Finding enough money to cover your operating costs, provide programs and services, and invest for future growth is a difficult challenge for most nonprofits. While there are government grants, most come with preconditions on how they can be spent. The same can be said for many individual and corporate donors, as well as foundations.

One source of funding that is often overlooked is earned income. Just because you’re a nonprofit doesn’t mean that you can’t generate revenue. In fact, as long as it’s mission-related, its likely to still be treated favourably for tax purposes. It is also one of the surest ways to turn your NFP into a self-sustaining operation!

The following options are just a few of the many ways that your nonprofit can generate cash.

Sell Something

Some products and services that you might consider offering for sale include membership dues and products that are either related or unrelated to your mission, as well as pamphlets, books and other publications created by your organisation.

When offering products and services for sale, keep in mind that if your selling activity is accompanied by a business plan, and, begins to be operated as a business, it may develop into a social enterprise rather than remaining a charity.

License Your Intellectual Property

Has your nonprofit discovered a new way of doing something that other organisations would find beneficial to use, such as creating apps that make it easier to onboard volunteers, gather client information or accept donations? If it’s a truly unique app or similar process, you could charge others a licensing fee to use your technology. You could also charge others a royalty fee to use your NFP logo when you endorse their products or services.

Consulting and Training Services

Does your nonprofit currently offer training that other groups would find helpful? Consider opening some of your training to related nonprofits or other organisations and charge tuition or other fees to earn income for your NFP. You could also offer your expertise in specific areas to others and charge for consultations.

Offer Facilities and Unused Space for Lease

Do you have extra office space or other areas in your facilities that are used very little by your organisation? Consider offering these spaces for rent to increase your cash flow!

How to Select the Earned Income Option that’s Best for Your NFP

Depending on your NFP’s specific circumstances, some earned income opportunities may be more likely to be successful than others. When deciding on which activity would be best for your nonprofit, boards should consider the following questions.

1. Do you already offer products, services or programs for free that you could charge a fee for?
2. Do you have enough volunteers or other staff members that you can call upon to assist in collecting dues or other fees, or otherwise operate a storefront for your wares?
3. What other resources do you need to sell these products and services? Do you have any relationships with third parties that you could partner or ally with to help you launch the activity if you need help?
4. Does your organisation have any special skills and expertise that you could provide to others outside your NFP for a fee?
5. Do you have access to specialised processes, technological advances or other intellectual property that you could charge others to use?
6. Do you have unused office space or underutilised property, such as computers, lockers or other facilities that you could offer for rent during your quiet times?
7. Is there truly a need for the proposed activity? Conduct a market survey beforehand to make sure  that it will be worth all the time and effort you will put into it before you launch!

As you learn the answers to the above questions, create a list of the activities that will be the easiest and most lucrative for your NFP to start. Make sure that you have the full support of your board and staff before you begin.

Don’t forget to determine the costs to start your new activity, including marketing expenses, before start-up. If the venture is unlikely to recoup its direct and indirect costs, as well as a healthy margin of profit, it may not be the best opportunity for your nonprofit to generate earned income.