How Nonprofits can Increase their Funding by Tapping into Different Sources

External Sources of Funding

Though the term nonprofits refers to organizations whose motive is not to make profits, they still need funding for financing their day to day operations that include paying salaries, running expenditure, and costs incurred for maintaining the offices and running the campaigns. There are many sources of funding for nonprofits and we shall discuss the main sources of funding in this article.

First, they can tap into the Federal governmental funds that are earmarked specifically for social welfare. In the United States, the government has a large budget for funding nonprofits and therefore, they can tap into this source of funding. Next, the nonprofits can avail themselves of the funding from regional and state governments as well as county councils that have special funds for the nonprofits.

Apart from this, nonprofits can raise money from charitable institutions that have been setup exclusively for funding activities that promote the public causes.

Further, nonprofits can also tap into the funds at the disposal of foundations like the Rockefeller Foundation, the Carnegie Endowment, and the Ford Foundation. These foundations have been setup by extremely wealthy people to serve society and indeed, many nonprofits help themselves liberally to the grants from these foundations.

Internal Campaigns and Methods

The previous section dealt with the sources of funding for nonprofits from external agencies. This section looks at how nonprofits can raise funds from within by running campaigns and user generated fees. For instance, it is quite common for nonprofits to run a series of campaigns aimed at raising money and these include performances by famous artists where the public buys the tickets the proceeds of which go to the nonprofits.

The nonprofits also run campaigns that are topical in nature where the people contribute to specific causes or the topical campaigns that are aimed at mopping up money from the niche causes.

Apart from these, the nonprofits also charge a nominal fee from the users of its services, which mean that they can fund themselves by virtue of money generated from their activities.

There are also cases where nonprofits have planned episodic and ongoing funding activities that as the names suggest are either one time affairs or run throughout the year. For instance, many nonprofits ask their donors to contribute to seasonal or quarterly fundraising campaigns and also ask their patrons to contribute to a one-time campaign aimed at making up the shortfall in their budgets.

Why People Contribute?

The fundraising by nonprofits can be of two kinds and that are the capital funding campaigns that aim for a particular amount of money to be raised as part of their campaign and the planned giving that focuses on ongoing contributions throughout the year or the time that the nonprofits have been around.

The various methods of funding by the nonprofits have become more innovative in recent years because of the crash crunch that they are facing as a result of the ongoing economic crisis. For instance, many nonprofits make it a point to give something (a token symbol or an item) to their donors as a mark of appreciation for their contributions. As mentioned earlier, the performance by famous artists and the events targeted at specific segments of society are examples of other innovative methods that the nonprofits have adopted.

Further, many nonprofits source products from their beneficiaries and sell them at a markup so that both they and the beneficiaries can profit from the sale of these items. The key point here is that the money generated by the nonprofits is supposed to be used for social welfare and public good and hence, many people willingly buy these products not only for their utilitarian value by but also as a conscientious gesture of promoting the larger good.

❮❮   Previous Next   ❯❯

Authorship/Referencing - About the Author(s)

The article is Written and Reviewed by Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.