How Do Nonprofits Make Money? 10 Revenue Streams Explained (2026)

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Table of contents

• How Do Nonprofits Actually Make Money? (The Basics Explained)

• How Do Nonprofits Make Money: 10 Ways to Raise Funds

• Recurring and Monthly Giving Programs

• Thrift Stores and Social Enterprise Models

• How Nonprofits Can Make Money with Zeffy

• Revenue Streams at a Glance

• FAQs on How Nonprofits Make Money

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Most nonprofits don't fail because of a bad mission. They fail because they run out of money. Understanding where nonprofit revenue actually comes from, and what the rules are, is the first step to building an organization that lasts.

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How Do Nonprofits Actually Make Money? (The Basics Explained)

Before diving into specific revenue strategies, it's worth clearing up one of the most common points of confusion in the nonprofit world: the idea that nonprofits can't, or shouldn't, make money. This misconception holds back a lot of organizations from pursuing the revenue streams they're fully entitled to pursue.

Here's the short answer: nonprofits can absolutely generate revenue and even operate with a surplus. What they can't do is distribute that surplus to shareholders or private individuals for personal gain. That single distinction is really what separates a nonprofit from a for-profit business.

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What "Nonprofit" Actually Means

The term "nonprofit" refers to how an organization uses its money, not whether it generates any. A nonprofit organization exists to serve a public or community benefit, and any revenue it brings in must be reinvested into fulfilling that mission. This could mean hiring more staff, expanding programs, building operational reserves, or improving infrastructure.

The IRS grants 501(c)(3) status to organizations that meet this standard, which comes with meaningful benefits: exemption from federal income tax, eligibility to receive tax-deductible donations, and access to grants restricted to tax-exempt organizations. In exchange, nonprofits agree to operate exclusively for their stated exempt purpose and to avoid private inurement, meaning no one with insider control can personally profit from the organization's earnings.

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Can a Nonprofit Make a Profit?

Yes, and in fact, building a revenue surplus is often a sign of a financially healthy organization. Nonprofits are encouraged to maintain operating reserves (typically three to six months of expenses) to weather funding gaps, economic downturns, or unexpected costs. Generating more revenue than you spend in a given year is not just allowed; it's good financial stewardship.

The key is that surplus funds must stay within the organization and be used in ways consistent with your mission.

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Understanding Unrelated Business Income Tax (UBIT)

One area where nonprofits do face tax liability is unrelated business income. If your organization regularly carries on a trade or business that isn't substantially related to your exempt purpose, that income may be subject to Unrelated Business Income Tax (UBIT).

For example, if a literacy nonprofit sells books related to its programs, that's likely mission-related and tax-exempt. But if the same organization starts a commercial printing business on the side, that revenue could trigger UBIT.

Three criteria generally define unrelated business income:

• It's a trade or business (a revenue-generating activity)

• It's regularly carried on (not a one-time event)

• It's not substantially related to the organization's exempt purpose

Most common nonprofit revenue activities, including membership dues, fundraising events, program fees, and donations, don't trigger UBIT. But it's worth consulting a nonprofit attorney or accountant if you're expanding into commercial territory.

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Two Broad Categories of Nonprofit Revenue

Nonprofit revenue generally falls into two buckets:

• Contributed income: Donations, grants, and gifts, which is money given without expectation of a direct exchange

• Earned income: Revenue generated through services, products, memberships, ticket sales, or other activities where value is exchanged

Both are legitimate, and most financially resilient nonprofits build a mix of both. According to Giving USA, individual donations account for roughly 67% of all charitable giving in the United States, making them the single largest source of contributed income for most organizations. Over-reliance on a single source, especially competitive grants or major donors, creates vulnerability. Diversifying your revenue model isn't just smart; for many organizations, it's essential to long-term sustainability.

With that foundation in place, here are ten proven ways nonprofits generate the revenue they need to grow and serve their missions.

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How Do Nonprofits Make Money: 10 Ways to Raise Funds

1. Fundraising Events

When it comes to raising funds for nonprofit organizations, one of the most popular and effective methods is hosting fundraising events.

