The defining source of revenue to nonprofits is charitable contributions of money, time, and material. These revenue streams should be sustainable and diversified to ensure continual funding. It is important to differentiate between the types of funders and donors -- know who's giving what, how often, and the likelihood of deflection. With developing nonprofits, it may be beneficial to establish barter exchanges with others so that you can reserve funds, but also establish relationship of (healthy) mutual dependence.
In assessing the sustainability of Revenue Streams within the framework of the business model, we should reflect on the following questions & considerations:
In assessing the sustainability of Revenue Streams within the framework of the business model, we should reflect on the following questions & considerations:
People & Revenue Streams
- Are there underlying social implications with the revenue that is generated by this organization? Are there any questionable funds that potentially conflict with our mission?
- Start out by asking for something small from your donors. People are more like to continue giving to an organization once they have made a small investment. (For example, ask for postage stamps -- many people have collections of old postage stamps or 1-3 cent filler stamps collecting dust. This is a small donation that many people won't even consider a monetary donation, but later you can publish a concrete figure of donations collected when you go back to ask for more
- Strategically defining revenue sources is especially important for SCOs. To legitimate themselves, organizations committed to social sustainability must show that they can generate revenue from like-minded constituents to corroborate their social raison d’etre.
Planet & Revenue Streams
- Do you know where your money's coming from? Determine appropriate sources of revenue for your organization; are all funds good funds? Consider conducting background checks on large donors prior to accepting donations so you can better understand the root of their "charity." There are very powerful arguments on both sides regarding the acceptance of funds from donors with conflicting interests. Take the time to engage your financial decision makers in this discussion.
- Strategically defining revenue sources is especially important for SCOs. To legitimate themselves, organizations committed to environmental sustainability must show that they can generate revenue from like-minded constituents to corroborate their environmental raison d’etre.
Profit & Revenue Streams
- Attract charitable contributions from those who share your cause; these may be receive in the form of in-kind contributions of volunteer time or contributed materials, thus reducing overhead costs.
- How well do we price our value proposition? What do our partner organizations charge for the value of their programs? Consider doing a FIG exercise to determine how your organization Fills an Important Gap in your market.
- Diversification of revenue streams is imperative from a "don't put all your eggs in one basket," kind of strategy. For an organization like Earth Access that seeks to incorporate all three pillars of sustainability, there should be no dearth of target funder populations, as virtually any organization can be appealed to by reason of social, environmental, or financial motivation.
- How sustainable are our potential revenue streams?
- Thoughts on revenue diversification
- The following mechanisms may promote financial sustainability through revenue diversification (for details, see Moore 2005):
- government funding
- (tax) percentage philanthropy
- privatization proceeds
- lottery proceeds
- national funds & foundations
- private philanthropy
- community foundations
- volunteerism
- self-generated income
- social enterprises
- investment income
- government funding