Picture this: as the new year begins, you review your nonprofit’s year-end donation revenue and realize you’ve fallen short of your projected fundraising goals. As fundraising reports have shown, end-of-year donations can account for up to 22% of a nonprofit’s total annual fundraising, meaning potential shortfalls can have impacts on your programs for the rest of the year.

Situations like this can happen, especially if unexpected circumstances arise. Fortunately, your nonprofit can mitigate situations like this by diversifying its revenue with a variety of fundraising sources outside of just donations. 

Of course, acquiring donors and cultivating donations will continue to be important, but by expanding your revenue sources, you’ll be able to give your nonprofit added financial security and even give your donors flexible options for offering support. To demonstrate this point, this article will first walk through the importance of diversifying your revenue streams, then dive into three ideas nonprofits can get started with quickly. 

Nonprofits should always be on the lookout for how to grow their revenue streams. There are several other methods for increasing your funding total that are worth the effort but may take significantly more time to get up and running, such as grants. While your nonprofit takes the time to invest in these long-term strategies, you can support your investment with fundraising methods that aim to be as convenient as possible, such as passive fundraisers.

Let’s get started!

Why should nonprofits diversify their revenue?

You’re likely familiar with the classic advice of not putting all of your eggs in one basket. That sentiment rings true in the nonprofit world, where donations are dependent on a variety of factors, some of which are outside of your nonprofit’s control. For example, the financial situation of a major donor might suddenly change due to their investments, which in turn can impact their ability to give to your cause. 

Many nonprofit organizations are already aware of the importance of diversifying their revenue. For instance, NPOInfo’s charitable giving statistics report notes that nonprofits in several fields rely on other revenue sources far more than individual donations. Specifically, for health-related organizations, donations from individuals only made up 22% of their total funding in 2021, while higher education organizations reported individual donations making up just 10% of their annual funding. 

The best additional revenue sources will vary depending on your nonprofit. For instance, health-related and higher education nonprofits make significant revenue from providing in-demand services, while an environmental-focused nonprofit may do better exploring other avenues.

3 Additional Revenue Streams for Nonprofits 

Additional revenue sources can sometimes also lead to new ways for your supporters to interact with and support your nonprofit outside of just donating. The ideas in this guide were selected due to their ability to help nonprofits earn more revenue while also cultivating relationships with donors. Let’s dive in. 

Shopping Fundraisers 

Shopping fundraisers earn revenue for your nonprofit when supporters shop at participating retailers. The contributions earned through shopping fundraisers come from the retailers, not your supporters. This means that your supporters can help nonprofits by making the same daily purchases they likely planned to anyway. 

Your supporters can use shopping fundraisers as an opportunity to shop more ethically by helping important and local causes with their purchases. As ShopRaise’s guide to ethical shopping reports, 56% of shoppers refuse to buy from brands they feel are unethical. This pressure has been shown to have a tangible on impact businesses practices, such as reducing the use of child labor by one-third

Here are a few ways your nonprofit can run a shopping fundraiser: 

  • Online shopping fundraisers. Online shopping is more popular than ever—online sales saw an increase of 25% over the last year. You can meet your supporters where they’re already at and help them give back to your cause without increasing their spending using online shopping fundraisers. These fundraisers allow your supporters to contribute to your nonprofit when they make purchases through an online shopping fundraising app or browser extension. Partner with an online shopping program, who will provide a customized app or browser extension for your nonprofit’s supporters, then encourage your shoppers to make their regular purchases through it. 
  • Grocery store fundraisers. Grocery stores often offer fundraising programs that allow supporters to contribute to nonprofits when they make purchases, all at no additional cost to them. These programs also apply to online grocery purchases, which are predicted to grow in popularity with 55% of consumers shopping for at least some of their groceries online.  
  • Restaurant partnerships. Many established chain restaurants have partnership programs where nonprofits and charitable causes can work alongside a restaurant in their area to host a fundraising night, where a portion of collected proceeds will go to the nonprofit. You can also reach out to locally-owned restaurants in your community to establish your own partnerships outside of official programs. 

Shopping programs work by contributing a percentage of each supporter’s sales total to your nonprofit. This means these fundraisers are designed to help nonprofits accumulate funds over time. Plus, as shopping fundraisers can be held all year round, they can be a reliable source of revenue in between major fundraisers. 

To set your shopping fundraiser up for success, be sure that your nonprofit regularly promotes it. This will help you attract new supporters to your program, while also reminding current supporters to continue participating. 

Volunteer Grants

Volunteer grants are a method of corporate philanthropy. Many businesses will make a monetary donation to nonprofits and charitable organizations that their employees volunteer with, essentially allowing your volunteers to maximize their contributions without reaching for their own wallets. 

More corporations offer volunteer grants than you might first assume. For instance, reports on volunteer grants companies show that 40% of Fortune 500 companies have volunteer grant programs. Additionally, these grants often go underutilized as only about 33% of eligible volunteers make use of their employers’ grant programs. 

This means a significant number of volunteer grants go unclaimed. To make the most of this fundraising opportunity, it’s important to understand the steps of the volunteer grant process:

  1. Volunteers work a given number of hours a week, which is recorded by your nonprofit.
  2. Your nonprofit assists volunteers in discovering if they are eligible for a volunteer grant and helps those that are, fill out and submit their application to their employer. The details on these forms will vary, but most include the number of hours worked and some basic information about the nonprofit organization. 
  3. The volunteers’ employers review the applications, and, if the applications are approved, send a check to your nonprofit with the approved amount.

There are a few other details to keep in mind when looking into volunteer grants, such as application deadlines. For many companies, these deadlines will be the end of the calendar year, but some offer extensions as late as March to account for volunteer time during the last few days of the year. 

Sales and Services

As mentioned previously, many nonprofits can earn a significant amount of their income through fees from goods and services. For some types of organizations, these opportunities will be obvious, such as hospital bills, tuition payments, tickets to a play, and museum admission fees, to name a few. 

However, other nonprofits—which are often smaller organizations, as well—might need to get creative to make significant revenue from their services. To help you get started, here are three opportunities small organizations can leverage to earn revenue:

  • Space rentals. If your nonprofit has a large space as part of its operations, you have the option of renting it out to other organizations when it’s not in use. This can apply to theaters, schools, churches, and sports teams. Set up guidelines that establish how and when the space will be used, as well as practices for ensuring that it is cleaned up before your renters leave. 
  • Merchandise sales. Most nonprofits can create for-sale items promoting their cause, such as t-shirts, mugs, buttons, and water bottles. You can go the extra mile by creating items that are themed to your nonprofit, such as an animal shelter selling frisbees, leashes, and dog bowls with their logo on it. 
  • Product sales. Product sales are a bit different than merchandise sales, as they usually involve partnering with a service that allows nonprofits to buy a product in bulk rather than selling items through your nonprofit’s permanent online store. Product sales usually work best for nonprofits with lots of potential volunteers willing to sell, such as schools, sports teams, and clubs.  

You can also take advantage of various community events, holidays, seasonal changes, and other opportunities where your nonprofit can provide a service to your community. For example, small local nonprofits might make it a routine to host a car wash in the summer and then provide holiday decorating services in the winter. 

Nonprofits have a number of available fundraising opportunities and should avoid relying solely on just one or two methods. The best additional revenue streams will depend on the nonprofit, and some funding methods will require long-term investment, while others can be started right away. Explore your options to discover an approach that fits your nonprofit’s unique needs. Good luck!