These events provide an engaging platform to spread awareness about your cause and a fantastic opportunity to connect with your community and generate much-needed funds.

Some of the key benefits of hosting fundraising events include:

• Generating revenue through ticket sales

• Collecting additional donations during the ticketing process

• Selling food, merchandise, or other items during the event

• Facilitating in-person donations at the event venue

• Hosting a raffle on the day of your event

Organizing an event that aligns with the interests and preferences of your target supporters is more likely to drive higher levels of engagement and, consequently, increased donations.

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How to Host a Successful Fundraising Event

• Establish clear goals: Determine the amount of funds you aim to raise

• Set a realistic budget: Allocate resources for organizing and executing the event

• Understand your supporters: Tailor the event to appeal to your target audience's preferences

• Identify donor types: Cater to the specific categories of donors you wish to attract (e.g., mid-tier, major, or small-level)

• Assess available resources: Evaluate the resources at your disposal to support the event's needs

• Recruit volunteers: Determine the number of additional volunteers required for a smooth execution

By carefully considering these factors, you can make an informed decision about the type of event best suited to meet your fundraising objectives while aligning with your supporters' interests. You have the flexibility to host events on a quarterly, annual, or one-time basis, depending on your organization's needs and the nature of the event itself.

Real example: Dearborn Education Foundation (Dearborn, MI) funds classroom grants and student scholarships across the Dearborn Public Schools district. Their signature F.O.R.E. Golf Outing sold out in under two months using a Zeffy ticketing page. The 2025 event raised $24,650, and they saved $1,250 in fees that went straight back to students. Read their full case study.

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2. Individual Donations

When it comes to how nonprofits make money, individual donations are the most common and crucial source of revenue. These contributions come from individuals who support your organization's mission.

Your donors fall into several categories, ranging from general supporters to major givers and mid-tier donors. Some types of individual donations include:

• Donations: These come from nonprofits' online donation pages and in-person donations

• Event donations: Donations that come from events organized by nonprofits

• In-kind contributions: These are physical gifts, such as food, clothing, medical supplies, or anything other than money. NPOs must record their value as donations in their accounting systems

• Stocks: Some individual donors offer stock holdings rather than direct funds or physical items

• Planned gifts: These are larger donations promised to charitable organizations and paid at a later date. They are often received through wills and trusts after the donor passes away

Nonprofits should dedicate ample time and effort to building a strong base of individual donors. This increases visibility as your donors spread awareness about your mission within their networks, leading to greater outreach.

Having numerous individual donors diversifies your funding sources. Once you've secured their trust and loyalty, you can encourage them to make recurring donations, providing a steady stream of funds.

To effectively attract and retain individual donors, nonprofits should:

• Implement a strong donor stewardship program to cultivate lasting relationships

• Craft personalized appeals that resonate with each donor's interests and motivations

• Demonstrate the tangible impact their contributions have on your mission

• Show appreciation through thoughtful gestures, such as thank-you gifts or surprise rewards

• Maintain regular communication through channels like email newsletters to keep donors engaged and informed

Real example: Loose Ends Project (Spokane, WA) matches volunteer knitters and crocheters with families who have unfinished craft projects left behind by a lost loved one, completing them at no cost, in the original maker's memory. Their always-on Zeffy donation form has collected 1,701 individual donations from supporters worldwide, raising $90,750 total. They saved $4,600 in fees thanks to Zeffy, money that stays in their mission instead of disappearing into platform costs. Read their full case study.

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3. Corporate Donations

Corporate donations are financial contributions from businesses for charitable or philanthropic purposes. They can take several forms, including in-kind donations of goods or services, cash donations, or grants to fund initiatives.

These can also take the form of matching gift programs, a type of giving program in which companies match their employee donations to charitable organizations up to a certain amount, doubling their donations.

Companies secure a tax benefit for donating to 501(c)(3) nonprofit organizations. They can contribute up to 25% of their taxable income to the nonprofit's mission. The best part is that any small or big business can get tax benefits from giving money to charity.

