Fundraising for Nonprofits: The Essential Guide + 12 Ideas

Nonprofit fundraising does not have to be complicated, but there are several different avenues you can choose from to raise money for your organization.

Regardless of your organization's size, most nonprofits can benefit from all of the fundraising ideas in this article. Some fundraising strategies are well-known, while others have only become popular recently. 

As you learn more about the best ways to fundraise with companies, individuals, and foundations, take the time to determine which fundraising idea will work best for your organization.

Pay extra attention to the strategies, tools, and case studies we've shared to help you get the most out of these fundraising strategies. 

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What is Nonprofit Fundraising? 

Nonprofits, like for-profit companies, need funding to survive.

The difference between the two is that funding for nonprofits must connect to the nonprofit's purpose, but that doesn't mean you can't raise funds in various ways. Nonprofit fundraising is more than just events, online campaigns, and accepting online donations. 

Organizations can raise funds from individuals, companies, and foundations. The following twelve strategies can help you raise more money, and build and strengthen relationships with donors. 

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The Importance of Fundraising for Nonprofits 

Fundraising helps nonprofits reach a larger audience, encourage supporters to donate money, find more volunteers, and further develop their programs. Nonprofit fundraising campaigns are crucial for organizations that hope to grow and fulfill their mission.  

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12 Strategies to Raise Money for Your Nonprofit 

Fundraising is more than events and online campaigns. As we delve deeper into the best ways to raise money from companies, individuals, and foundations, it's important to remember that all examples won't work for your organization. You must determine your organization's resources and limitations when deciding which nonprofit fundraising strategy will work best for your organization. 

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Best Ways to Raise Money from Companies 

1. Sponsorships 

Corporate social responsibility is a big trend, and companies search for ways to publicize their good works to customers. Nonprofits like yours can benefit from this trend. Event sponsorship is a common fundraising strategy when soliciting companies. 

Nonprofit organizations searching for event sponsors should look at local businesses and organizations with a similar customer base. A primary reason companies have for sponsoring events is the chance to reach a new audience. If you can prove that your donor base will be interested in their products or services, you will have a better chance of gaining the company's support. 

Another way to find potential corporate sponsors is to connect with businesses in different ways first. An easy way to do this is to ask for an in-kind donation for your event.  

Another way to get your foot in the door is through the company's volunteer program. Many corporations offer their employees paid volunteer time to support their favorite charities. Contact your current donors to see whose employers offer this perk.  

Your donor will be the best contact for the business and may be able to set up a group of volunteers to work on a project. During or after the “volunteer day” you can personally connect with the donor's boss, thank them for the company's help, and build a relationship that may turn into a sponsorship that equally benefits both organizations.   

Case Study: Comcast did this with several nonprofits during their Comcast Cares Day. Before the COVID-19 pandemic, Comcast held an annual day when all staff could sign up to volunteer with different organizations nationwide. Nonprofits could sign up online or connect with Comcast through its employees. As relationships between Comcast and many of these nonprofits grew, some turned into long-term event sponsors. 

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2. Corporate Partnerships 

Relationship building is crucial when soliciting corporations. A solid relationship can turn an event sponsorship into much more. Corporate-Nonprofit partnerships happen when the two organizations have a similar goal. Businesses can use the opportunity to promote corporate responsibility to their customers. Nonprofits can benefit from an increase in donors and volunteers. 

Case Study: An example of one of these partnerships is with Walmart and Feeding America. During the Feeding America campaign, customers could round up their purchases on Walmart.com and Walmart app. Walmart and Sam's Club stores, and online, donate money to cover one meal with all participating products that customers purchase. To date, the campaign has raised enough to provide 1.7 million meals to food banks nationwide. 

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3. Matching Gifts 

While your nonprofit may not raise as much as Feeding America through a corporate partnership, matching gifts can help you raise money in a few different ways. In addition to offering paid volunteer time, many companies match donations made by employees to their favorite charity. Double the Donation makes it easy for nonprofits to share which companies offer this employee perk.    

Corporations and nonprofits that have developed a partnership can also create a matching gift campaign where the company matches all donations up to a specific amount. Campaigns like this benefit both organizations and are simple to hold online. Click here for more tips to run a successful online campaign with Zeffy.    

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Best Ways to Raise Money from Individuals 

4. Events 

Fundraising events are an excellent way to raise money from individual donors. Whether it's an annual fundraising gala, family festival, or 5K run, your organization can raise funds with event tickets, auctions, raffles, and individual donations.  

While you can raise money, the primary reason for your nonprofit to host an event is to reach individuals who don't know your organization and to promote your organization's mission and programs.  

