How Does a Nonprofit Organization Raise Money?

Nonprofit Organizations Solicit Individual Donations

Nonprofit organizations receive their tax exempt status and privileges because their work benefits the public who also pays for it through donations. One of the most important assets that a nonprofit organization possesses is its mailing list of individuals who have requested to receive newsletters and information about the work. Most nonprofit organizations send regular mailings and often include a return envelope and a specific request for money. A healthy nonprofit organization receives around 30 percent of its funding through individual donations.

Nonprofit Organizations Conduct Fund Raising Events

Banquets, galas, golf benefits, telethons, silent auctions and faith-promise dinners are all types of fund raising events conducted by nonprofit organizations. These are usually structured to attract the more affluent of the individual donors and to recruit new affluent participants who will eventually donate to the organization. Society columns in high end community magazines and newspapers often publish photographs of the donors in attendance at these events. Another 30 percemt of a healthy nonprofit's funding may be raised at these events which are often held annually.

Nonprofit Organizations Apply for and Receive Grant Funding

Philanthropic organizations exist to fund nonprofit service organizations with grant funding. The funding organizations receive tax shelters in exchange for their promise to give away 5 percent of their annual assets to nonprofit service organizations. The nonprofit organizations spend a lot of time researching prospective grants, scrutinizing the requests for proposals and attempting to convince organizations that they share the same mission and priorities. Larger nonprofit organizations hire grant writers as part of their overall development plan.

Nonprofit Organizations Operate for Profit Businesses

Nonprofit organizations are allowed to run for-profit businesses to fund their own organizations. Thrift stores often belong to a non-profit organization and serve as job-training programs for their clients and as a revenue stream for the organization. Some nonprofit organizations charge admission fees or tuition which also produces funding to pay for their other programs. While some additional tax responsibilities go along with a nonprofit organization's decision to run a business, it is a proven way to raise money on a regular basis.