Suppose, you have made up your mind to start a nonprofit that serves underprivileged kids. You have a mission in the world, a team of enthusiastic workers and plans for programs. Then reality sets in: how will you pay staff salaries, operate and fund your programs consistently?
Which is why you need to learn how to make money as a nonprofit business. Nonprofit organizations, however, do not have the ability to distribute profits to owners or shareholders. Each dollar must be used in support of the mission and programs or to meet operating budget.
In this guide, we’re going to cover how do you make money from a nonprofit business? and 10 solid nonprofit revenue sources that they can use to raise money in a way that is both legal and sustainable — everything from donations and grants to social enterprises and memberships.
What Does “Nonprofit” Really Mean?
A nonprofit can make a profit, but it cannot pay out those profits to owners, shareholders, or private individuals.
Instead, all income must support:
- Programs
- Operations
- Staff salaries
- Community services
- Mission advancement
In other words:
A non-profit organization is one that uses surplus financial resources to achieve its goals, rather than investing them in a for-profit business
What Makes a Nonprofit Different from a For-Profit Organization
Before looking at strategies for revenue generation, it’s important to understand what makes a nonprofit unique.
Mission: The mission of a nonprofit is to fulfill the needs of the community in which it operates, whether that’s through education, health care, environmental defense or some other public purpose. For-profits are designed to produce profits for owners or shareholders.
Revenue Use: Any profit in a nonprofit is plowed back into programs, staff and its operations. In for profits, surplus is paid to shareholders as profit.
Governance: Nonprofits are led by volunteer boards public mission responsibility. For-profits respond to owners or investors.
Tax Status: Qualified nonprofits (501(c)(3)) are federally tax-exempt on mission-related income and eligible to receive tax-deductible donations. The for-profits pay taxes on all of their profits.
IRS rules and 501(c)(3) guidelines that define allowable revenue
IRS Notice and 501(c)(3) pre-notice guidelines insist that revenue-generating activities align with what when on the record per your exempt purpose, or be ancillary and tracked so. Document everything you do, how it supports your mission, keep organized records.
The rules involve proper accounting and disclosure on Form 990, as well as rules regarding restricted funds.” If you have questions, refer to resources from the I.R.S., GrantSpace at Candid or guides from Council on Foundations.
Understanding Program Service Revenue vs. Unrelated Business Income
Program Service Revenue: Income related to your mission. Examples: a nonprofit literacy organization charging for tutoring programs, or an animal shelter charging adoption fees.
Unrelated Business Income: Income generated from activities which are not substantially related to your mission. Example: selling coffee for another, unaffiliated café. UBIT may apply.
How Do You Make Money from a Nonprofit Business? 10 Best Revenue Streams Strategies
See the most accessible, scalable and beginner-friendly income streams for nonprofits below.
1. Earned Income (The Most Stable Nonprofit Revenue Stream)
Suppose you run a nonprofit that focuses on teaching digital skills to young people in your area. You see parents willing to pay a modest monthly fee for classes that will enhance the future of their kids. You start with 10 students, and charge exactly enough to pay the instructor’s salary, plus money for materials. You monitor attendance, collect feedback and refine the curriculum. Within the course of months, 50 students are enrolled in the program. The program fees lined the pockets of more employees and took pressure off of our financial position so we could give free scholarships to families who can’t afford them.
Examples
- After-school programs charging small fees
- A nonprofit clinic charging low-cost appointments
- Art nonprofits selling workshop tickets
- Skill training nonprofits charging course fees
- Adoption fees at an animal shelter
Why It Works
- Predictable monthly income
- Less dependency on donors
- Usually tax-exempt if mission-related
- Builds long-term sustainability
2. Individual Donations (The Easiest Way to Start)
A nonprofit begins an ad campaign to help community gardens. They share the story of a local family who was able to enjoy fresh produce and healthier meals. The story strikes a chord, and people give $20–$50 on line. The nonprofit offers automatic donation options and monthly income starts to accrue. When the aid is given, make sure to update people and their use of it – it keeps the donors involved and maintains a long-lasting support base.
