Diversifying Nonprofit Revenue Streams for Growth in 2024

Nonprofits thrive on passion, but they survive on funds. As traditional donation models shift, organizations must explore new avenues to ensure financial stability and continued growth.

In this article, we’ll take you through 10 practical revenue streams that are reshaping nonprofit funding in 2024. We'll delve into each option's potential, providing real-world examples and actionable implementation strategies tailored to organizations of various sizes and missions.

Our goal is to equip you with the knowledge to make informed decisions about which revenue streams align best with your organization's unique needs and objectives.

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10 ways to diversify your nonprofit’s revenue stream

1. Individual donations
2. Grants from foundations or governments
3. Corporate giving 
4. Fundraising events 
5. Crowdfunding campaigns
6. Peer-to-peer fundraising
7. Selling branded merchandise
8. Membership program
9. Program-related investments
10. Building investments 

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Why should you diversify your nonprofit revenue streams?

Diversifying your nonprofit's revenue streams is crucial for long-term sustainability and growth. Multiple income sources provide a buffer against economic fluctuations and donor fatigue, ensuring your organization can weather financial challenges.

Diversification also broadens your support base, engaging different stakeholder groups and potentially attracting new supporters. It allows for greater financial flexibility, enabling your nonprofit to pursue innovative programs or respond quickly to emerging needs in your community.

Diverse revenue streams can also enhance your organization's credibility with grantmakers and major donors, who often view financial stability as a key indicator of effective management.

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10 revenue streams to consider for nonprofits

1. Individual donations

Over 80% of all donations to nonprofits come from individuals, making them a key part of your revenue stream. Individual donors can make one-time or recurring donations and give in different ways: online and offline, through events, silent auctions, planned giving, and more.

To maximize revenue, your nonprofit should tap into all types of individual donors, including:

• Major donors: Individuals with the potential to give large gifts, taking a project from idea to the implementation phase. To prospect major donors for your nonprofit, consider investing in a wealth screening tool. Tailor your approach to address each potential donor's interest and needs.
• Regular donors: Also called mid-level donors, these individuals give more frequently, but their gifts are smaller in size. These donors offer steady, predictable income for your nonprofit. Focus on personalized communications, impact reporting, and stewardship programs to strengthen these relationships.
• Recurring donors: Monthly or quarterly supporters who provide steady, predictable income through automated donations.
• Volunteers: 62% of charitable donors are also volunteers, indicating that you should nurture relations with people who donate their time and effort. To boost revenue, focus on giving volunteers a great experience. Recognize their efforts and build strong relationships to encourage them to support your cause financially.
• Planned/legacy donors: Individuals who arrange to leave a gift through their will, trust, or estate planning. These gifts can have a lasting impact on a nonprofit's long-term financial health.
• Alumni: Former members, especially of educational institutions, who may donate to help new members receive similar benefits they once enjoyed.

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2. Grant funding

Grants are funding provided by government entities (at federal, state, or local levels) and private foundations. They are awarded in the form of money, accelerator programs, or free resources such as professional legal services, software, etc.

Often, grants are restricted to a specific location, sector, or program, and they will have specific guidelines on how funds should be spent. Given these constraints, conducting thorough research and applying for grants aligned with your mission and project goals is crucial.

Several platforms exist to help nonprofits identify grant opportunities and improve application success:

• Grants.gov provides a comprehensive database of federal funding opportunities
• Candid offers extensive resources for private and public grants
• GrantWatch highlights current grant opportunities across sectors
• Foundation Directory Online connects nonprofits with potential funders

Since grant funding is a bit tricky, here are a few tips to help you increase your chances of success:

• Build relationships with funders: Many grants are invite-only, and even those that aren't will be more within reach if you have prior connections with the funding organization. Build relationships through networking, attending webinars, and participating in relevant forums.
• Write strong grant proposals: Create a well-structured, compelling proposal that clearly states your mission, need, and funding use. Tailor the document to the grant's specific goals, highlighting how your project matches their priorities.
• Follow the instructions: Submit within the deadline and double-check that you've followed the grant guidelines. This includes ensuring the sections are of the correct length and in the right order. Attach requested documents such as the project budget.

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3. Corporate giving 

Corporate giving, or "corporate philanthropy," refers to businesses' efforts to create social impact, including facilitating donations to charitable causes.

When exploring corporate giving as a funding option, look for companies that share your nonprofit's values. With the same beliefs, you're more likely to secure their support for your initiative. Corporate giving can take various forms, including:

• Event sponsorships: Support nonprofit fundraising events through monetary contributions or in-kind donations such as free catering services or auction items. In return, you offer sponsors promotional opportunities like logo placement, mentions in event materials, or speaking slots.
• Pro-bono services: Some corporate professionals offer free accounting, legal, bookkeeping, and other services to nonprofits.
• Matching gifts: A company matches its employees' donations to charities or causes specified in its matching gift programs. Usually, the company matches the original donation at a 1:1 ratio.
• Volunteer grant programs: Companies will donate money based on how many hours their volunteers spend with your nonprofit.
• Paid release: A company offers a few paid release days each year, allowing its employees to spend a day or two volunteering during regular work hours.
• Corporate grants: Companies award money to a nonprofit for a specific program or project that is aligned with their values.
• Cause marketing: A mutually beneficial partnership between a for-profit business and a nonprofit, designed to promote the business's sales and the nonprofit's cause.

