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Mar 19 2015

Why A For-Profit Strategy Can Boost Nonprofit Revenue

Learn why a for-profit strategy can boost nonprofit revenue. Following for-profit marketing strategies can reap rewards for nonprofits.

Best Ways to Generate Nonprofit Revenue

I recently wrote an article on the for-profit vs nonprofit, especially as they relate to generating nonprofit revenue, their different accounting principles and how they measure outcomes in relation to their mission and purpose. Well now, here are the ways that nonprofits need to start acting like for profits.

First, the concept that nonprofits cannot have a profit is flat out wrong. Nonprofits have a mission to serve a sector of society and they need funding to achieve that goal. Without ongoing, sustainable revenue, they will not survive. The most heathy nonprofit organizations are those with a healthy balance sheet and their accumulating net assets give them a long term cushion to weather a potential downturn in revenue, or major unexpected expenses.

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A Profitable Nonprofit Can Benefit Society

Nonprofits are a force to be reckoned within the US economy. The nonprofit sector provides 5.5% of the nation’s entire GDP or $805 billion worth of output. Between 2000 and 2010, nonprofit employment grew an estimated 18 percent, faster than the overall U.S. economy and employees of nonprofit organizations account for 9.2% of wages paid in the U.S. in 2010. A financial healthy nonprofit provides jobs, invests in the community and benefits the community with their stated mission.

Focus On Your Marketing Message

Another important aspect of a for profit business is the marketing of their products. There are many brilliant ad campaigns that tout the latest TV, car, game app, or smart watch. Marketing your nonprofit must follow the same principles. Your marketing message explains what you are selling (mission/purpose) and how it is going to make someone’s life better. How are you delivering your message and inviting others to share your message? You need to make sure it is easy to understand, relays tangible benefits and is memorable.

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Nonprofit Leader Endorses Corporate Model

Probably the most controversial message within the nonprofit sector is currently being delivered by Dan Pallotta, head of a Cambridge nonprofit called the Charity Defense Council. Pallotta has insisted for years that nonprofits should adopt a more corporate model of doing business. That includes spending more on themselves, an expense traditionally viewed by donors and watchdog groups as wasteful. Some critics argue that social impact organizations suffer from “too much overhead.” Pallotta believes that if charities increase overhead spending, especially on executive compensation and fund-raising, they could bring in more money to do more charitable work.

Invest in Technology

Overhead includes a wide range of vital costs, including information technology, finance, fundraising, external affairs, and staff development. Successful for profit businesses, invest heavily in high quality information technology, staff salaries and in their marketing. They need this to effectively sell their products and make a profit. Likewise, a nonprofit needs to hire talented employees, invest in technology, and develop an administrative budget to pay for these investments in their infrastructure. This investment will build awareness of your organization, generate support, and ultimately increase your revenue to build sustainable organization. By bucking the conventional wisdom of trying to keep overhead low, nonprofits who provide competitive salaries for their employees, will thrive and be able to recruit and retain the best talent.

Treat Your Donor Like a Customer

Another key business principle that nonprofits need to embrace is the concept of having repeat customers. For profit businesses rely on building long term relationships with their customers. As a nonprofit, your ‘customers’ are donors who are making a commitment to your cause. As a flourishing nonprofit, you need to develop a strategy that will have your donors coming back, year after year to help your cause.


Schedule a FastFund Online Demo: Learn more about our unique software approach to nonprofit accounting, payroll and fundraising.


Bottom Line

The work that nonprofit organizations do has a significant impact on the world we live in. They are providing services that neither the government, nor the private sector is equipped to handle. The only way these services can continue is for the nonprofit industry to profit like a for profit business.

Want to read more? Check out these insightful articles:

  • Donor Stewardship: Relationship Building Strategy for Nonprofits
  • Functional Accounting: Guide to Classifying Expenses
  • 8 Reasons Why Financials for Nonprofits Are More Difficult than For-Profits
  • Nonprofit Accounting: Guide to Financial Statements Management
  • Donor Retention: 4 Strategies for the Long Term
  • Nonprofit Funding Sources: Top 4 Revenue Streams

Did you find this article useful? We welcome your thoughts and comments.

Written by Joseph Scarano · Categorized: Fundraising Stewardship · Tagged: Fundraising Marketing, Nonprofit Marketing, Nonprofit Profitability, Nonprofit Revenue, Nonprofit Stewardship

About the Author

Joseph Scarano is the CEO of Araize, Inc., developers of cloud-based FastFund Online Nonprofit accounting, fundraising and payroll software solutions to help your nonprofit become more transparent, accountable and sustainable.

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