Funding sources for nonprofits is a pertinent topic because financial instability is a common issue for many companies, especially those primarily dependent on restricted grant support. The truth is that funding growth is complex, and missing out on funding opportunities results in programs that are curtailed or never launched.
In the world of nonprofits, you’re often advised to “diversify revenue streams.” But it can be challenging to know what this really means in practice.
Below, we’ll look at five available funding sources for nonprofits.
5 Viable Funding Sources for Nonprofits
1. Individual Donors
Charitable donations from individuals or households are among the best funding sources for nonprofits. According to the National Philanthropic Trust, Americans gave almost $500 billion to charity in 2020, about 69% of total giving. As such, individual donors are a funding source you cannot afford to overlook.
People act from the heart when it comes to charitable donations. Knowing what motivates your donors to give is vital to growing and maintaining a relationship with them.
Several nonprofits rely on major grants from foundations or government programs to fund their operations. Grants can fuel large projects, allowing you to grow and impact society at a rate that wouldn’t otherwise be possible. They also
lend credibility to your organization, helping you secure more funding from other sources.
However, applying for grants is a time-consuming and stressful process requiring specialized skills and experience. Besides that concern, you’re not assured of approval, and they come with specific conditions attached that limit how you can use the money. For these reasons, grants should be directed towards short-term projects and should not be relied on for long-term growth.
3. Corporate Partnerships
Corporations are teaming up with nonprofits more than ever before, making corporate partnerships an excellent funding source for nonprofits. What’s more, successful private-nonprofit partnerships are generally mutually beneficial, granting nonprofits access to long-term funding.
In the age of Corporate Social Responsibility, corporations are eager to partner on projects that improve their philanthropic image, resulting in various forms of corporate support like no-strings-attached donations, event sponsorships, in-kind gifts, and pro bono services.
That said, it’s important to focus on value alignment when courting corporate sponsors. Partner with a brand whose mission and values match your own to build and safeguard your reputation.
4. Membership Dues
Because acquiring grants, sponsorships, and donations on a regular basis can be challenging, some nonprofits form memberships with large organizations in exchange for exclusive programs and benefits. As a funding source, it can provide a constant stream of unrestricted revenue and open doors to develop close, ongoing relationships with partner organizations.
Unfortunately, it’s not a funding avenue that can work for every type of nonprofit organization.
5. Crowdfunding and Fundraising Campaigns
Crowdfunding is the act of raising small amounts of money from large numbers of people to support a specific cause. As a matter of fact, people not directly affiliated with nonprofits create crowdfunding campaigns on behalf of their favorite nonprofits every day.
As a funding source, crowdfunding and fundraising campaigns amplify the value of individual donations and use connections to mobilize larger crowd support. They allow you to tell your story and expand your reach to connect with a new audience.
Take Your Donor Experience to the Next Level!
There’s no one funding source that’s sustainable enough to sustain your organization in the long term. That’s why diversifying your revenue streams is generally a good practice. It will help you run programs and manage operational expenses when one or more funding sources dry up.partnerships