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4. Nonprofit Grants

Nonprofit grants are another excellent way for nonprofits to raise money. Other organizations provide these to help achieve specific charity goals. You'll find grants for all types of nonprofit organizations, including animal welfare organizations, after-school programs, culture centers, and environmental nonprofits.

Here are some types of grants available for charitable organizations:

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Government Grants

These grants come from federal, state, or local sources. They often support initiatives that align with government priorities, such as education, healthcare, social service, and community development. Government grants can also cover expenses related to infrastructure development, organizing youth mission group trips, and more.

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Public Charity Grants

These come from other larger organizations whose beliefs align with your mission. They help nonprofits connect with potential supporters and are well-suited for organizations that create programs to support local community development.

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Independent and Family Foundation Grants

These are grants provided by private foundations established by individuals or families. Family or private foundations support a wide range of causes, such as health, education, and the arts. Building relationships with family foundations can also be useful in securing consistent funding.

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Corporate Foundation Grants

This is financial help that organizations can seek from foundations established by corporations. Such grants usually fund programs and projects that align with the company's values and interests. When corporations donate stock or other assets to nonprofits, the tax deduction can be based on the asset's fair market value at the time of the donation.

Finding the right grants for your specific mission takes time. Zeffy's Grant Finder helps you identify grants your nonprofit is actually eligible for, free, in under 5 minutes.

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5. Earned Income

Earned income refers to self-generated revenue that helps cover operating expenses. It's a great way to access a steady stream of income while furthering your cause. Earned income must directly contribute to the nonprofit's mission to secure its tax-exempt status.

This category is broader than most people realize, and it's where many nonprofits leave significant revenue on the table. Strong earned income strategies include:

• Selling tickets to activities and programs relevant to the mission

• Holding community classes and charging service fees

• Renting out venues or equipment your organization owns

• Offering consulting or training services in your area of expertise

• Charging fee-for-service for programs that deliver measurable outcomes (such as job training, counseling, or tutoring)

• Licensing intellectual property, including curriculum, methodologies, or branded content, to other organizations

Fee-for-service programs are especially worth exploring. If your nonprofit delivers a program that produces results, other organizations, government agencies, or school districts may pay you to deliver it to their communities. This turns your expertise into a revenue stream without compromising your mission.

Licensing is another underused option. If your organization has developed a training curriculum, a proprietary model, or a branded framework, you may be able to license it to other nonprofits or institutions for a fee. As long as the licensed content is mission-related, the income stays tax-exempt.

The key distinction: earned income from mission-related activities is generally tax-exempt. Revenue from activities unrelated to your exempt purpose may trigger UBIT (see the section above). When expanding into earned income territory, it's worth a conversation with a nonprofit accountant to confirm the revenue stays on the right side of that line.

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6. Corporate Sponsorships and Partnerships

Another way for nonprofits to raise money is by establishing corporate sponsorships and partnerships with other NPOs or for-profit businesses. This offers a classic win-win situation: you get money while your partnered business receives brand exposure.

By adding them as sponsors to your event, the corporation gains goodwill in the community. In exchange, they provide support to extend the impact of your mission.

The three major types of sponsorships to seek out are:

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Financial Sponsorships

The most common type of sponsorship is when a company directly donates money to support your program or event. The amount of money you'll get will depend on the sponsorship or exposure your organization provides.

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In-Kind Sponsorships

In-kind sponsorships involve a company offering goods or services, like a gift basket or catering service, during the event. Determine what kind of items or services you need and ensure you highlight the sponsors during the event.

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Media Sponsorships

Work with local media, such as print, radio, and TV, to promote your event and spread the word quickly. While you secure event exposure, the media business will be seen positively and boost its reputation.

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7. Membership Programs

Membership programs are another great funding source for sustainable growth. Many nonprofits have one in place to build a reliable and loyal base of supporters who, in return, secure more perks and bonuses from your organization. These include tickets for exclusive events, access to charitable programs, or other opportunities.

With an active and supportive group of registered members, you have money handy, as membership dues are paid regularly. A membership program can also attract donations from other sources. Loyal members are willing to donate consistently to your nonprofit, and they can also help grow it and recruit new members.

