4 Simple Steps to Generating New Revenue Streams for Your Nonprofit

Reading Time: 4 minutes

Author: Jamie Klobuchar, Executive Vice President of Evolve Giving Group (she/her) 

My big lesson in the importance of revenue diversification in your fundraising strategy came as a result of two national disasters–September 11 and Hurricane Katrina. 

At the time, I was working at a nonprofit that raised the majority of their annual revenue from special events. Although we had some other revenue streams, the majority of our revenue was generated on the day of each event. 

9/11 happened a couple weeks before our New York events, which were both canceled–tanking our revenue for that quarter. The same thing occurred after Hurricane Katrina devastated the South. 

These two tragedies revealed how reliant we were on this one revenue stream, and that when push came to shove, we didn’t have enough fully developed revenue streams or a back-up plan to switch gears quickly. 

We all know what happens when revenue streams decrease. Operational expenses are cut, which impact your fundraising, and important programming is reduced or eliminated. Having too few gifts can even threaten your status as a public charity. 

We’ve established that revenue diversification is really important. So, where do you start? 

Step 1: Identifying All Possible Revenue Streams

The first step to expanding your revenue streams is identifying all possible revenue streams–including what streams you currently tap into and new ideas. 

Here is a list of places to start brainstorming. (Note: This is not an exhaustive list, and not all of these might be the right fit for your audience!) 

1. Membership fees and dues. There are many different models of nonprofit membership–some are focused on fundraising, while others relate to advocacy, programming, or community-building. 
2. Fees for service. This structure means that people pay your organization in return for a service offered. Some services might include summer camp, child care, use of a facility, or professional development and training. 
3. Selling merchandise. Remember: the best merchandise relates directly to your mission!  
4. Special events. Although big in-person galas have waned in popularity due to the pandemic, there are many other options for in-person gatherings like fashion shows, run/walks, auctions, and benefit concerts. 
5. Peer to peer fundraising. This fundraising strategy involves individual supporters fundraising on behalf of your organization to their networks. This may be a good fit for your organization if you have many supporters with strong social media presences. 
6. Major gifts. Note that “major gifts” are going to mean different things to different nonprofits, depending on budget. 
7. Cause marketing. Some nonprofits partner with corporate entities to have a portion of their sales benefit the nonprofit. You’ve likely seen this offer at your local drug store or grocery store.  
8. Business sponsorship. This involves partnering with local businesses to promote their work in your lobby, special events, and newsletters while they commit to a set donation. 
9. Seek out grants. If you’ve never looked into grant possibilities, there are so many foundations, government agencies, and companies that earmark dollars for specific causes every year. Although it can take time to research and apply, many grant-makers become loyal donors who contribute every year. 

Step 2: Understanding What Revenue Streams Work Best For Your Nonprofit 

Many nonprofits make the mistake of trying to jump into generating new revenue without understanding what’s currently working–and what isn’t. But you shouldn’t just jump into new fundraising strategies in a vacuum or without understanding how it fits into your overall organization strategy and budget. 

After all, diving into new areas of revenue takes a lot of resources. That might include staff time, building materials, investing in new software, purchasing mailing lists. And if you’re not resourced properly, it’s not going to be worth it. 

This also includes having a strong understanding of your current audience and donors. If you’re not sure where to start, check out today’s freebie, which is a chart that will help you understand the groups and individuals that are your strongest supporters: Identifying Your Organization’s Key Audiences. 

Once you’ve reflected on your budget, fundraising strategy, and current audience, we recommend asking yourself the following questions before creating a new revenue stream: 

• What are you trying to achieve and how is it tied to your mission? 
• What revenue streams are currently most successful? Which are the least profitable? 
• What is the cost of each of your revenue streams on an annual basis in terms of time and money spent?
• Do you have a strategic plan and a fundraising plan for the year? 
• What do your resources look like now, and what would they need to look like in order to add new revenue streams? 
• Have you tapped out your existing revenue streams, or would an increased investment in those areas give you what you need? 
• What are other organizations in your sector doing to fundraise? 

Step 3:  Figuring Out How Much Will It Cost to Add New Revenue Streams & Determine Your Markers for Success

Let’s say you are adding a peer-to-peer program. In order to do that right, you’re going to need to invest in new technology that supports this and a subscription. 

This will also take a lot of staff time–to learn the new system and get set up in the new technology, identify prospects for this program, build the strategy, and do outreach to the folks who will be participating in your peer-to-peer fundraising program. 

Every fundraising strategy comes with overhead costs. Make sure you factor these into your decision. 

You’ll also want to establish your goals and success metrics for generating new revenue. Are you hoping to add a certain amount of new donors? Increase the level of gifts? Establish specific membership goals? 

Step 4: Building a Budget for Each Potential Revenue Stream 

The final step is building a budget for each potential new revenue stream so you can see which best aligns with your goals and audience. 

Make sure this budget includes both how much revenue you anticipate building from each source and the upfront costs. 

This will help you identify which new revenue streams are the best bet for you and your organization! 

P.S. In case you missed it, today’s freebie is a super useful chart that will help you identify the individuals and organizations who are your biggest supporters–a crucial piece of understanding what revenue streams will be best for your audience. Good luck!  

Download it today: Identifying Your Organization’s Key Audiences.