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4. Fundraising events 

Fundraising events, whether in-person or virtual, are powerful tools for generating revenue and fostering community engagement. However, it’s essential to plan your budget carefully to maximize profits and ensure expenses don't eclipse funds raised. Nonprofits can explore a range of event ideas, from cost-free to low-budget options, to suit their resources.

Partnering with local businesses for sponsorships, venues, catering, and entertainment can significantly reduce overhead costs. While ticket sales often form the primary revenue stream, organizations can diversify income by selling branded merchandise and strategically placing donation signage throughout the venue. 

For larger-scale events, incorporating elements like silent auctions or ticketed dinners can further boost fundraising potential, creating a multi-faceted approach to revenue generation.

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5. Crowdfunding campaigns

Unlike traditional donations, crowdfunding campaigns are time-bound initiatives that leverage social sharing and progress tracking to create urgency. These campaigns typically focus on specific projects or goals, using storytelling and regular updates to engage large numbers of small-dollar donors who feel connected to the immediate outcome.

Here's how crowdfunding campaigns usually work:

• Create a donation page for your cause. Post it on the crowdfunding platform that best fits your purpose.
• Make sure your campaign has a specific monetary goal and a deadline. This will help create a sense of urgency and encourage more donations.
• Beyond the crowdfunding platform, share your page across social media profiles and through emails.
• Post regular progress updates to keep your audience in the know and show them how much of a difference they're making.

Successful crowdfunding campaigns usually have an inspiring story that resonates with the public and compels them to share your campaign with their networks. 

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6. Peer-to-peer fundraising

Peer-to-peer fundraising leverages the power of your supporters' networks, exponentially expanding your donor base. This strategy empowers your advocates to become active fundraisers, reaching out to their friends, family, and colleagues for donations. 

The personal connection inherent in these appeals often leads to higher response rates, as people are more likely to contribute when asked by someone they know and trust.

Here's how a peer-to-peer campaign works:

• Set up the campaign: Create a central fundraising campaign with defined goals, timelines, and messaging while providing tools and resources for supporters to launch mini-campaigns.
• Create fundraising pages: Individuals set up personalized pages on the nonprofit's platform, adding their own stories and reasons for supporting the cause.
• Supporters promote their networks: Each fundraiser shares their page with friends, family, and social media followers.
• Collect incoming donations: As people donate through personal fundraising pages, funds go directly to the nonprofit.
• Engage and acknowledge: Provide updates, offer fundraising tips, celebrate milestones, and thank both donors and fundraisers for their contributions.

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7. Selling branded merchandise

By selling merch, you offer supporters something valuable and unique to your nonprofit in return for their financial support. Limited editions or unique merch can attract supporters who want something meaningful tied to the cause they care about.

Branded merchandise is also a nonprofit funding source that doubles as a promotional opportunity. When your supporters wear or use your merchandise, it increases the visibility of your nonprofit.

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8. Membership program

Memberships and subscriptions work well for nonprofits such as museums, art organizations, and environmental advocacy groups. They offer exclusive benefits to members, creating a reliable, recurring income stream. 

This approach supports ongoing projects and activities while fostering donor engagement,  building long-term loyalty, and cultivating a dedicated community of supporters. Consider this option if your nonprofit can provide unique perks to members.

Here are different types of membership programs nonprofits can focus on:

• Annual membership: Pay a yearly fee to access benefits such as exclusive event tickets, discounts on branded merch, a free annual calendar, and more.
• Tiered membership: Offers multiple membership levels (e.g., bronze, silver, gold), with increasing fees and benefits at higher levels.
• Monthly subscription: Contribute a fixed amount monthly to receive access to event tickets, webinars, and more.
• Exclusive/Invite-Only Membership: Reserved for a select group of donors or supporters, offering prestige and exclusive access to high-end galas, information, or opportunities.

Streamline your membership process with Zeffy’s 100% free membership management tool that tracks members, manages dues, automates renewals, and sends reminders—all at no cost.

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9. Program-related investments

Program-related investments (PRI) are a type of funding used by foundations to support their mission. Like grants, PRIs provide funding support to organizations that align with their values. However, unlike grants, PRIs are repaid, often at low interest rates.

This revenue stream is ideally suited for nonprofits that don't fall under IRS Code 501(c)(3). Most US government or private foundations give grants to only organizations under this status. PRIs offer funding to all kinds of charitable entities, including social enterprises.