Here are some things to keep in mind when it comes to membership programs:

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Membership Tiers

Consider offering memberships with different tiers, each offering benefits and privileges to inspire more people to sign up. This can start with access to a members-only newsletter or a digital or printed thank you card, then increase to exclusive merch and VIP event passes.

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Membership Perks

Nobody will join your program unless you're giving something of value or exclusive. For instance, if you're hosting an event, offer members the option to register for events early and reserve seats. You can reach out to your sponsors and see if they'd be open to providing a membership discount program on their products and services.

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Membership Fees

You'll have to set the right price for your membership fees; otherwise, people won't sign up. Consider the end goal of your membership revenue, the benefits offered, and the number of people you want to join. Set a fee that's profitable for your organization and reasonable for your supporters.

Zeffy's 100% free nonprofit membership software makes managing your memberships a breeze. You can create customizable membership forms, set several tiers, offer automatic membership renewals, and more.

Real example: Allegiance Color Guard (East Dundee, IL) is a nationally competitive winter guard program for middle and high school performers. Each season, members pay Open Guard Dues through a Zeffy membership form, covering coaching, travel, uniforms, and competition fees. Since 2023, 308 performers have joined via that single dues form, raising $88,580 total. They saved $4,500 in fees thanks to Zeffy. Read their full case study.

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8. Merchandise and Products

Nonprofits also see a boost in income by selling merchandise and products that support their mission. There are several ways to start selling, from opening an online store to a second-hand charity shop.

Supporters who want to represent your nonprofit in public will be willing to buy branded merchandise. Many nonprofits with an in-person presence, like a museum, sell these goods in their gift shops. Those like churches or religious institutions sell merchandise, food, and drinks at events, including family game nights, movie nights, talent shows, and more.

With Zeffy, organizations can easily set up and manage an online store completely free of charge, enabling you to sell products to supporters. This not only generates funds but also raises awareness for the cause. Zeffy's free POS, tap-to-pay, allows nonprofits to accept contactless payments for goods sold at fundraising events or physical locations.

By embracing e-commerce and mobile payment solutions, nonprofits can unlock new avenues for engaging their community, fostering supporter loyalty, and driving consistent income to sustain their vital missions.

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9. Investments

If you're looking for ways for nonprofits to make money, a lesser-known way is by investing. It's a great source of revenue for nonprofits but might not be as quick as other sources like individual donations or fundraising. Like an individual investor, nonprofits can open a brokerage account and invest in stocks, bonds, or other securities to generate income. Their tax-exempt status means they might not have to pay income tax on portfolio gains and dividends.

Here are some sources where nonprofits can invest:

• 1. An endowment is a fund invested to generate income for an organization's programs or operations. It's typically built through donations and may have specific restrictions on how the income can be used.

• 2. Reserve funds are set aside for emergencies or unexpected expenses. They may be invested to secure the organization in case of unforeseen events.

• 3. Most nonprofits can invest in stocks to generate revenue. To avoid violating US Securities and Exchange Commission (SEC) and IRS regulations, your investment should not benefit nonprofit board members or employees.

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10. Publicity

Even for charitable organizations, advertising is necessary to expand the reach and awareness that will ultimately help to raise money. Although advertising campaigns need an early investment, they usually have a higher ROI for nonprofit organizations.

Platforms like Google offer charities monetary help to grow visibility around their cause. Google offers Google Ad Grants that equip nonprofits with up to $10,000 per month of free search advertising. The Facebook Community Fund extends support to organizations aligned with community building in certain US regions.

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Recurring and Monthly Giving Programs

One of the most reliable ways nonprofits build financial stability isn't a new revenue stream. It's a different way of structuring the donations they're already collecting. Recurring giving programs turn one-time donors into monthly contributors, creating predictable income that you can actually plan around.

The difference between a one-time gift and a monthly gift is significant over time. A donor who gives $50 once contributes $50 to your mission. That same donor enrolled in a $20/month recurring program contributes $240 over the course of a year, and often stays engaged for multiple years.

Recurring giving also reduces fundraising fatigue. Instead of asking the same donors for money repeatedly throughout the year, a well-run recurring program lets you make one strong ask and then focus your energy on fulfilling the mission and reporting back on impact.

