Sometimes finding new sources of revenue starts internally by examining your organization’s finances and finding ways to maximize income. That calls for applying critical thinking skills as you analyze current income. Then, you can set annual goals, prepare your budget and manage other aspects of your organization with the new insights you have gained.
Compare contributions
Compare the donation dollars raised in past years to pinpoint trends. For example, have individual contributions been increasing over the past five years? What campaigns have you implemented during that period? Go beyond the totals and determine if the number of major donors has grown.
Also estimate what portion of contributions is restricted. If a large percentage of donations is tied up in restricted funds, consider re-evaluating your gift acceptance policy or fundraising materials.
Measure grants
Grants can vary dramatically in size and purpose — from covering operational costs, to launching a program, to funding client services. Pay attention to trends here, too. Did one funder supply 50% of total revenue in 2015, 75% in 2016, and 80% last year?
A growing reliance on a single funding source is a red flag. If funding stopped, your organization might be forced to close its doors. Encourage your organization’s board to consider ways to diversify your funding sources.
Assess fees
Fees from clients, joint venture partners or other third parties can be similar to fees that for-profit organizations earn. They’re generally considered exchange transactions because the client receives a product or service of value in exchange for its payment.
Sometimes fees are charged on a sliding scale based on income or ability to pay. In other cases, fees are subject to legal limitations set by government agencies. You’ll need to assess whether these services are paying for themselves.
Membership dues
If your nonprofit is a membership organization and charges dues, determine whether membership has grown or declined in recent years. How do your membership dues compare with those of your peer organizations? Do you suspect that dues income will decline? Consider dropping dues altogether and restructuring, but first examine other income sources for growth potential.
By performing these exercises, you should be able to gain a basic understanding of where funds are coming from and where greater potential lies. For specific tips and help applying revenue data strategically, please contact us.