You can reach a larger audience with marketing tools like social media, paid ads, and word of mouth. The last one, word of mouth, will have a more significant impact in most cases. If you're having trouble selling tickets to your event, ensure that it's easy for existing supporters to promote and share event information on their social media pages. You may also want to include challenges and prizes for the supporters who sell the most tickets. Check out three more no-cost ways to promote your event! 

Once you have an audience, you'll want to find ways to share your organization's mission whenever possible. The more you share about your organization, the more people feel connected and will be willing to give. At your event, either in person or online, you can share videos or include speeches from beneficiaries who benefit from your nonprofit's programs. Adding these before a live auction or donation appeal will increase what you can raise.  

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5. Peer-to-peer online campaigns 

Peer-to-peer and crowdfunding campaigns are some of the best online fundraising ideas. They're also an excellent way to reach individuals who don't know your organization. Nonprofits can hold a peer-to-peer campaign by itself or add it to any existing event or fundraising campaign. 

Nonprofits that want to add peer-to-peer campaigns to their fundraising calendar can use online tools, like Zeffy, to make it easy to spread awareness and raise funds. They should also find a group of supporters with a solid online following and an interest in sharing your organization's cause.  

Starting with a group of fundraisers will help spread the word about your campaign and raise more money. You must train them to use the available online tools and provide them with enough information about your organization to share with their community. The best way to do this is with regular updates and videos on the successes of your nonprofit's program and campaign.  

While your chosen supporters begin their fundraising efforts, you can reach out online for more people to join the campaign. One way to get fundraisers and donors more involved in you crowdfunding campaign is to create a competition where the supporter who raises the most money wins a prize. 

Case Study: Another way to grow this type of campaign is through a social media challenge. The best example of this is the Ice Bucket Challenge by the ALS Association. A simple video of someone dumping a bucket of ice over their head and challenging their friends to do the same helped this organization raise millions and made a significant difference in its fight against the disease.   

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6. Major Donor Cultivation 

Many small and medium-sized nonprofits rely too heavily on event fundraising. Successful organizations understand the importance of prospecting and forming strong relationships with major donors. A major donor is different for each nonprofit. Whether you see a major donation as $10,000 or $1 million, the process of establishing these relationships remains the same. 

The first step is donor prospecting. You'll want to look inside and outside of your organization for these individuals. Zeffy's donor management tool lets nonprofits collect and store donor information, segment donors based on their interests and ability to give, and add notes on any communication.  

Before you look outside your nonprofit, pull up a donor report of significant gifts. Do your due diligence to find and contact existing supporters who already have a relationship with the donor and have them introduce the donor to your Executive Director or Board Director. 

Donor management tools like Zeffy make creating a moves management plan for each donor easier to follow. Moves management is a process that fundraisers and board members can follow to communicate with the donor, and build, and strengthen the relationship. Throughout your donor's moves management plan, various people may be involved so it's crucial to add all communication steps and feedback to your donor management system. 

The more you learn about the donor, the more options you'll find to solicit their donation. Some major donor fundraising options include program funding, scholarships and endowments, or planned giving.  

Planned giving is the opportunity for donors to give to a charity as part of their overall financial or estate planning. Organizations that educate their donors about planned giving will find more supporters with the ability to give significant gifts and increase their long-term fundraising sources.  

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7. Recurring Giving 

One-time gifts from individuals are great, but recurring gifts are better. Recurring donations can help your organization plan its fundraising and program calendars. These donations also give nonprofits a greater chance of building long-term relationships.  

A membership program that offers increased access to your Board of Directors or beneficiaries, can help encourage more recurring donations from your supporters. Other perks you can offer members include regular updates about programs via newsletters, VIP tours of your facility, or event tickets. 

Donor communication is essential for membership programs at every step of the relationship. You should send a personalized letter when people join your organization as a member, after every donation, and after they've left. In the letter, you must thank members for their involvement, provide updates on programs and events they're interested in, offer them more ways to get involved, and ask for their feedback.  

Be sure to direct donors to a donation page, too, where they can easily make charitable donations and receive automated donation receipts for their contributions.

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8. Earned Income 

Earned income is revenue generated by selling goods or services, rather than relying solely on donations, grants, or gifts. Creating an earned income source for your organization can help raise significant funds. 

If your organization chooses to sell a product or service, it must align with your mission. An example of this is a hospital or medical office that offers medical services, or an environmental organization that sells eco-friendly products. 

→ Check out these profitable things to sell for a school fundraiser here.