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How to Launch a Recurring Giving Program

Setting up a recurring giving program doesn't require complex infrastructure. The essentials are:

• A donation form that offers monthly giving as the default (or prominently featured) option

• A simple way for donors to manage or pause their giving without calling you

• A communication plan that keeps monthly donors informed about their cumulative impact

Framing matters. Rather than asking donors to "set up a recurring gift," ask them to "join your monthly giving community" or "become a sustaining member." Positioning recurring donors as a distinct, valued group, rather than just automated givers, increases both sign-up rates and retention.

Zeffy's free donation forms let you enable recurring giving in minutes, with no transaction fees taken from any gift. Donors can give monthly, quarterly, or annually, and your team gets real-time visibility into active subscriptions.

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Upgrading Existing Donors to Monthly Giving

Your warmest prospects for recurring giving are people who've already given to you before. A targeted upgrade campaign, sent by email or direct mail, focused specifically on converting past donors to monthly status is one of the highest-ROI moves a nonprofit can make. Keep the ask specific: "Your $25/month would cover X for a full year" converts better than a generic recurring ask.

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Thrift Stores and Social Enterprise Models

Selling branded merchandise is one way to generate earned income. Running a thrift store or social enterprise is a bigger commitment, but for organizations that do it well, it can become one of their most stable and mission-aligned revenue streams.

Goodwill Industries is the most visible example: the organization generated $7.4 billion in revenue in 2022, with the majority coming from retail thrift store sales. Those stores also directly advance Goodwill's mission by employing people with barriers to employment. That alignment between revenue model and mission is exactly what makes social enterprise work for nonprofits.

You don't need Goodwill's scale to make this model work. Many small and mid-sized nonprofits operate thrift shops, resale boutiques, or social enterprises that generate consistent earned income while putting their community relationships and volunteer networks to work.

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What Counts as a Social Enterprise?

A social enterprise is any revenue-generating activity structured to advance the organization's mission. For nonprofits, common models include:

• Thrift and resale stores: Accept donated goods, sell them to the public, and use proceeds to fund programs. Many also employ program participants as part of job training initiatives.

• Cafes or catering operations: Common among organizations serving people experiencing homelessness or recovering from addiction, where the business itself provides employment and skills training.

• Training-to-employment programs: Organizations charge employers a placement or training fee for graduates of their workforce development programs.

• Mission-aligned product lines: Selling goods that directly reflect the nonprofit's work, such as a conservation organization selling sustainably sourced goods, or a food bank operating a community market.

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Key Considerations Before You Start

A social enterprise requires upfront investment, operational capacity, and a clear connection to your mission. Before launching one, work through these questions:

• Does this activity connect to our exempt purpose, or could it trigger UBIT?

• Do we have the staff, volunteers, or partners to run it consistently?

• What's the break-even point, and how long can we sustain it before it becomes self-funding?

• Does this model create value for the people we serve, or just for our revenue line?

The most successful nonprofit social enterprises aren't separate businesses bolted onto a charity. They're mission delivery mechanisms that happen to generate revenue.

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How Nonprofits Can Make Money with Zeffy

Maximizing fundraising revenue is crucial for nonprofits to sustain and expand their impact. With Zeffy's 100% free fundraising platform, organizations can significantly boost their income without incurring any platform or transaction fees.

Zeffy empowers nonprofits to create customizable donation forms, manage donor relationships, and sell event tickets at no cost. Every dollar raised by your organization goes directly toward your cause. More than 100,000 nonprofits have raised over $2 billion through Zeffy, with zero fees taken from any of it.

With Zeffy's user-friendly tools and zero-fee approach, nonprofits can allocate more resources toward their core programs, ultimately enabling them to make a greater difference in the communities they serve.

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Revenue Streams at a Glance

Use this table to quickly compare all ten revenue streams by effort level, revenue potential, time to first dollar, and which organization types they suit best.

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No single stream is right for every organization. Start with what fits your current capacity, then layer in additional streams as your team grows.

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FAQs on How Nonprofits Make Money

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