Time and again, we’re approached by nonprofits struggling to stabilize their fundraising efforts (too many peaks/troughs). Or, struggling to build enough capital to scale-up their efforts and get to their next level of impact (plateauing).
When digging into these challenges with our customers, we tend to hear things like they:
- Have gone to the well too much with their donor-base
- Spend more time reporting on what they do, than actually doing
- Invest a lot of time and capital upfront on events, with potentially little payoff
Those are just a few of the most common concerns, but I’m guessing that some of this sounds familiar to you, right?
The problem is there are some truly foundational issues with each of these channels that cause instability:
- Donations – asking someone to give you their hard earned money for something intangible in return (though you’d like to think your mission and regular updates are enough!)
- Contracts & Grants – squandering limited operational budget meeting your reporting requirements instead of investing it in your people, processes, technology and innovation (so you can get better at what you do like a for-profit organization would)
- Events – spending a lot of time and effort to promote your event for one night of activity, and then you have to start all over again for the next event/year (hoping to keep momentum and attendees engaged)
So, Why Earned Revenue?
Earned revenue, or sometimes referred to as earned income, is revenue generated from selling a product or service more like a traditional for profit business (i.e. Girl Scout Cookies). So, why do I advocate for earned revenue? In short, it helps tackle the foundational issues for each of the channels we’ve discussed.
Replace Donations with Tangible Value
When you provide a product or service with value and social benefit, people are willing to pay for it (and maybe even at a premium!) As you can see with the rise of social enterprises like Tom’s and Seventh Generation, consumers are looking for businesses that do good. I’m not advocating for dropping your nonprofit status (at this point), but if you can look at your core competencies and identify products or services that you can offer, then you might have a better shot at sustainable funding.
Remove Unnecessary Oversight From Delivery
The revenue generated is yours to use as you see fit, with no unwieldy reporting requirements that typically come with contracts and grants. Think of what you could do with that income! Now, don’t get me wrong, I believe measuring impact is a fundamental part of telling your story. But, you should be more focused on achieving your mission than pulling together documentation to prove your work matters.
Eliminate One-off Promotional Efforts
Instead of spending time and effort on a one-time payoff like promoting a fundraising event or peer-2-peer campaign, what if you could build momentum and have a consistent stream of income coming through your door? Think of the progress over the years, for instance by the Girl Scouts, promoting and selling their cookies. By doing this, you can better forecast your income and expenses and make more concrete decisions on when to scale your efforts.
Earned revenue may not be the only answer for your organization (and you’ll also want to stay in compliance with the IRS’ standards), but after you take a look at strategies for being more effective at traditional fundraising, it might be time to look at other opportunities to differentiate yourself from the crowded market of nonprofits pursuing traditional avenues.
Interested in generating earned revenue? Feel free to reach out to me at firstname.lastname@example.org to see how I can help you become more Impaktfel.