Fundraising Fact Sheet 1 - Fundraising as an income source
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Fundraising as an income source
Nonprofit organisations can have a wide range of income sources whereas for-profit organisations obtain their working revenue mostly from sale of goods and services and governments from taxes. Community service nonprofit organisations often wish to diversify their income sources, particularly when they are dependent on one source alone – often government grants and contracts. There are a number of sources of income other than government and the main ones are:
Giving by individuals of cash
- Cash donations are given by supporters and friends, e.g. church collections
Grants by foundations and other nonprofit organisations
- Grants are given by charitable trusts (for example Queensland Community Foundation www.qcf.org.au)
Fee income and commercial ventures
- An ‘op-shop’ which sells donated goods
- Fees charged for services delivered by nonprofits such as counselling service to wealthy people in addition to their free counselling to the needy
Membership income
- Members are charged fees to belong to the organisation
Investment income
- Sometimes known as an endowment, where a large sum is invested and the income used by the organisation. Often the large sum comes from bequests
Volunteer resources
- Volunteers provide services to the organisation such as staffing its ‘op shop’ or serving on its board
It is usually a matter for the board or management committee of an organisation to assess the strategy about the best balance of income sources. Some organisations decide to have as many sources as possible, other concentrate on growing just a few. This series of fact sheet examines developing fundraising from individuals as a revenue source for the nonprofit organisation.
The Australian Bureau of Statistics (ABS) estimates that fundraising across the nonprofit sector accounts for some 9.4% of income being made up of:
- Grants from foundations 0.4%
- Donations from business 0.8%
- Sponsorships 1.4%
- Donations from individuals 5.4%
- Other fundraising 1.3%
For the ABS category ‘social service’ the portion of their income sourced by fundraising is nearly 22% of their total income. This is only an average and some organisations can be higher or lower than this average.
Many associate ‘fundraising’ with the rattle of the tin cup on the street corner. However, this is a fading sound. Fundraising today - or development as it is often called - is a sophisticated and complex profession, drawing on management, marketing and communication skills. In fact, fundraising is taught at tertiary level, and a full training program is also offered by Fundraising Institute Australia, who also has a very detailed Code of Professional Conduct. Clearly, there is more to the fundraiser’s role than meets the eye, be it a volunteer role or a staff one.
A foolproof formula for raising funds has yet to be devised, but good planning and management are staple ingredients in every successful campaign recipe. Many Australian organisations these days employ a fulltime development team, specifically to raise funds. Often the organisation may employ fundraising consultants as well, just as it might call on financial or management consultants to meet specialised needs. If your organisation’s fundraising task calls for such specialist expertise, Fundraising Institute Australia, mentioned at the end of these factsheets, will have contact details for local consultants.
Alternatively, you may opt to raise funds yourself. Obviously, the scope of your fundraising task will determine the type of campaign you run. Whether you use a consultant or ‘do it yourself‘, whether you are raising hundreds of dollars or millions, some core questions can get the effort started. People think fundraising is about asking people for money and that is such a minute part of the role. More importantly, it is about communicating with relevant people about the absolute value of what your organisation is and does in the community. The challenge is to encourage others to engage so they want to be part of that effort.
Five key questions:
- How prepared is your organisation to win community support? – See Fact Sheet 2
- Who believes in what you’re trying to achieve? – See Fact Sheet 3
- What fundraising tool/s should you use to reach these ‘markets‘? – See Fact Sheet 4
- How will you ask for funds? – See Fact Sheet 5
- How will you keep the momentum going? – See Fact Sheet 6
Each question prompts some thought and action and is dealt with in separate fact sheets. Also included are a sheet on legal considerations that go with fundraising activities (See Fact Sheet 7) and a case study of a community service organisation that has embarked on a strategy to increase their fundraising income (See Fact Sheet 8).
