Diversifying Revenue Streams for Nonprofit Sustainability

5 min read

June 16th, 2025

If one chicken is laying all of your nonprofit's eggs, that puts your organization at great risk because if anything were to happen to that chicken or hinder its ability to produce eggs, your nonprofit would find itself in financial trouble. In the world of nonprofit management, this individual chicken is officially known as a "single point of failure." A single point of failure is defined as a single factor that has the potential to sink an entire organization.

While most organizations aren't operating with a single funding source, many operate with most of their revenue coming from one or two significant streams. This lack of diversification puts nonprofit organizations at financial risk because any number of things could occur that might slow or stop those revenue streams. 

When nonprofits fail to diversify their funding sources, they operate at great peril because so many different difficulties and external factors could impact the availability of their funding, such as new nonprofit competitors in the market, shifting donor positions, or economic challenges like inflation, falling consumer confidence, or high unemployment rates. 

Shoring up your organization's revenue streams with diverse funding sources will help to shield your nonprofit from challenges and risks, increasing your financial health, making you more resilient, and adding longevity to your organization's future.

 13 Creative Nonprofit Funding Sources to Support Diversified Revenue Streams

When you get creative and do a little research, you will find that your organization can pursue a wide array of potential funding sources. Plus, you can work to diversify individual revenue streams within those larger channels. 

1. Individual Donors

Some individual donors give a little, and others give a lot. Whichever kinds of individual donors you attract, work hard to cultivate a long list. The more individual donors you connect with, the more diverse and resilient this funding stream will be. 

For an added benefit, work to promote recurring giving within this group of donors so that you will be better able to rely on this channel as a recurring funding source. 

Read More: Why Your Nonprofit Needs a Sustainer Program (And How To Get Started)

2. Corporate Donors and Sponsorships

If your organization is a 501(c)(3), then gifts made to your nonprofit are tax-deductible for donors. This often appeals to individual donors, but typically is of greater benefit to corporate donors who are looking to reduce their tax bill while improving their brand reputation and making a positive difference in the world. 

There are several ways you can benefit from relationships with corporate donors, such as:

• Philanthropic financial contributions
• In-kind gifts or pro bono services
• Event sponsorships
• Contribution matching
• Incorporation into a corporate social responsibility strategy or triple bottom line
• Cause marketing
• Check-out or cash register campaigns
• Paid release days for employee volunteering

To develop the strongest corporate relationships, look for businesses that have values and cultures that closely align with those of your organization. 

3. Government and Foundation Grants

Nonprofits qualify to apply for grant funds that are awarded by local, state, and federal government agencies, in addition to private and public foundations. Researching, applying for, and managing grants can be a full-time job. The potential revenue, however, is significant, making it well worth your time. 

Read More: The Key To Reporting on Multi-Year Grant For Your Nonprofit

4. Investment Income

Ideally, your nonprofit can operate with a budget surplus that helps create a cash reserve. Smartly invested, a cash reserve will earn interest and/or dividends that you can use as another revenue stream. 

5. Rental Income

If your nonprofit owns assets, such as offices, event space, or equipment, that are not utilized 100% of the time, then you can generate another source of revenue by renting out these underutilized assets. Just be sure you have the proper insurance and agreements in place to do so responsibly. 

6. In-Kind Donations

While not technically a revenue source, in-kind donations can save your nonprofit money that it would otherwise spend on goods, services, or expertise. 

Read More: How to Track and Report In-Kind Donations

7. Peer-to-Peer Fundraising

Run a peer-to-peer fundraising campaign by encouraging your existing donor base to help your organization raise more money and reach more potential donors. 

8. Planned Giving

While death isn't necessarily a comfortable topic to talk about, planned giving can be a significant revenue source for nonprofits. Provide options and clear instructions for your donor base to earmark a portion of their estates to your nonprofit through bequests or other types of planned gifts. 

9. Product and Merchandise Sales

You can generate revenue, increase donor engagement, bolster community engagement, and expand awareness by selling branded merchandise and mission-related products like books or handmade items. 

10. Fee-for-Service Programs

Many nonprofits add fee-for-service programs to their list of offerings. The fees paid for these services can offset costs or help to support free programs. Some examples might be educational workshops, counseling, or professional training. 

11. Membership Dues

Creating a membership plan for your supporters with tiered membership levels and tiered benefits helps to encourage regular contributions while increasing donor retention. 

12. Event Ticket Sales

Fundraising events (workshops, concerts, barbecues, ice cream socials, auctions, and galas) are a fun way to involve your community in your nonprofit while creating a revenue stream through ticket sales and event-related purchases. 

13. Crowdfunding

Crowdfunding through online platforms can be effectively used to raise money for specific purposes and goals. These online platforms help nonprofits generate revenue by reaching a wider audience and building up their communities. 

Boost Your Nonprofit's Financial Health and Future With a High-Performing Back Office

A robust back office supports every aspect of your nonprofit's operation, funding, and mission by facilitating the collection, organization, reporting, and analysis of data. From the identification and retention of donors to the success and ROI of fundraising campaigns, having a back office designed to provide you with actionable insights can vastly improve your organization's success, financial health, and mission impact. 

For nonprofit organizations, maintaining a high-functioning back office on a limited budget can pose a significant challenge, but outsourcing to a reputable nonprofit accounting provider offers the perfect balance between budgetary priorities and payoff. With a well-run back office, you can identify ways to maximize funding, optimize diversification, and supercharge your positive impact.