Unlocking Non-Profit Funding: Tips for Generating Revenue

Chase Davis

I start with an eye-opening stat: nearly 60% of small nonprofit organizations report that one donor provides a quarter of their annual revenue. That concentration risks programs and public trust.

In this piece I ask the central question: how do non profits make money, and then give clear, practical steps I use to diversify funding. I explain why nonprofit means reinvesting profit into the mission, not operating without cash, and why that matters for your business model and community impact.

You’ll get concise paths to revenue—donations, grants, earned income, investments—and tips on blending those sources so the organization doesn’t rely on a single stream. I also preview compliance must-knows that protect your tax status and reputation.

My tone is friendly and direct. I share what worked for me, quick wins, and durable plays so you can steer funds toward programs and lasting impact.

Key Takeaways

Understand revenue options and why diversification matters.
Align every funding decision with your mission and community goals.
Use simple systems to build donor confidence and financial resilience.
Know compliance basics to safeguard your tax status and reputation.
Balance short-term wins with long-term reserve building.

Understanding the nonprofit basics before building revenue

To plan revenue well, I begin by clarifying the legal role and daily structure of mission-led organizations.You can learn more about how-do-podcasts-make-money

What sets a nonprofit apart? A 501(c)(3) nonprofit reinvests surplus into its mission and gets federal tax exemption. There are no owners; a volunteer board provides oversight while staff execute the work.

How nonprofits differ from other entities

For-profit organizations distribute profit to owners or shareholders and use standard accounting. Many not-for-profits serve members and fall under different 501(c) categories with distinct tax obligations.

Why mission and public benefit shape financial choices

Fund accounting matters. It tracks restricted gifts so services and activities match donor intent. The IRS also bans inurement — net earnings cannot enrich private individuals.

“Surplus in a nonprofit must advance the mission, not private gain.”

I compare governance, tax, and profit rules so leadership has clear information.
I note naming and status nuances in bylaws and filings to keep public records consistent.
I recommend consulting professionals when choosing status and planning compliance.

For a practical overview of revenue routes and compliance, see this resource: revenue and compliance guidance.

how do non profits make money: the revenue mix I aim for

I set a clear revenue mix early so the organization can weather funding shifts. I map four core sources: individual contributions, grants, earned income, and investments.

Balancing donations, grants, earned income, and investments

I treat donors and grants as cornerstone funding while I grow earned services and investments for predictability. In early stages I lean into donors and foundation grants. Later I add fees, memberships, rentals, and an investment cushion.You can learn more about how-does-spacex-make-money

Mission-related vs. unrelated income and UBIT implications

I test every earned activity against the mission. If an activity is unrelated, it can trigger UBIT and tax exposure. I bring an accountant in to review classifications and protect profit we reinvest.

Setting targets for sustainable, diversified revenue streams

I set percentage targets by stage and review them quarterly. I track leading indicators like pipeline and retention, plus lagging metrics such as cash collected and net margin by stream.

Source	Typical Early Mix	Target Mature Mix	Key Metric
Individual donors	50%	30%	Retention rate
Grants	30%	25%	Pipeline value
Earned income (services)	10%	25%	Net margin
Investments/endowment	10%	20%	Return & draw policy

I earmark reserves to smooth timing gaps between grants and service revenue. I also ensure board visibility so governance aligns with the revenue mix and risk posture.

Designing an individual giving engine that actually grows

A reliable giving engine starts with a clear, repeatable donor journey. I map simple steps from an online gift to major and planned giving. That path respects people’s choices and builds trust.

From online gifts to major and planned support

I make online donations easy and mobile-friendly. Then I follow with targeted touches for monthly, mid-level, and major donors.

Segmentation matters: new, recurring, and major donors receive different messages and benefits. This raises retention and lifetime value.You can learn more about periods-when-to-make-money

Accounting and acknowledgement for stock and in-kind gifts

Stock gifts often arrive via donor-advised funds or broker transfers. I provide brokerage instructions and quick processing so the organization secures full value.

