If you’re a nonprofit, chances are you’re always looking for new and innovative ways to fund your organization. You may have tried grant writing, crowdfunding, or soliciting donations from individuals and businesses, but those avenues may not be yielding the results you hoped for. Luckily, there are other creative funding models out there that could work well for your nonprofit. Check out some of the options below to see if they could be a good fit for you.
Most popular nonprofit funding models
- Earned income: This is one of the most popular methods for nonprofits to generate funding. Essentially, earned income means that the nonprofit generates revenue through the sale of goods or services. This can be done in various ways, such as charging program fees, selling merchandise, or renting out facilities.
- Individual donations: Donations from individuals are a common source of funding for nonprofits. Individuals can donate money, time, or goods to a nonprofit. These donations are often tax-deductible, which makes them an attractive option for donors.
- Grants: Grants are another common source of funding for nonprofits. A grant is typically a sum of money awarded by a foundation or government agency to support a specific project or program. Grants can be used for a variety of purposes, such as funding research, starting a new program, or expanding an existing one.
- Corporate sponsorships: Many businesses choose to sponsor nonprofits as a way to support their causes and reach out to their target audiences. Sponsorships can take many forms, such as financial contributions, in-kind donations, or promotional opportunities.
- Special events: Nonprofits often host special events to generate funding and awareness for their organizations. Special events can include galas, concerts, auctions, and more. These events typically require significant planning and coordination but can be very successful in raising funds and awareness for a nonprofit.
- Crowdfunding: Crowdfunding is a relatively new way for nonprofits to raise money. Crowdfunding platforms like Kickstarter and Indiegogo allow individuals to make small financial contributions to support a cause or project. These platforms are often used to fund creative projects, such as art installations or new technology products.
- Government contracts: Many nonprofits receive funding from government contracts. This can be a great way to secure stable, long-term funding for your organization. However, it is important to note that government contracts often have strict requirements and reporting standards.
- Endowments: An endowment is a sum of money invested and then used to generate income for a nonprofit. The income from endowments can be used to support the ongoing operations of the organization or to fund specific projects.
- Social impact bonds: Social impact bonds are a type of investment that allows private investors to finance social programs. The return on investment is based on the program’s success in achieving specific social outcomes. This funding model is often used to support programs in areas like education, health, and employment.
- Peer-to-peer lending: Peer-to-peer lending platforms connect borrowers with individuals or institutions who are willing to lend money. This can be a great option for nonprofits that need to raise funds for a specific project or program.
- Microloans: Microloans are small loans that are typically given to entrepreneurs and small businesses in developing countries. These loans can be used for a variety of purposes, such as starting a business, expanding an existing one, or financing infrastructure projects.
- Impact investing: Impact investing is a type of investment that intends to generate social or environmental impact alongside a financial return. Impact investors typically invest in companies or projects working to solve social or environmental problems.
- Social enterprise: A social enterprise is a business that seeks to generate both social and financial returns. Social enterprises typically reinvest their profits into their mission rather than distributing them to shareholders.
- Cooperative: A cooperative is a business owned and controlled by its members. Cooperatives often seek to create economic opportunities and promote social welfare.
- Employee giving: Many businesses encourage their employees to donate to charitable causes. This can be done through payroll deduction, matching programs, or volunteer opportunities.
- Philanthropy: Philanthropy is the act of giving money or other forms of support to a cause or organization. Philanthropy can take many forms, such as financial donations, in-kind gifts, or pro bono work.
- Foundation grant: A foundation grant is a sum of money that a foundation to a nonprofit organization gives. Foundation grants can be used for a variety of purposes, such as funding research, starting a new program, or expanding an existing one.
- Corporate social responsibility: Corporate social responsibility (CSR) is a term that refers to the way businesses integrate social and environmental concerns into their operations. CSR programs can take many forms, such as charitable giving, employee volunteerism, or sustainability initiatives.
- Social finance: Social finance is a type of investment that seeks to generate social or environmental impact alongside a financial return. Social finance can take many different forms, such as impact investing, social impact bonds, or microfinance.
- Enterprise development: Enterprise development is the process of supporting small businesses and entrepreneurs in developing countries. This can be done through training, access to capital, or business incubation programs.
- Community development: Community development is the process of working with individuals and groups to build capacity and improve the quality of life in their communities. Community development initiatives can include housing projects, economic development programs, or education initiatives.
- Social entrepreneurship: Social entrepreneurship uses business methods to create social change. Social entrepreneurs typically start businesses or nonprofits working to solve social or environmental problems.
- Corporate philanthropy: Corporate philanthropy is giving money or other forms of support to a cause or organization by a corporation. Corporate philanthropy can take many forms, such as financial donations, employee volunteerism, or sustainability initiatives.