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Earning income

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Question:

What are three things nonprofits can do to generate earned income to support their missions?

Answer:

On average, more than half of a nonprofit’s income comes from earned sources like program service fees, memberships or the sale of products and services.

It’s more than people think.

The odds are that your organization already generates some earned income.

* Look first at your current activities.

The first thing nonprofits should do is look for ways to improve results from their current revenue-generating activities.

Consider charging more for your services.  That can sound scary, but we all know people value things more when they pay more.

Nonprofits often are worried about excluding people who can’t afford to pay, which is a legitimate issue, but there are ways around that.

You can consider charging different customers differently, or creating a sliding fee scale.

Or you can vary the product or service, and that could allow you to sell it at different prices.

There may even be products or services that you currently give away for free that you could charge for.

You should also look for opportunities to reduce your costs, restructure activities, or change your staff structure.

Finally, are there ways to conduct low- or no-cost promotions to increase business to the venture?

* Talk to your customers, constituents or clients.

Your best source for additional income is from those individuals and organizations that you currently have relationships with.

Ask them what their wants and needs are, and what would lead them to buy more from you, more often, and at different times.

Try to identify related customers, which are people or organizations that are similar to your current customers in some way, and ask them what they are interested in.

Related customers are people you could naturally connect with, based on geography or interests, who wouldn’t see you as a stranger.

* Explore new venture ideas.

This is where most nonprofits want to start, but this step comes after looking at your current activities and talking to your customers.

First, inventory the assets and capabilities of your nonprofit.

What are you known for?  What are your organization’s greatest strengths?  Do you have publications, training materials or specific areas of expertise?

Then ask your customers what else you could provide them with. What services do they currently get from someone else that they wish they could get from you?

And finally, ask related customers, people who are similar to your customers in some way, what they would like to receive from you.

The answers to these questions will point you in the direction of new product or service opportunities.

For more information about earned income, visit www.npEnterprise.net, the official listserv of the Social Enterprise Alliance.


Rolfe Larson is president of Rolfe Larson Associates, a consulting firm with offices in Denver, Minneapolis and Toronto that works to help nonprofits grow by generating earned income.

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