In-kind products and services get recorded at fair value. For gifts over $250, I send IRS-compliant written acknowledgments to protect donor tax claims and our status.

Retention levers: stewardship calendars and impact reporting

I calendar stewardship touches: thank-you calls, handwritten notes, and impact emails. Regular program updates show exactly how funds support services and people.

“Consistent thanks and clear impact reports turn first-time givers into long-term partners.”

I build a year-round fundraising calendar with campaigns, events, and membership touches to avoid team burnout.
I keep acknowledgment templates and track turnaround times for donor satisfaction and tax compliance.
I train staff and board to ask confidently and ethically, linking asks to measurable program outcomes.

Gift Type	Key Action	Record / Acknowledgment
Online donation	Fast receipt + welcome series	Immediate e-receipt; donor profile update
Stock donation	Broker instructions + rapid liquidation	Broker confirmation + IRS language
In-kind gift	Valuation at fair market value	Written receipt noting description and value
Planned gift	Stewardship plan + recognition	Documented intent; acknowledgment per legal form

Winning grants without losing focus

Winning a grant starts with knowing which funders truly fit your mission and capacity. Grants come from government agencies, family and private foundations, community funds, and public charities. I sort these sources by fit, award size, and reporting burden before I chase an opportunity.

Finding fit: government, foundations, and community funders

I build a pipeline that notes deadlines, award ranges, and probability. This gives realistic forecasts of funding and prevents wasted staff hours.

Writing to restrictions and building a compliant budget

I write proposals that mirror funder language and list clear activities and measurable outcomes. I separate restricted and unrestricted items in the chart of accounts so each grant maps to audit-ready entries.

Reporting rhythms: deadlines, deliverables, and data

I backcast from due dates to create data collection timelines, partner letters, and board approvals. My reporting templates hold baseline information, outcome metrics, and financials so I hit every milestone.You can learn how-to-make-money-in-stardew-valley

Grant fit criteria: mission alignment, program readiness, match availability, reporting capacity.
Governance: I call on board directors for resolutions when funders require formal action.
Continuous learning: declined grants become notes for revision using reviewer information.

Earned income that aligns with the mission

I view earned income as a way to extend program reach while keeping the mission front and center. Sales of merchandise, program fees, memberships, and space rentals can all support operations without diluting purpose.

Program fees, merchandise, memberships, and rentals

I list common options that fit many nonprofits: program fees, branded products, fee-for-services, memberships with perks, and renting physical space.

I set prices from true cost plus market benchmarks so each offering yields net profit we can reinvest into programs.
I pilot small offerings to measure demand, margin, and staff load before scaling to protect team capacity and money.
I write customer-friendly policies for refunds and renewals so memberships and services renew naturally.

When revenue counts as related versus unrelated

I document clear criteria that define related activities and build review checkpoints with finance. Revenue tied to the mission is usually tax-exempt; unrelated business income may trigger UBIT and needs reporting.

I track earned income separately in the ledger and tag each stream so leadership and auditors see clean reports.

Option	Fit	Key action
Program fees	High	Price by cost + value
Products	Medium	Pilot, market test
Space rentals	Variable	Check insurance & contracts

I align marketing with offerings so supporters know how purchases power impact. I also schedule annual UBIT checks with our accountant and revisit contracts and insurance to protect our tax status and minimize business risk.

Events and campaigns that don’t drain the team

I design events that scale impact while protecting staff time and focus. I pick formats that suit our mission and capacity, not trends.You can learn how-to-make-money-on-onlyfans-without-showing-your-face-2

Choosing formats: peer-to-peer, galas, and challenges

Peer-to-peer taps members and donors to fundraise from their networks with toolkits and simple asks. This limits staff labor and raises community visibility.

Galas earn big when sponsorships come first. I model sponsor revenue before finalizing guest lists and menu choices.

Short challenge campaigns work as a fast, focused way to activate supporters and boost fundraising with minimal lead time.

Sponsorship packages and match opportunities

I build clear sponsorship packages that list benefits, deliverables, and reporting. Matches multiply gifts and motivate giving.