Types of Donations
- One-time gifts
- Monthly recurring donations
- Peer-to-peer fundraising
- Online campaigns
- Holiday drives
- Corporate matching gifts
Tips for Success
- Use emotional stories
- Offer recurring donor options
- Keep the donation page simple
- Make mobile donations easy
Donations are powerful because individuals give out of passion—not obligation.
3. Grants (Government, Foundations, and Corporations)
A nonprofit that teaches about the environment seeks a $10,000 grant from a local foundation. They meticulously line up the grant’s purpose with their programs, laying out matrix-like blueprints for workshops and quantifiable results. The foundation approves the grant. This funding enables the non-profit to cover salaries, acquire supplies and increase its capacity.
Where Grants Come From
- Government agencies
- Private foundations
- Corporate giving programs
- Community foundations
Why Grants Matter
- They provide large funding amounts
- They support new and established nonprofits
- They boost credibility for future funding
Beginner Tip
Start with small local grants first. They have a higher approval rate and require simpler proposals.
4. Fundraising Events (Great for Awareness + Revenue)
A charity 5K run is organized by a nonprofit foundation to raise funds for local literacy programs. They collect a registration fee, sell branded T-shirts and solicit sponsorships from local businesses. Virtual participation is possible, so this can reach far and wide. Despite a low cost of entry and heavy promotion, the event manages to raise enough money to buy new books for multiple schools, as well as raising itself to greater visibility.
Popular Nonprofit Event Ideas
- Charity dinners
- Walkathons
- Auctions (live or silent)
- School fairs
- Talent shows
- Virtual events or webinars
Best Practices
- Keep expenses low
- Seek sponsors to cover event costs
- Sell tickets or merchandise
- Promote heavily on social media
5. Corporate Sponsorships & Partnerships
A nonprofit organization introduces a youth coding camp. A tech company sponsors them; they have partnered with a tech company. It is a little about responsible business on the part of the company that provides lap tops and its own branded materials. The nonprofit receives money at no cost to hire instructors and buy supplies. Each party gets exposure and community good will.
Types of Sponsorships
- Event sponsorship
- Logo placement
- Donation matching
- Co-branded campaigns
- Cause marketing
Why Companies Choose Nonprofits
- Tax benefits
- Positive PR
- Strong community reputation
Start by contacting local businesses—they are far more likely to support you early on.
6. Membership Programs (Reliable Monthly Revenue)
A nonprofit opens a youth coding camp. They are sponsored by a tech company. The company offers laptops and custom products, showing off its corporate responsibility. The nonprofit receives money to employ teachers and buy supplies. Both sides get exposure and the local community gets good feelings.
Examples of Membership Nonprofits
- Museums
- Advocacy groups
- Professional associations
- Community clubs
Benefits to Offer
- Member-only events
- Discounts on workshops
- Early access to programs
- Special newsletters
Membership programs build loyalty and stable cash flow.
7. Social Enterprise Activities (Sell Products with Purpose)
There is a thrift store that sells donated clothes and home items, operated by a nonprofit. Pilferage is a source of revenue for public youth job training programs. They begin with very small sales, keep an eye on profits and expand to online sales only slowly. Every sale contributes directly to the mission providing a financially sustainable source of revenue.
Examples
- A thrift store funding shelters
- A café funding job-training programs
- Selling eco-friendly products to support environmental projects
- Handmade crafts sold to support artisans
Why Social Enterprise Works
- Long-term financial independence
- Growth potential
- Strong community engagement
8. Courses, Workshops & Educational Programs
A nonprofit that teaches wellness workshops imposes a small fee on participants. They take notes on what works and doesn’t work as they receive feedback, and then revise content. Revenue from successful workshops finances free wellness sessions open to the community.
Examples
- Teacher training sessions
- Mental health workshops
- Skill-building programs
- Youth leadership classes
- Environmental awareness courses
This works well for nonprofits focused on education, empowerment, or skill development.
