How Charities Make Money
Charities survive primarily on donations, with the holiday season (and year-end tax deadline for charitable donation deductions) making December the busiest time for charitable giving. Charities need to get creative to stay afloat the other 11 months of the year.
There are five main ways charities make money and maximize their dollars: enlisting volunteers, hosting fundraising galas, selling products, sponsoring events, and advertising for attract more donations.
Key points to remember
- The holiday season and the end of the year are lucrative for charities. The rest of the year, they have to hustle.
- Galas, special events and product sales all raise funds.
- Donations, especially of time, do not generate revenue directly, but they do keep many charities afloat.
Volunteering
Donations bring in money, but most charities stretch the money further by relying on the time generous people give to their favorite causes. And Americans are generous with their time: In 2019, 30% of Americans volunteered, working a combined 5.8 billion hours (worth an estimated $147 billion), according to the report. Volunteering in America from the Corporation for National and Community Service. (CNCS).
In 2020, AmeriCorps data puts that figure at nearly $200 billion, with the value of an hour of volunteering at $28.54, according to Independent Sector and the Do Good Institute. Indeed, it seems that charitable donations have increased overall due to the COVID-19 pandemic.
There is even non-profit associations who help other nonprofits maximize their armies of volunteers. Most charities view volunteers as an essential resource for their core operations.
Galas
Many charities hold an annual gala to help raise funds. These events can be quite expensive upfront, but they can provide a significant cash injection. One of the many examples is undoubtedly the off-Broadway York Theater Company’s annual Oscar Hammerstein Awards Gala, which began in 1988. It includes a dinner, speeches, awards and performances. Famous recipients include Stephen Sondheim, Sir Cameron Mackintosh, Harold Prince, Carol Channing and Angela Lansbury.
Charities can bring in big bucks from a fundraising gala through a mix of high net worth ticket buyers and corporate sponsorships. Local food and liquor vendors often donate their wares to the cause. Quiet and alive auctions for travel events, products and other services donated by companies can increase revenue from these events.
Product sales
Selling a product for the cause is a source of income for many charities. The annual Girl Scout cookie and Boy Scout popcorn sales are two high-profile examples.
Cookie sales have been a lucrative source of income for Girl Scouts since 1917, when a troop in Muskogee, Oklahoma started one to raise funds. The concept went national in 1922. In 2020, Girl Scout cookie sales bring in nearly $800 million a year. Indeed, the World Economic Forum claims that Girl Scouts make more money from cookies than Oreo. With approximately 2.5 million girl and adult members worldwide and an annual fee of just $25, the cookie money clearly outweighs the membership fee.
Total Boy Scout popcorn sales are harder to pin down as an annual total, but according to local publication West Side News & Greece News, which covers suburban Rochester, NY, in 2020, 9,000 boys across five counties averaged $1.2 million a year in sales. Across 16 counties in south-central Wisconsin and northern Illinois, the Boy Scouts of America Glacier’s Edge Council calls the sale “the largest annual” and represents more than $600,000 in cash and prizes. When you consider that the Boy Scouts have 2.2 million young members between the ages of 5 and 21 nationwide, that’s a lot of popcorn making a lot of dough.
30%
The percentage of Americans who donate their time to good causes each year, according to the Volunteering in America report from the Corporation for National and Community Service (CNCS).
Events and shows
Gala events attract wealthy donors, but charities also rely on events that attract a wider audience. Non-profit performing arts groups have an advantage in this area and can present concerts, dance performances and music recitals. Broadway Cares/Equity Fights AIDS, for example, does very well with themed music shows such as Broadway Bares, Broadway Backwards, the Red Bucket Follies (formerly Gypsy of the Year Award) and the Easter Bonnet Competition.
However, people with artistic difficulties need not despair. Major fundraising events, according to Onecause.com, include silent auctions, walk-a-thons, cookouts, shoe drives and that old favorite, the car wash.
Advertising
Even for charities, spending money can be necessary to make money. Advertising and promotion can increase a charity’s reach and awareness among potential donors. As with volunteering, advertising does not generate revenue directly, but it can generate donations. A celebrity endorsement can multiply the impact. There are companies that promise to help your nonprofit with public relations by doing their best to make sure you need their help.
How many Americans donate their time to charity?
According to data from AmeriCorps, in 2019, 30% of Americans donated their time to charity, amounting to 5.8 billion hours (worth an estimated $147 billion). AmeriCorps increased that amount to nearly $200 billion in 2020 and valued a single hour of volunteering at $28.54.
Are charities allowed to sell products to make money?
Yes they are. Just one example is Girl Scout cookies, which rake in nearly $800 million a year, more than Girl Scouts earn in membership fees.
What are other revenue-generating strategies for charities?
In addition to selling products, charities can also make money through fundraising galas, benefit shows, and good publicity, which can lead to increased donations.
The essential
There are many ways for an organization to make money, and charities are some of the best for generating revenue. From product sales to fundraising events, charities can generate income from many sources. Volunteers who help for free further improve the margins of these nonprofit organizations.