and Visibility

A strong online presence can serve as a powerful tool for nonprofits and charities to raise awareness, build engagement, educate others, and increase donations.

Social media platforms like Instagram, Tik Tok, Facebook, and YouTube, can help nonprofits connect with their audience, inform them of upcoming events, target their audience with creative ads, and overall keep their audience interested and engaged at very low costs.

Global Trends in Giving Report tells us 63% of donors prefer to give online and 55% of people are encouraged by social media to donate to a specific cause or nonprofit.

Here goes a quick statistical recap related to the significance of having a strong online presence to make money as a nonprofit:

  • 18% of donors worldwide have given through Facebook fundraising tools.
  • 57% of people feel encouraged by nonprofits’ YouTube videos to donate.
  • 75% of Instagram users that come across an advertisement take some sort of action.

There is little to no doubt organizations failing to set time to build a solid online foundation are missing out on a major source of revenue and a rather efficient way to build long-lasting relationships with their donors.

Set up an online donation page or website (+1)

Another part of a strong online presence as a means to make money as a nonprofit, having a website is also a significant factor when it comes to the success of any fundraising campaign or encouraging donations overall. With a website in place, nonprofits are able to increase credibility and offer their supporters a safe place to submit their donations.

Generally, we’re all less hesitant to donate and support a specific cause if we find the donation process easy and safe. Thankfully, nonprofits don’t necessarily need a fancy website to achieve this. For those just starting and testing the waters, a simple website offering insightful information about the organization’s mission and a safe donation system is usually a great start and can make a significant difference to not having one at all.

Here are 5 ways nonprofits make money with something as simple as having a website:

  • It expands their reach
  • Creates a trustworthy impression
  • Helps achieve conversions
  • Education purposes
  • Safe transactions and donations

Without a doubt, a strong online presence is one of the top strategies used by nonprofits to raise money, tell their story, keep their audience updated, build long-lasting relationships with their donors, and increase their reach beyond local advocates.

Ecwid for donation collection

Even if a nonprofit has neglected its online presence for years, the minute they begin investing in it, results are often almost immediately.

Ecwid users can create a professional website in a few clicks and easily collect donations online for their nonprofits. If you use Ecwid to build your website, here is how to get donations for a nonprofit fundraiser:

  1. Go to your website’s catalog, select products
  2. Add New Product named “Donation”
  3. Remove shipping and pickup requirements
  4. Click “Manage Pricing Options”
  5. Enable Ecwid’s “Pay What You Want” Function

Additionally, nonprofits that build their website with Ecwid can add a “donations” function at checkout when selling products online. Online donation pages can generate funds without requiring any maintenance, making them the most cost-effective form of nonprofit fundraising.

How Do Nonprofits Use The Money They Make

Profit made by a nonprofit goes toward operating expenses and oftentimes staffing. Many nonprofits depend on volunteers but are allowed to have employees for specific roles and responsibilities.

Nonprofits are usually exempted from taxes and are allowed to pay employees without losing this benefit. The founder of the nonprofit may sometimes get compensation for their work. The rest of the money is meant to go toward the nonprofit’s mission, equipment, and fundraising plans or events.

Making Money As a Nonprofit

The sky’s the limit when it relates to the different ways nonprofits make money. While these organizations typically work on a non-profit basis, they still find themselves in need to raise enough funds to cover their in-house expenses and support their mission.

Apart from fundraising events, federal grants, and personal donations, having a website and strong online presence continue to be leading factors in amplifying any nonprofit’s efforts and assisting in accomplishing its mission and goals.

Nevertheless, with the right support and dedication, foundations often find the most efficient way to connect with their audience and encourage them to support their mission.

Regardless of the size of your nonprofit, you can start testing the waters of online donations and have your free website with Ecwid today. Check out our blog for a full library of resources and recommendations specifically created to help you succeed.

 

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About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.

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