Case Study: An obvious example of nonprofit earned income is museum admissions and gift shops.  Museums like the Smithsonian in Washington D.C., The Art Institute in Chicago, and the Metropolitan Museum in New York are well-known examples of organizations that raise the majority of their funds through earned income.  

Most museums will charge visitors a fee to view their exhibits. They also operate gift shops and sell items that match their mission and raise significant income. Many smaller museums and art exhibits follow a similar fundraising strategy.   

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In addition to goods and services, nonprofits can collect earned income in various ways, including:  

• Membership fees 

• Fees charged for workshops, online courses, and webinars 

• Consulting services 

• Rental Income 

• Licensing and Royalties 

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Nonprofits must be transparent about these sources of income, how they are used, and any potential conflicts of interest. Organizations must also make sure their earned income complies with the Internal Revenue Service (IRS) tax regulations. 

Individuals want to support organizations that meet their personal values and interests. If your nonprofit sells products that impact your organization's mission and programs, donors will likely purchase them. Foundations also prioritize nonprofits that generate earned income. They appreciate the financial health and stability and reduced reliance these organizations have on grant funding.  

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Best Ways to Raise Money from Foundations 

When asked about fundraising, most nonprofits automatically think of grants. In 2021, foundations game more than bequests and corporations combined. What may surprise you is the variety of grants your organization can apply for.  

When researching grants for your organization, you should start small with local community foundations. Winning grants with smaller foundations will help promote your organization and build your credibility.  

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9. Program Grants  

Program Grants are the most common. Organizations that raise funds for a specific program that meets the foundation's mission and goals will have a greater chance of receiving funds. If your nonprofit hopes to gain grant funding, you must research and find foundations with similar goals, and look for personal relationships you already have with the organization.  

Many nonprofits also provide funding for operational support or unrestricted funding. This is especially helpful for new nonprofits looking for financial help to register their nonprofit with the state and IRS, build a website, and develop new programs. 

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10. Capacity-Building Grants 

If your nonprofit is new or hoping to grow, capacity-building grants are also an excellent option. Many foundations will offer organizational development grants to help pay for strategic planning, board development, leadership training, financial management, technological upgrades, staff training, and consultants.  

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11. Challenge Grants  

A different type of foundation grant is the challenge grant. This is when a foundation offers to match the donations of a campaign. The foundation's gift is typically contingent on successfully meeting the fundraising goal. Organizations holding capital campaigns for large building projects can use these grants to excite and involve donors. 

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12. Donor-Advised Funds  

Nonprofits can also work with foundations to find and receive Donor-Advised Funds (DAF). A Donor-Advised Fund is a financial tool that lets individuals make significant charitable contributions, receive immediate tax benefits, and then recommend how the gift should be spent.  

DAFs are often managed by foundations. Nonprofits can reach out to foundations that sponsor DAFs to inquire about partnership opportunities, ask if they will list you as a recommended charity, or if you can participate in their grant recommendation program. 

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Mistakes to Avoid When Fundraising for Your Nonprofit 

Fundraising is more than just throwing ideas against the wall to see what sticks. Planning, diversifying, and communicating are all essential pieces of your nonprofit's fundraising. Stay ahead of the competition, and make sure you avoid the following fundraising mistakes. 

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No clear strategy 

Nonprofit boards may want to jump on every fundraising and marketing trend for fear of missing out, but action without a well-thought-out plan will cause more damage than good. A strategic fundraising plan will help your organization prioritize programs and fundraising activities and create a reasonable financial goal and budget you can meet. 

It's vital to set clear goals, identify your target market, and develop fundraising events and campaigns that will appeal to your donor base. 

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No donor management 

Communication and stewardship are crucial for donor relationships and fundraising. Unfortunately, many nonprofits are volunteer-run and don't have the time to send regular communication pieces to donors.  

Fundraising without donor relationships is likely to fail, so your organization must find ways to build communication plans for each donor type. You must determine these group's program and project interests, their ability to give, and the relationships they may already have within your organization. 

Keep track of this information by adding it to your donor database. Develop a moves management plan for each donor type and include staff, board members, and volunteers in the communication process. By involving many people, you'll have a greater chance of keeping up with communication goals and strengthening donor relationships. 

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The following list includes different ways to regularly communicate with donors: 

• Powerful beneficiary stories 

• Video interviews 

• Donor acknowledgments 

• Welcome letters 

• Surveys 

• Monthly Newsletters 

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Zeffy offers a free donor management feature designed to help you effectively engage with your donors.

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Ignoring lapsed donors 

If your organization has built a solid donor management system and created a moves management plan for all donor types, make sure Lapsed Donors is one of them. 2022 showed a significant decrease in donor retention across all nonprofits. The economy is one reason, but another primary issue donors gave for leaving the organization is the lack of communication.  