9. Merchandise Sales (Low-Cost, High-Visibility Revenue)
Supporters purchase mission-themed goods, such as reusable bags, mugs or T-shirts. Proceeds from sales go to programs and raise awareness every time someone uses the merchandise. Low-risk practices such as print-on-demand minimize the cost upfront.
Ideas
- T-shirts
- Stickers
- Tote bags
- Bracelets
- Mugs
Merchandise also spreads your branding everywhere support wears or uses it.
10. Service Contracts (Often High-Paying)
Some nonprofits work with local schools or government agencies, providing services such as after-school programs or community workshops. The nonprofit negotiates transparent terms and services that align with their mission. Multi year contracts offer predictable revenue to plan for long term initiatives.
Examples
- Managing community centers
- Running youth programs
- Offering consulting support
- Delivering health or counseling services
These contracts are stable and often multi-year agreements.
Why diverse nonprofit revenue sources are critical to financial sustainability
You want a cushion to ensure your nonprofit can function from week to week and even beyond funding cycles. Depending on one large grant or donor can be precarious. Modifications in funds can result in cuts, layoffs or eroded trust.
Risks of relying on single funding sources like a major grant or donor
Dependence on one source weakens your bargaining power. A grant cancellation or donor shift can cause a budget gap. This gap often leads to quick, harmful decisions.
Grants and donors have their own cycles and limits. Donor fatigue can happen after years of asking. These issues make planning hard.
Benefits of a mixed model: grants, earned income, memberships, and events
Mixing revenue types reduces risk. Grants fund new ideas, while earned income and fees provide steady cash. Memberships and subscriptions offer ongoing support.
Events and merchandise add variety and visibility. Corporate partnerships and e-commerce offer scalable options. These can help traditional fundraising.
Conclusion
How nonprofits can make money is not about pursuing every opportunity for funding. It’s all about creating diversified, sustainable revenue so you don’t have to spend time worrying about keeping the lights on and instead can actually focus on impact.
You’ve given and taken across the continuum: grants and donations that build relationships, program fees that link revenue to mission, social enterprises that provide jobs and income, events and products that raise visibility as well as money, memberships for predictable income, corporate partnerships for their resources and reach.
The strongest nonprofits are not dependent on one funding superstar. They construct a portfolio of revenue sources that balance stability and growth, mission alignment and financial return, donor cultivation and earned income.
FAQ
How does a CEO of a nonprofit get paid?
The nonprofit CEO takes a salary paid from the organization’s revenue, i.e., donations, earned income and unrestricted portions of grants. Compensation is reasonable and documented.
How do nonprofits pay employees?
Nonprofits, like any employer, pay staff salaries and benefits and contribute to payroll taxes. The way the organization is financed comes from its revenue — donations, grants, program fees or earned income.
While many grants have limits on how much can be spent on salaries (particularly for “overhead” or administrative staffers), unrestricted donations and earned income offer flexibility.
What makes a nonprofit different from a for-profit business?
Nonprofit refers to organizations that are dedicated to achieving a public purpose — charity, education or research, for example — and reinvest all remaining money back into their programs. They are not required to pay federal income tax on their mission-related income, and they have volunteer boards. For-profits are there to make money for their owners, or shareholders, pay taxes on the profits and distribute earnings. Given that both can turn a profit, hire employees, etc., the main difference is that nonprofits value mission over profits and for-profits prioritize making money.
How do non profits work?
Nonprofit management Nonprofits work through mission-focused programs, multiple income source and flows of revenue, board governance, tax-exempt status and public record.
Can a non profit organization make money?
Yes. Nonprofit organizations need to earn money to pay the bills and be able to offer their programs. Anything above that must be reinvested in the mission.
What happens when a nonprofit makes too much money?
Excess revenue must be reinvested in programs, reserves, or expansion. Profits cannot be distributed to individuals. Unrelated business income may be taxed separately.
Do nonprofits pay taxes?
Mission-related revenue is tax-exempt. Unrelated income may incur UBIT. Payroll and state/local taxes may still apply.
