Earned income which comes from the sale of products or services that are aligned with an organization’s mission is a sustainable source of revenue. For many nonprofits, earned income is their only sustainable income.
The term nonprofit is not a business strategy. Unfortunately, many nonprofits that engage in generating earned revenue don’t understand this concept. Sustainable organizations need to generate a profit.
For example, Girl Scouts make a profit from cookie sales, and that profit allows them to provide services. Thrift stores that thrive make a profit. And there are many types of nonprofits with various missions, like performing arts organizations that sell tickets. Earned income with a profit that becomes unrestricted funds is a very good thing. The more sustainable unrestricted funds that are raised, the more services an organization can provide.
Nonprofits primarily rely either on earned revenue or charitable giving. In my experience, I haven’t seen a nonprofit equally successful with both strategies. While an organization can have both sources, one will most likely dominate.
We would love to hear your examples of sustainable earned income.
Dennis McMillian is President of The Foraker Group, a capacity building organization based in Alaska, and the author of Focus on Sustainability: A Nonprofit’s Journey.