7 Alternatives for Non-Profit Organizations (NPOs) to Diversify Revenue Streams

Making money for any business is challenging. But making money for a non-profit organization is even more difficult. A non-profit organization (NPO) is funded by individual donors, government grants, or corporate donations. However, even these sources cannot always stay consistent. And when such donations and funds start to dry up, finding new sources of revenue to survive becomes challenging.

Is there a way to prevent such an emergency at your NPO? Yes, there is – diversifying your non-profit’s revenue streams.

Alternative Sources to Generate Revenue for Non-Profits (NPOs)

Here’s how to build up your NPO’s resilience against funding challenges with alternative revenue sourcing:

Look for Alternative Grants

With federal funding on the wane, looking for alternative grants has become urgent and necessary. This would require some research and networking on your part to find other state or federal government agencies willing to help your NPO. A good practice is to actively look for alternative grants, such as private donors, corporations interested in corporate social responsibility (CSR) activities, or foundations that offer endowments or financial support, even if you don’t need funds immediately.

You can use digital platforms, social media, or the official websites of such institutions to contact them and apply for grants. There are some grant management software to help you identify grants that fit your purpose, apply to them, upload the required documentation online, and track your application status.

Build Relationship with Individual Donors

While grants and endowments are certainly appreciated, the truth is that non-profit organizations’ biggest cheerleaders are the individual donors. They could be one-time donors, regular patrons, recurring givers, corporate campaign givers, or peer-to-peer fundraising. Consider building a relationship of trust and transparency on a common objective of helpfulness with such donors, as they can help raise funds in their own ways.

Offer Membership with Special Perks

Some nonprofits – usually those that work towards a dedicated cause such as wildlife conservation, art conservation, and museums – offer paid memberships to secure a regular source of income for the NPO. You can increase such paid memberships by offering more perks and encouraging members’ active participation.

For instance, members could be offered free or discounted entry at events. You can organize special “Members Only” dinner parties, group activities, or such curated experiences, making them feel special and included. You can also involve regular members in the decision-making for certain events or campaigns, or invite them to participate in community services. By convincing them how much their presence and opinion matter, you can gain an encouraging and helpful member for life.

Optimize In-Kind Contributions

Not all donations need to be monetary or in cash. Many people involved with your non-profit might want to make in-kind donations of furniture, food grains, or services such as plumbing or infrastructure repairs. Such in-kind contributions can help you reduce expenses.

You could consider drawing up a wish list (and keeping it updated) of any such services or requirements, and uploading it to your website or circulating it regularly on social media platforms to attract the most-needed in-kind donors. You can also ask patrons for items to auction, with proceeds used for NPO operations.

Seek Corporate Sponsorships

Donations from individual donors and patrons might not always suffice. You could reach out to corporate organizations interested in helping society. However, unlike individual donors, corporate sponsorships are more give-and-take. They need to be convinced that the cause they support is really making a difference in the world, or that they can gain something in return, such as a tax benefit. While they can provide monetary or in-kind support, they can also give your NPO and its noble cause a wider reach through their websites or digital platforms, which already reach thousands of people.

Sell Merchandise

Instead of relying solely on donations, you can also create and sell merchandise to earn revenue. For instance, if you work for a cause related to children, you can sell and auction artwork like greeting cards and bookmarks created by those children. Not only do such products make for interesting, unique buys, but they also raise awareness of the cause and help you build a brand image. Hosting fundraising events or partnering with big events and offering specially branded T-shirts, diaries, or other merchandise on sale is a wonderful way to engage more people and increase revenue.

Partner with Other NPOs

Working alone is a challenge – but when you join forces with other organizations like your own, working can be both fun and fruitful. Not only do such collaborations give you a wider audience, but they also divide the burden of hosting fundraising events or social campaigns. Moreover, it helps you meet more people and expand your network to interested donors and people in need.

For instance, if you run an NPO that distributes food to fight malnutrition, collaborating with another NPO that offers free medical check-ups for the underprivileged would be beneficial. You can find such NPOs at conferences, seminars, summits, and other events where open discussion and the exchange of ideas are encouraged.

Things to Consider When Diversifying Revenue Streams

While diversifying revenue streams is important for increasing your non-profit’s reach, longevity, and overall effectiveness, certain considerations must be kept in mind to ensure you do not lose your original revenue stream.

• Keep your current donors and patrons informed about any new ideas or fundraising strategies you want to try.
• Check Key Performance Indicators (KPIs) of the new income source, such as return on investment, cost-to-revenue ratio, or donor acquisition cost.
• Check if these new revenue streams are legally compliant and socially responsible. For example, special in-kind donation tax considerations can impact how you fill out income tax returns.
• Plan how to use, allocate, or invest the new revenue effectively and optimally.
• Developing and managing new revenue streams need time, money, and labour. A proper resource allocation can help you manage new revenue streams while focusing on the cause.

Contact Edelkoort Smethurst CPAs LLP in Burlington to Help Your NPO Diversify and Manage Revenue Streams

Consulting an experienced business consultant who is well-versed in the workings and requirements of a non-profit organization can help you gain a clearer vision and idea of how to go about diversifying your income streams in the best possible way. At Edelkoort Smethurst CPAs LLP, our accountants and business consultants can provide services such as filing income tax returns, tracking KPIs, and ensuring compliance with new revenue streams. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best accounting and business consulting services, contact us online or by telephone at 905-517-2297.