[Mark H (forum moderator)]

Can nonprofits choose any revenues “model” that they want? Maybe not. What you DO might strongly influence what revenue sources you can pursue. Hospitals might not have much option on membership dues. Arts organizations might not have many options on government contracts. To what extent does YOUR nonprofit’s mission determine which revenue sources it pursues?

[Bob]

There has to be a balance between our missions and programs and our organizational and financial capacities. Our mission does drive what we do but how we doit and how we fund it have to be serious considerations .

[Mark H (forum moderator)]

Bob: Can you share more about your particular nonprofit? I’m curious how much what you DO (your services or programs) determines which mix of revenue sources you can or want to pursue.

[Bob]

We are an outdoor public garden. Our earned revenues and contributed support are roughly equal with a little more weighted toward earned revenues. coming out of the pandemic where we received significant funding through the Cares Act (PPP, ERC) we found that our financial and organizational capacities were out of whack with our mission and programs. Our staffing was inadequate as were our financial resources. If we had continued down the current path, we would have fallen into a truly difficult financial situation. We were unsustainable in our current form.

We determined that we needed to develop some blockbuster programming to increase our financial capacity so that we could increase our organizational capacity. It was all driven by our mission and programs (what we do and what we’re so passionate about. We now think out-of-the-box because we have to. It’s not an easy fix and takes time. Our staff is learning why we do the things we do (they often are mainly focused on mission/programs.

[Mark H (forum moderator)]

It seems that hard times is when people do that out-of-the-box thinking! Creative networked people can come up with some pretty innovative revenues.

[Bob]

It’s funny how that works. And when we find these creative solutions, we sometimes have to bring people along kicking and screaming. Some folks hate change…they just want to leave things as they are and move forward. Problem is, and they don’t understand, that there is no “forward” if we leave things as they are.

In finding these new opportunities though, we still have to bring them back to mission.

[Ruth McCambridge]

Hi! This is Ruth chiming in!

Some people expressed concern about UBIT yesterday when we were talking about earned income. UBIT is “unrelated business income” which can create problems of a number of kinds for nonprofits BUT the key word there is “unrelated.” We’ll go back to UBIT requirements and issues later in this series but this example is great because it just exhibits another revenue producing avenue to actively enact your mission. There is much written and researched about this but are there other examples participants have for:

1, successful earned income efforts that have stood the test of time? or

2. Earned income programs that have fizzled for one reason or another?

I will also ask Hilda if she has an example or two.

[Mark H (forum moderator)]

Hello visitor! We moderators are checking these forums all the time, so don’t be afraid to chime in. We’d love to hear from you —

Mark

[Dana B (forum moderator)]

Thinking back to this original question (Does the mission determine the model?), at our last webinar on 1/31, we received a lot of questions and interest around more “alternative” models. Feel free to check out this article from NPQ that talks through the experiences and learnings from the development of a mission-aligned co-op:

https://nonprofitquarterly.org/the-colors-co-op-experiment-learning-the-right-lessons-from-our-failure/

Would love to hear from those with any experiences with these types of co-ops/LLCs or social enterprise entities. Let us know what you’ve learned, and what you still have questions about.

[Diane]

The operational model of our environmental mission impacts the revenue model, but it doesn’t necessarily narrow it such that it has led to time and money spent on models that are not sustainable. I asked our board to think about our funding model recently as an exercise in rallying them around those that historically were most fruitful because we showed so many sources. They ended up concluding that individual giving with a heavy emphasis on major gifts was where we needed to put our effort. Corporate funding was never a success avenue because we don’t have the size, scale, and name recognition for a company to associate itself with. The organization size again limits our ability for sizable program delivery that the government would fund directly, although government funding has been part of the mix. The advocacy arm of our organization has been impactful and it relies on individual donors to support as support from local foundations is limited and their priorities can fluctuate.

I think that it is a combination of mission and organization size that determines the model.

[Dana B (forum moderator)]

Diane, thank you for the perspectives. I think organizational size is indeed an important consideration, and within that, understanding the capacity, expertise and networks/relationships among your board and staff is key. And I very much appreciate the exercise you went through with your Board to really zero in on the most fruitful sources.

Given that there’s so many factors to consider when determining which revenue sources are most “fruitful” (mission alignment, strategy, infrastructure for managing reporting/invoicing, ability to cover full costs of services, etc.), would love to hear if others have frameworks, processes and/or criteria for assessing and informing revenue generation strategies. Please feel free to share your thoughts and experiences!