I templatize run-of-show, vendor lists, and checklists for repeatable production.
I align products and services upsells to events only when they add margin and value.
I track every dollar and hour so we know which events are the best way to make money and engage the community.

“Event contributions count as individual donations and should be tracked accordingly.”

Stewardship is built into every campaign: public thanks, impact recaps, and accurate receipts keep donors returning and protect compliance.

Corporate and community partnerships I cultivate

I prioritize partnerships that bring steady community support and aligned corporate resources.

Partnering with businesses helps our organization scale programs and unlock grants tied to employee engagement.

Employee giving, matching gifts, and volunteer grants

I map local and national companies whose values match our services and build a simple outreach plan. I align asks with company CSR cycles so timing increases the chance of funding.

I make it easy for members and employees to give through payroll options and one-click matching tools. This captures more donations with less friction and raises retention.

I promote volunteer grants so hours translate into corporate payouts, and I track approvals and disbursements promptly.
I design partnership benefits that are mission-forward: impact reports, staff talks, and co-created community activities.
I keep up-to-date public profiles on Charity Navigator, Candid (GuideStar), and CharityWatch so business partners see clear governance.

Action	Why it matters	Outcome
Payroll giving setup	Reduces friction	Higher recurring donations
Volunteer grant promotion	Leverages staff time	New corporate funding
Multi-year scopes	Aligns goals	Predictable program support

I train staff to work with HR and CSR leads, and I measure benefits—dollars raised, people served, and programs expanded—so partnerships deepen year after year.You can learn more about how-did-john-staluppi-make-his-money

Building and managing investments and endowments

I treat endowments as long-term partners that stabilize program delivery through market cycles. I keep donor intent central and build policies that turn gifts into lasting support.

Endowment basics: principal, dividends, and donor restrictions

Principal is preserved. Dividends or a set spending rate supply operating support while respecting donor restrictions. I record restrictions in writing and mirror them in the ledger and investment policy.

Prudent investing policies and reserve goals

I set prudent reserve goals—typically 3–6 months of operating costs—and target a diversified funds mix to smooth cycles. I separate operating cash from long-term investments and clarify roles for staff, board, and advisors.

I work with board directors to approve an investment policy that covers risk, liquidity, screens, and rebalancing.
I review fees, performance, and benchmarks quarterly and adjust allocations with board approval.
I confirm tax considerations for investment income given our tax-exempt status and keep documentation current.

I build a gift acceptance form for complex assets and report clear information to the board and community. A disciplined draw policy lets investment profit support the mission without endangering principal, delivering steady benefits for the organization and its programs.

Budgeting with fund accounting at the core

I center budgeting on fund accounting so each dollar follows donor intent and program needs.

Unrestricted vs. restricted funds and how I track them

I separate unrestricted and restricted lines in the budget so spending matches grants and donor wishes.

I assign a clear code to each fund, program, and service. That coding makes reporting fast for the board and auditors.

I keep agreements, award letters, and the related form templates with each fund for clean audits and confident decisions.

Statements to monitor: activities, position, and cash flow

I review the statement of activities monthly to track revenue, income, and expenses by fund and program.

I scan the statement of financial position to watch liquidity, reserves, and obligations that affect organizational health and status.

During peak seasons I check the statement of cash flows weekly so payroll and bills clear without surprises.

Budget built around funds: program lines separated from admin and services.
Coding consistency: activities and services tagged for fast board reporting.
Rolling forecasts: I update projections and share changes with board directors.
Expense approvals: thresholds formalized so managers act within policy and protect tax compliance.
Training: I teach non-finance staff to read key reports so their work links to real numbers.

“Surplus is reinvested or added to reserves to steady programs and the business over time.”

Report	Cadence	Focus
Statement of activities	Monthly	Revenue, income by fund
Statement of financial position	Quarterly	Liquidity, reserves, obligations
Statement of cash flows	Weekly (peak) / Monthly	Cash availability for payroll and bills

Keeping 501(c)(3) status secure while I grow revenue

When revenue streams expand, I keep compliance front and center to protect our status. Small oversights can cost an organization its tax benefits or public trust.

