How Do Nonprofits Make Money?
When most people think of a nonprofit, they might imagine scanty organizations staffed entirely by passionate volunteers running the whole company out of the goodness of their hearts. And while it’s true that nonprofits thrive with the help of enthusiastic audience members working in unpaid positions, nonprofits are so much more.
There is always a team of people working behind the scenes at any nonprofit, no matter how big or small. And a bigger part of that team than most of us may realize are actually paid staff who either take annual salaries or hourly wages. Running a nonprofit can be a full-time job, and it’s only right that those putting time and energy into a not-for-profit organization should get paid for their efforts.
And even the most frugal nonprofit companies need money to keep things running. On top of paying dedicated members of staff, there is the overhead of office space, event planning, online presence, and so much more!
The mystery remains: how do nonprofits make enough money to stay afloat, while so many for-profit organizations fail? Let’s talk about it
Nonprofit monetary basics.
What’s the biggest difference between a for-profit and a nonprofit organization? Nonprofits don’t make NO money, but they are also not designed to create a surplus of wealth for the company. Every penny that nonprofits organizations bring in is put to use. Surplus wealth usually goes to executives within a for-profit organization, but nonprofits invest that surplus back into the community if any extra beyond the needs of the organization is made.
Money that comes in must be spent on the improvement of the organization, or go towards other relevant causes which further the organization’s mission statement, whatever that may be. An art museum might invest in local arts education. A zoo may support an animal rescue effort. A historic house might donate to accompany making tiny homes for unhoused residents, and so on.
Nonprofit surplus usually means good work for you, and for your community! And an overflowing financial cornucopia for your organization is a good sign that you’re contributing a valued and impactful service to your locale.
How money is raised in a nonprofit organization.
The good news for nonprofits is that there are truly an unlimited number of ways for them to generate income. And the rewards for their supporters have the potential to be endless, as well. All it takes is a little creative thinking. Below are listed some of the more common methods nonprofits use to bring in the bacon.
Donations, after volunteer work, represent the bread and butter of any nonprofit organization. In fact the vast majority of fiscal income for most charitable organizations comes from individual donations. In 2018, single-household donors made up 68% of all income generated for nonprofits in the US alone. Nonprofits can also garner donations from corporations, charitable foundations, and other for-profit institutions.
In addition to financial donations, nonprofits may also receive valuable income in the form of in-kind donations, where a local organization or individual may contribute goods and services. While these generous gifts can’t be counted in cents, they can certainly put a dent in your expenses for events or activities.
Parties, auctions, exclusive exhibition openings, and other special gatherings are another great way to generate extra income for your organization. Many nonprofits support specific exhibitions, actions, and even just day-to-day expenses with ticketed receptions. For example, the Academy of Sciences in San Francisco holds a weekly themed party for adult visitors, highlighting a different area of natural sciences every Thursday evening.
Depending on your budget and any upcoming special occasion, your organization may choose to hold regular events, or just one every once in a while.
Everyone loves to show off the name of their favorite organization. And nonprofits take advantage of this all the time. Offering a little swag for your audience members to take home with them is a great way to generate funds, as well as spread your name across town.
Most cultural institutions in the US charge admittance to their patrons. This is the simplest way a public-facing nonprofit organization can make money. Additionally, larger organizations such as art or historic organizations may charge a special ticket price for admittance to especially popular or interesting exhibitions.
And if your patrons really love what you do, you can offer them memberships so they can have easier and more consistent access to your exhibits and events.
How money is spent.
So now that you’ve earned all this money using the techniques listed above, what do you do with it? Here’s how most nonprofits put their money to good use.
- Oversight. This means standard upkeep to maintain your organization from top to bottom. It includes everything from the electricity bill, to marketing; from keeping up your social media presence to cleaning the bathrooms at your physical institution.
- Wages and salaries. Although a good portion of your workers will likely be volunteer-based, core staff members must be paid a fair wage for the work they put into the organization. Everyone on the team, custodians and curators alike, should be well paid for their efforts.
- Investment and growth. Of course there should be room in your budget for improving the goods and services offered by your organization. Growth in this context may mean literal, physical expansion of your exhibition spaces and buildings. Or, it could be acquisition of new exhibits, staff members, or other attractions.
- Giving back. If you have a surplus of funds, invest it back into your local community. Find another nonprofit working in your area that does work in your field, and help plump up their funds with the extra dollars that you don’t need.
How ACME can help.
One of ACME Ticketing’s latest features is a shiny new donations button. This add-on makes it easier than ever for individuals as well as corporations to make one-time AND repeat contributions to your organization. Through ACME, the donations page is fully customizable, so you can make a personal and specific ask of your patrons before they check out. To see how ACME can work for you, sign up for a demo today.