PRIs are generally available as loans, deposits, or equity investments. They can help with:

• Short-term cash flow
• Large projects like renovations
• Equipment purchases

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10. Building investments 

Strategic investments provide nonprofits with a powerful tool for long-term financial growth and stability. As 501(c)(3) organizations, nonprofits benefit from tax-exempt status on investment gains and dividends, maximizing returns. 

While not an immediate revenue generator, a well-managed investment portfolio builds substantial reserves over time. These assets serve as a crucial financial buffer, ensuring operational continuity during periods of funding volatility or economic downturns. 

By diversifying into carefully selected investments, nonprofits can create a sustainable financial foundation, supporting their mission and programs for years to come. Nonprofits can invest in a variety of assets to grow their financial resources. 

Here are some common investment options:

• Endowment funds: These are funds created by a donor's gift with specific conditions. Outlined in a signed agreement that allows the principal to be spent only after a predetermined date.
• Bonds: Debt securities are loans to corporations or government entities in exchange for regular interest payments and the return of principal at maturity.
• Stocks: Ownership in companies for potential high returns over the long term through capital gains and dividends.
• Treasury bills: Short-term debt securities issued by the U.S. government with maturities of one year or less.
• Certificates of deposit (CDs): A type of savings account that offers interest on a fixed amount of money held for an agreed-upon period.

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How to diversify revenue streams for your nonprofit

1. Conduct a financial needs assessment

Conduct a thorough analysis of your nonprofit's financial health, examining primary revenue sources, overhead costs, and financial projections. This assessment will help reveal funding gaps, identify effective and underperforming revenue streams, and highlight areas where your organization may be overly dependent on specific income sources. 

By uncovering these financial vulnerabilities, you can pinpoint where diversification is most critical. This will help you lay the groundwork for a more resilient and balanced funding strategy tailored to your organization's specific needs and challenges.

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2. Identify opportunities for new revenue streams

It's time to brainstorm with your team and come up with new ways to generate revenue. Get creative and think outside the box. 

What's working in your mission-related area that you haven't tried yet? 

Research successful revenue strategies from other nonprofits and consider adapting them to your organization. Ask your volunteers if they have any ideas, and consult your board.

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3. Create a plan of action

Select two or three promising revenue models from your assessment and develop a comprehensive strategic plan for each. Outline clear goals, realistic timelines, and specific success metrics to guide implementation. Craft tailored communication strategies for different stakeholders, including sponsors and donors, to maximize engagement and support.

Evaluate your organizational capacity to manage these new revenue streams effectively, as major gifts, corporate sponsorships, and investment management often require dedicated personnel. Assess whether your current staff can absorb these responsibilities or if you need to hire additional experts. 

Consider leveraging skilled volunteers for specific tasks to balance resource allocation and cost-effectiveness in your diversification efforts.

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4. Building partnerships for financial support

Collaborate with other organizations, companies, or influencers who share your mission. Partnerships provide access to new donors, in-kind donations, or shared resources. 

Build long-term relationships by showing how their contributions impact your cause. Be proactive in networking at events, conferences, and through industry groups. Aligning with the right partners leads to new funding sources and expands visibility.

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5. Continue to evaluate your revenue streams

Implement a systematic approach to regularly evaluate the performance of your diversified revenue streams. Conduct quarterly assessments to analyze each stream's contribution to your overall financial health, considering factors such as growth rate, cost-effectiveness, and alignment with your mission. 

Use data-driven insights to identify trends, challenges, and opportunities for optimization. Be prepared to adjust your strategy based on these evaluations. Stay informed about emerging fundraising trends and be open to incorporating new methods that align with your organization's goals and capacity.

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Case study: How Parkdale Community Food Bank raised over $1.3 million using Zeffy

The Parkdale Community Food Bank was able to effectively diversify its sources of revenue thanks to Zeffy's 100% free fundraising platform. They've created targeted campaigns using Zeffy’s donation forms and event ticket management platform, such as the Monthly Grocery Support Program, Emergency Food Relief Fund, Holiday Meal Initiatives, etc.

Through Zeffy's zero-fee platform, PCFB has processed over $1.3 million in donations while saving more than $66,000 in processing and platform fees. These savings go directly toward their mission to provide barrier-free access to nutritious food for all, empowering community members with compassion, dignity, and respect.

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Final words on nonprofit revenue streams

In today's ever-changing nonprofit space, diversifying revenue streams is not just a strategy—it's a necessity for long-term sustainability and impact. By carefully selecting and implementing a mix of funding sources tailored to your organization's mission and capacity, you create a resilient financial foundation for growth.

As you explore different streams to raise funds, consider leveraging tools that can streamline your fundraising efforts and maximize your resources.

Zeffy offers a 100% free fundraising platform designed to support nonprofits in managing multiple revenue streams efficiently. From processing donations to event management and donor communications, our tools can help you implement and track your diversified funding strategy without incurring additional costs.

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FAQs about the nonprofit revenue stream