Could your non-profit generate revenue? (5 questions to ask yourself)

Fundraising / Thursday, August 28th, 2014

Monday’s post shared several stories of non-profits who, in response to chaotic funding streams, decided to bring in a portion of their funding via revenue generating activities.  But is this for everyone?  I’d be willing to bet that many of you, as you were reading those stories, thought something like ‘well, that’s all well and good, but my non-profit could never do that…’  

Now, I’ll grant that housing non-profits, like Habitat, have a unique advantage when it comes to revenue generation, but before you dismiss the idea out of hand, I’d encourage you to think creatively about ways your non-profit may generate revenue.  And I don’t say this simply for fundraising reasons!  For example, I worked with a non-profit focused on financial literacy classes for families.  In all but the most dire of circumstances, we charged families for the class.  Why?  Partly to generate revenue, but mainly to generate commitment.  See, we discovered very quickly that the families who had paid were much more likely to attend all classes, implement our teachings, and actually change bad financial habits.  

But how todecide if this fits your non-profit?  And if so, how is this even possible?  Here are five initial questions I’d ask yourself that will help you explore if and how your non-profit might generate revenue:

1.) What are we naturally gifted at?  In the case of Affordable Homes of South Texas (see this article), they had a team of accountants, real estate managers, and a crew of people dedicated to serving their community.  They also happened to own a building that was a terrific location for a sandwich shop.  This combination of forces made a Blimpie franchise, owned by the non-profit, AHSTI’s ideal option for revenue generation.  

2.) Could we leverage existing corporate partnerships?  City Year is an international leader in creating strong corporate partnerships.  For example, Timberland has donated uniforms for tens of thousands of corps members over the years and its employees consistently volunteer with City Year.  Thus, when City Year established Care Force to generate revenue, these corporate partners became their first customers, gladly paying to have City Year arrange company-wide service days.   

3.) Will this cause us to lose focus on our central mission?  This is a tough one…but you must ask yourself this question.  For every non-profit that generates revenue in a mission sensitive way, there is another that loses focus.  Remember this: your mission is the core of your being – it is why you exist and why you’re able to impact lives.  If revenue generation will harm that – don’t do it.

4.) Could we charge a fee on a sliding scale?  Even if you decide to charge for certain services – you will always have those families (we all know them) who simply can’t pay a thing.  Our mission (and our heart) is to serve them, so be sure that your revenue model doesn’t leave them out in the cold.  To do this, many organizations have created models that allow them to charge differently in different situations. 

5.) How will we communicate this to our community?  If you go down this road, you will undoubtedly have volunteers, contributors, and clients question the idea.  So, try to frame this decision in a way that emphasizes sustainability of your movement and the steps you will take to ensure this doesn’t dilute your mission.

Okay – we’ve had a week now to mull this over, so I’m curious, how do you think your non-profit could generate revenue?  What are the challenges you see with this?