Nonprofit Structuring and Generating Sustainable Revenue

Nonprofit concepts are generated at an increasing record rate even more than for profit concepts. New entrepreneurs who have the philanthropic mindset automatically are attracted to a nonprofit structure because of the cause. Soon after the entity is formed, they are overwhelmed with the structuring of a Board of Directors (BOD), bylaws, policies, and procedures and of course FUNDING. Can you structure your entity yourself? Of course, you can. However, we see that later nonprofits have trouble determining their revenue streams and how to access funding to support and maintain their initial capacity. From my experience in consulting and collaborating with “out-of-the-box” thinkers, there’s a different mindset to adopt before the BOD is mobilized. I know its cliché-ish, however every nonprofit should have a brainstorming session to identify its revenue streams. How will you generate revenue to support your capacity? Know this….#1 YOU ARE A BUSINESS. This means that you must consider a product or service to sell and/or promote. You say, “but Tyra, am I allowed to charge a fee for products and services?” I say again, YOU ARE A BUSINESS. The nonprofit designation offers you the opportunity of not being taxed. That’s it. Therefore, you should operate your “business” just as any other business. For example: You start a nonprofit to help youth and young adults with epilepsy to maintain a healthier life. This is the cause and from that you establish your mission, vision, and purpose. To ensure revenue is generated for the “business”, you create services and products that larger entities pay for on behalf of your targeted youth and young adults. Let’s say that you publish a magazine or some other publication because you are a talented writer. You sell ads to business owners with the premise that their dollars will be “tax deductible” to support programs to assist youth and young adults with epilepsy. What’s your product? The magazine. What’s your cause? Youth and young adults with epilepsy. Can I upsell the businesses on becoming a sponsor? Absolutely! Can I upsell them on sponsoring an event? Absolutely! More importantly, can I upsell them on possible solutions for their businesses? Absolutely! Now, if you actually invest into talking this out with a marketing professional you may come up with an even better concept than this. The goal here is to get you to thinking about products and services to sell to those who can easily afford it and to create projects to support the targeted group that’s focused on your mission with funds from the sales.

Let’s talk about collaborations. Let’s say that you have colleagues and/or friends who have for profit businesses. I’m sure they would welcome the idea of you promoting their services for a commission/fee. Based on the scenario mentioned above, let’s say that your colleague has a product/service that costs $100. You negotiate with them to offer their current clients and potential clients to donate 10% of the proceeds to your cause. In return, you do your part in promoting that product/service to new potential clients for their business. This type of collaboration is done all the time. When you check out at Walgreens, the cashier asks you if you want to donate to The United Way or some larger nonprofit organization. Imagine if we practiced this among your own networks?

Let’s talk about grants. There are different types of grants. There are cash grants, which are also considered community grants such as Walmart, Aldi, HEB, Costco, etc. that are easy online submissions. There are also community grants and capacity building grants that require written proposals. Most nonprofits only learn about the first two. Capacity building grants will assist in funding overhead, including paying consultants to help you get started.

Let’s say that you have outlined all of your programs, campaigns, events, and budgets for your nonprofit. You have galvanized your BOD to support fundraising efforts, program implementations and community outreach efforts. You have vetted all volunteers and established a “paid” staff to implement your programs. You have also hired a marketing professional to create your website, flyers and established all social media accounts, upload professional graphics to those accounts. Yours BOD has also laid out templates to use such as donation letters, Letters of Intent (LOI), banking confirmation letters from your entity’s financial institution and corporate letters of support to match funds. Once all of this is in place, you’re ready for grants.

Lately, we have seen a plethora of disaster relief grants. Just know that your nonprofit does not have to focus so much on hand outs. You are a business. Create products and services by solving problems for those who have the funds to support your cause. Become an entity that brings value, and you’ll minimize your challenges with revenue.

For more guidance on nonprofit structuring, attend one of our Chalk Talk FREE events for a live discussion. See our events page for details.

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