Lapsed donors may have stopped supporting your nonprofit this year, last year, or even before. Regardless of when, you must find ways to reach out to see why they left and learn how you can win them back. Visit our website for a list of writing tips and templates to help you re-engage your organization's lapsed donors. 

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Not diversifying revenue streams 

Another fundraising mistake nonprofits make is to rely on only one or two revenue streams. The number of revenue streams a nonprofit should have depends on financial circumstances, mission, and goals. Smaller nonprofits can easily fall into this trap due to limited access to resources and staff, but you cannot assume grant and event funding will be enough.  

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Many revenue sources on this list do not take a lot of time or money to start: 

• Individual donations 

• Membership fees 

• Earned Income 

• Online fundraising campaigns 

• Matching gifts 

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Overcommitting to restricted funds 

Foundations, corporations, and individuals will have specific funding interests that may not always meet your organization's needs. While it is tempting to raise funds for popular programs, you must also raise enough funds to cover administrative, fundraising, and other internal costs. Your nonprofit needs unrestricted funds to cover these expenses.  

When fundraising, nonprofits must balance restricted and unrestricted funds. Include program funding and operational funds on all fundraising pieces and explain the importance of both to your donors.  

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Ignoring legal and ethical guidelines 

The IRS and your state have strict guidelines and restrictions on nonprofit fundraising. Your organization must comply with each of these rules or risk the chance of losing your tax-exempt status. 

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Legal Compliance for Fundraising 

Nonprofits must follow IRS and state rules and regulations regarding fundraising. They must also check their state's rules about donor solicitation and raffle rules. Here are the primary areas of legal compliance for fundraising that nonprofits should be aware of. 

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Nonprofit Status 

If you are interested in starting a nonprofit, you must apply for tax-exempt status with the IRS. Nonprofits that register under section 501c3, must be organized and operate exclusively for tax-exempt purposes, and no individual can benefit from the nonprofit's earnings. 

501c3 organizations must be charitable, religious, educational, scientific, or literary, or they must perform public safety tests, foster national or international amateur sports, or prevent cruelty to children or animals. 501c3 organizations cannot participate in partisan speech or activities. They also have limited options for lobbying and cannot intervene in political campaigns without endangering their tax-exempt status. 

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Conflict of Interest Policy 

The IRS recommends nonprofits have a conflict of interest policy to manage and disclose potential conflicts among board members, staff, and volunteers. 

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Registration 

States have different rules and regulations, but most nonprofits must register with their state before soliciting donations. You must check your Secretary of State office to ensure you're following all requirements.  

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Solicitation 

After registering with your state and gaining tax-exempt status, you can begin soliciting donations from individuals, corporations, and foundations. When you do this, you must be completely transparent about how you will use funds and if there were goods or services given in exchange for their donation. 

For instance, if your organization sells event tickets to a dinner or collects funds for an auction or raffle, you must educate donors about how much of their gift they can claim on their taxes. If a donation is worth less than the item value or dinner, the donation is not tax deductible.  

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Raffles and Lotteries 

Each state and community has its own raffle and lottery laws. Your organization must do its due diligence to learn these laws before holding an event. Many local governments will require a license before hosting a raffle, auction, or lottery.

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Donations and Acknowledgments 

When collecting donations, nonprofits must have gift acceptance policies that clarify which gifts your organization can accept. Nonprofits must also have policies regarding donor privacy and record keeping ensuring they're following data protection laws and keeping accurate records for financial reports. Ensure all board and staff members know and understand this policy. 

After receiving a gift, your organization must also send tax receipts and acknowledgments. It is best practice to send an acknowledgment within 48 hours, but online fundraising tools like Zeffy let your organization send automatic tax receipts to your donors.  

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Financial Reporting 

Nonprofits are required to file Form 990 along with the following four financial statements with the IRS every year: 

• Statement of Financial Position 

• Statement of Activities 

• Statement of Cash Flow 

• Statement of Functional Expenses 

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While that is the only legal requirement, nonprofits will benefit from sharing these reports with their donors on their website, with mailed annual reports, and on external nonprofit rating websites like Charity Navigator

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Start raising money with free fundraising software 

As your nonprofit organization determines which fundraising idea works for your organization — whether it's an online fundraising idea or not — remember to diversify your fundraising calendar and don't put all your efforts towards one idea.

Regardless of your organization's size, you can start many of these fundraising ideas for little to no money.

Zeffy can help your nonprofit collect online funds with individual donations, peer-to-peer fundraising campaigns, eCommerce, raffles, and lotteries.

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Frequently Asked Questions

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