Annual filings, gift acknowledgments, and governance

I calendar federal and state filings and confirm each return before submission. Annual returns with the IRS are non-negotiable for maintaining tax exemption.

I issue written acknowledgments for gifts over $250 using IRS-compliant language. Clear receipts protect donors and our organization.

I document compensation reviews and approvals with the board directors. That record prevents any claim of private inurement and shows prudent oversight.

Avoiding political activity and managing unrelated business income

I train staff on lobbying limits and require pre-approval for advocacy activities. This keeps our work within allowed public policy engagement.

We strictly avoid political campaign activity—no endorsements, ad buys, or rental of lists or space to candidates. Public trust depends on neutrality.

I identify unrelated business income early and track it separately. When required, I file and pay UBIT so the organization stays compliant and protects its funds.

Centralize information: bylaws, policies, forms, and filings in one place for audits.
State renewals: review charitable registration so we can solicit legally in each jurisdiction.
Board visibility: include a compliance overview in meetings to keep governance proactive.

“A simple checklist and consistent board review keep status secure while we grow.”

Compensating staff fairly—and transparently

I treat compensation as a strategic investment that supports staff, program outcomes, and community trust. Fair pay keeps employees engaged and helps the organization attract skilled people in a competitive market.

Board-approved executive compensation and market benchmarks

The IRS allows reasonable compensation but prohibits inurement. I run an annual, formal compensation process that uses market benchmarks and documents board approvals for executive roles.

I present market data, job scopes, and comparable salaries to the board directors. Then I record the approval in meeting minutes and keep clear files for auditors to show compliance with our tax status.

Total rewards: salary, benefits, and flexibility

I design total rewards that combine base salary, medical and retirement benefits, paid time off, and flexible work arrangements. This package helps employees and staff feel supported beyond base pay.

I budget merit pools and plan promotions so pay reflects performance and impact.
I publish pay ranges where possible to increase equity and clarity across the organization.
I separate compensation setting from fundraising swings so pay stays fair when revenue shifts.

“Transparent practices turn compensation into an asset for trust, not a liability.”

I train managers on feedback and development so total rewards include growth opportunities and clear career paths. I also keep clean records and provide accessible information to the community and auditors.

For practical benchmarks and sample ranges I use a trusted resource for nonprofit salary guidance when setting pay for roles across the business and program teams.

Governance, metrics, and public trust

Trust and transparency are the pillars that turn accounting lines into public confidence. I keep watchdog data current so reviewers and the public see our true impact.

I monitor Charity Navigator, Candid (GuideStar), CharityWatch, and GiveWell profiles. These sites rate charities using financial statements, tax returns, and governance data. New nonprofit organizations may lack ratings because they have fewer years of reporting.

Using watchdog data to guide governance

I publish clear information on programs, funding, donations, and outcomes so people can see how money translates to impact. I prepare the board with dashboards on finance, fundraising, and mission metrics that mirror external reviews.

I align governance with watchdog expectations and keep profiles current.
I standardize audits, IRS filings, and policies so nonprofit organizations are rating-ready.
I document conflict-of-interest disclosures and board directors independence to strengthen trust.

“Contextualize overhead as capacity-building: efficient spending can improve services.”

Focus	Action	Outcome
Transparency	Publish clear information	Stronger community trust
Metrics	Collect impact for people	Better program decisions
Benchmarking	Compare business and fundraising efficiency	Targeted improvements

Conclusion

Conclusion

I’ll close with a practical recap you can act on this month.

I distill this article to three simple aims: diversify revenue, guard compliance, and channel profit back into the mission. When nonprofits make money with integrity, the organization funds programs, people, and services that change lives.

Use events, products, and services only when they fit your cause and staff capacity. Treat partnerships and grants as levers and assign an owner for each revenue stream to keep accountability clear.

