A Breakdown of Funding Sources for Nonprofits

A Breakdown of Funding Sources for Nonprofits

There are many ways to fund a nonprofit, and while every organization is different, it is generally a good practice to diversify funding sources. In this article, we will explore seven different types of funding.

Individual Giving

These are donations made by individuals online or offline, and they make up the majority of giving for many organizations. Individual giving encompasses a variety of sub-types, including:

  • Major Donors: These are individuals that can give a larger sum than most, and
    therefore, they generally receive additional cultivation efforts. Each organization
    decides the specific amount that defines a major donor. For example, a smaller
    organization may define a major gift as $200+, while a larger organization may
    define it as $10,000+.
  • Crowdfunding: This method is typically used for projects or to reach a specific
    funding goal and involves the solicitation of donations from many individuals.
  • Peer-To-Peer – This type of fundraising often falls under crowdfunding, as it
    empowers individuals to crowdfund on behalf of the organization and ultimately
    allows the nonprofit to reach a more extensive network of individuals.
  • Recurring Giving : These are individual donors that give a specific amount on a
    schedule; most often, these are recurring monthly donations. Recurring giving is
    a sustainable funding avenue and has been on the rise since online giving has
    made it more accessible.

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Corporate Sponsorship

Sponsorships allow nonprofits and corporations to build mutually beneficial relationships. Nonprofits receive funds, and in return, the corporation typically receives perks, such as logo placements and public thank yous. In addition, sponsoring a
nonprofit can show a corporation’s consumers that they are socially responsible, which has become increasingly important.

Events

Events not only bring in funds, but they allow an organization to build stronger relationships with their donors and community. While events can be a great funding source, they incur more expenses than most other fundraisers.

Earned Income

This type of income comes from the sale of services or goods. Earned income can be a great source of revenue if it fits into the mission of the nonprofit.

Memberships

Nonprofits that utilize memberships offer a specific set of benefits in exchange for an annual or monthly fee. Memberships also provide a sense of community and create more engaged donors.

Grants

Grants are awarded to nonprofits by private and public foundations and local, state, and federal governments. Nonprofits must apply for grants, and when awarded, they typically come with specific requirements and restrictions.

Planned Giving

Also known as bequest or legacy giving, planned giving refers to donations left to an organization in a person’s will.

Are you ready to boost your fundraising and diversify your nonprofit’s fundraising? As you begin looking at new fundraising methods, we encourage you to develop a plan and understand the additional work needed to make each revenue source successful, especially if you are a small organization.

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