Nonprofit Revenue Sources : Nonprofit Income

The variety of resources available for financing nonprofits may seem overwhelming and unmanageable, especially to someone looking in form the outside. The publication Financing Nonprofits: putting theory into practice (Young, 2007) addresses not only the variety of resources that are available but also the challenges of managing multiple revenue sources. This paper presents a brief reflection on some of the ideas presented in the publication.

This paper was originally written for Financial Management for Nonprofits 380, taught by Professor Zelhart.

1. Connors, T. D. (2001). The Nonprofit Handbook. New York: John Wiley & Sons, Inc. [US].

When one talks about ‘Nonprofits’ many things come to mind; People often use phrases such as 501c3’s, charitable, ambassadors of the poor, and tax free organizations to umbrella the whole nonprofit sector. However, what large portions of our country fail to note is that there are differences within the nonprofit branch. There are two man categories of Nonprofits: Public, and Private; within those categories there are differing distinctions that allow for the separate identities of these organizations to in function and scope.

For this reason, nonprofits were chosen as the mode of production and management of new affordable units because they had a wholesome image with the American public (Bratt, 1998). This image, coupled with a track record for having the health, welfare, and safety of the public in mind made nonprofits very attractive to legislators and popular with the public.

The nonprofit sector faces many challenges that make it more difficult to measure its financial performance. Young (2007) states that the survival of nonprofit businesses depends upon receiving financial funding from outside donors such as donations from charities, government contracts, endowments et cetera, and the necessity for having several different revenue sources is a challenge for nonprofit management. In addition, he points out that securing capital for operating is also much different than in the traditional business world. Fortunately, scholars have provided tools and information that will help nonprofits manage and measure their unique financial performance so they may make informed decisions and guide their organizations to sustainability (Young, 2007).

Nonprofit entity may assume a critical part in income broadening from an administration point of

The strength of a nonprofit organization depends on their capability to secure and conserve funds. Most nonprofits primary source of income is generated from private donors, fees for service, fundraising through special events or government grants. As a result of the recession the organizations that secure funds will be able to maintain a standard of performance. It is inevitable to control all the unpredictable, but nonprofit organizations can use multiple strategies that will allow them to survive these difficult times. Therefore having knowledge of your organization’s needs is the first step to fundraising.

Financial: Tax evasion can occur in nonprofit organizations because they may be recieving less funds leading to tax evasion and fraud. There also may be an issue with the organization receiving money from people who hav other interests. Nonprofit businesses also have more leniance as to how they spend their money. d. Competition: Without publicity and marketing these organizations will not be able to surpass eachother.

Revenue sources are not always stable and predictable and can create many challenges when it comes time to collect promised donations. Government funding can present a huge obstacle for nonprofit executives because of the instability of our government’s ability to balance their own budget which can result in fluctuations and cuts to excess spending. If an organization receives a huge majority of their revenue from a single source, this can present potential challenges too. What if that donor, whether an individual or corporation, falls upon hard times and can no longer financially support that organization? It is important to have a variety of revenue resources for this

Nonprofits organizations make money as a result of their plans and activities and use it solely to cover all the expenses. The benefits of nonprofit’s expenses is that as long as the costs are associated with the organization’s purpose, profit made isn’t taxable.

Both organizations bring in a profit but what they do with the money is what makes them different. The main difference lies in the organization's mission. A nonprofit must have a strong mission that will greatly help the community and if they address this mission properly and effectively, it will not bring in any money to the company. This causes the company to lose money but what you typically don’t realize about nonprofits is that they have other activities that do bring in money to help balance out the money lost for the main mission that betters the community. This talk showed that nonprofits must have a strong mission in place in order to make the nonprofit a success but they also need to have other activities and projects to balance out the loss of money that comes from carrying out a strong

There are two similarities between profit and nonprofit businesses. Both provides goods and services to customers. These two types of businesses also have costs from a variety of things such as supplies and employee pay. The difference would be that while a for-profit organization works to actually make a revenue, nonprofit companies provide services without compensation and rely on donations.

A not for profit organization is a corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive (Legal, 2013).” There are immense community benefits as a not-for-profit generally accepts everyone regardless of ability to pay. Nonprofit organizations are granted tax-exempt status which helps them to provide services to the public and are expected to be effective managers of their finances as well as being efficient (Financial Management, 2010). In doing so, they can gain exemptions from federal and state incomes taxes and have the ability to solicit tax-deductible contributions (Financial Management, 2010). Organization must follow legal financial

Nonprofit organizations that hold an appropriate level of cash are able to not only pay their necessary bills, but also deal with unexpected crises and potentially delve into other opportunities (McLaughlin, 2009). Since nonprofit groups typically are not functioning within a realm of businesses derived from or around cash, the need to monitor or plan cash is relatively small in comparison to other company examples. In the example