Invite your board directors to review the dashboards, back strategic investments, and confirm tax and reporting policies. Pick one grant, one partnership, and one fundraising tweak to implement this month. I’m cheering you on.

FAQ

What is the simplest way I can describe how a charitable organization earns revenue?

I explain it as a mix of gifts, grants, fees for services, and investment returns. Donations from individuals and foundations feed programs, while earned income — like program fees or merchandise — covers operational costs. I also rely on reserves and endowment income to smooth cash flow and support long-term goals.

How does a 501(c)(3) differ from a for-profit business when making decisions about income?

The legal status focuses my choices on public benefit and mission rather than shareholder profit. I must prioritize program impact and comply with rules on political activity and charitable reporting. Financial strategies serve the cause first, and any surplus is reinvested into services, staff, or reserves.

What revenue mix should I aim for to reduce risk?

Diversification is key. I balance individual giving, foundation grants, earned income, corporate support, and investment income. Relying too heavily on one source raises vulnerability, so I set targets for each stream and regularly review performance against those goals.

When is earned income considered related to mission, and why does it matter?

Income is related if it supports activities central to the mission. Related revenue avoids unrelated business income tax (UBIT) and aligns with donor expectations. I analyze each activity for purpose alignment and consult an accountant to manage tax implications.

How can I build an individual giving program that scales?

I layer acquisition, cultivation, and retention. That means easy online giving, mid-level and major gift moves management, and planned giving outreach. I use stewardship calendars, impact reports, and personalized outreach to keep donors engaged and giving over time.

What are best practices for accepting in-kind and stock donations?

I ensure clear policies, timely acknowledgments, and proper valuation. For stock gifts, I work with broker instructions and provide gift receipts. For in-kind items, I confirm usefulness and document fair market value for donor acknowledgments and internal records.

How do I find the right grantmakers for my programs?

I research foundations, government programs, and community funders whose priorities match my mission. I review their past grants, funding cycles, and application requirements, then tailor proposals to fit their interests and reporting expectations.

What should I include in a grant budget to stay compliant?

I break costs into direct program expenses, personnel, indirect costs, and capital needs. I follow funder restrictions carefully, justify line items, and include realistic timelines. Transparency helps avoid audits and strengthens future relationships.

How can events generate net revenue without exhausting staff?

I choose low-friction formats that suit our audience — virtual fundraisers, peer-to-peer campaigns, or smaller signature gatherings. I build sponsorship packages to offset costs and recruit volunteers for logistics so the team focuses on donor engagement, not production details.

What role do corporate partnerships play in a fundraising plan?

Corporate partners provide sponsorships, employee giving, matching gifts, and in-kind support. I pursue partners whose brand values align with ours and create clear benefits for them, such as visibility and employee engagement opportunities.

How should I approach building an endowment or reserve fund?

I start with a written policy that defines purpose, spending rate, and investment guidelines. I set minimum reserve targets for cash flow and emergencies, and work with an investment advisor to preserve purchasing power while generating steady returns.

What is fund accounting and why does it matter for budgeting?

Fund accounting separates restricted and unrestricted resources so I can track donor intent and legal obligations. I prepare budgets that reflect fund restrictions and monitor statements of activities, position, and cash flow to stay solvent and accountable.

How do I protect my tax-exempt status while expanding revenue streams?

I prioritize compliance: file annual returns, provide proper gift acknowledgments, limit lobbying, and monitor unrelated business activity. When a revenue source risks jeopardizing status, I seek legal counsel or restructure the activity to a taxable subsidiary if needed.

What should guide compensating staff and executives fairly?

I use market benchmarks, board approval, and transparent policies. Total rewards include salary, benefits, and flexibility. I document compensation decisions to show reasoned, defensible choices aligned with organizational capacity and sector norms.

Which public tools help me benchmark my organization’s credibility?

I use Charity Navigator, Candid (GuideStar), and CharityWatch to compare metrics, review financial ratios, and monitor public perception. These platforms help me refine governance, transparency, and reporting practices.