How are nonprofits funded?

Nonprofits can and do use the following sources of income to help them fulfill their missions:

  • Fees for goods and/or services
  • Individual donations and major gifts
  • Bequests
  • Corporate contributions
  • Foundation grants
  • Government grants and contracts
  • Interest from investments
  • Loans/program-related investments (PRIs)
  • Tax revenue
  • Membership dues and fees

While opinion varies as to what a nonprofit's "ideal" mix is, using several different sources to achieve sustainability is generally a good practice. Candid’s Social Sector Dashboard provides data about the percentages of various sources of nonprofit revenue, demonstrated here in a pie chart:

A pie chart shows sources of nonprofit funding as 75% earned income, 15% contributions, and 11% government grants.

 

Dive in to this topic with Candid courses:

 

See our related Knowledge Base Articles:

 

2022 Giving Overview
Giving USA

Giving USA's 2022 Giving Overview is a data visualization tool that allows you to view current and historical giving trends.
 

U.S. Social Sector Dashboard
Candid

Candid's annually updated website shares key statistics about the organizations, financial flows, and people that make up the social sector in the United States.
 

2019 Nonprofit Sector in Brief
Urban Institute

This brief highlights trends in the number and finances of 501(c)(3) public charities and key data insights on the nonprofit sector, such as private charitable contributions and grantmaking by foundations.
 

Ten Nonprofit Funding Models
Stanford Social Innovation Review

For-profit executives use business models—such as "low-cost provider" or "the razor and the razor blade"—as a shorthand way to describe and understand the way companies are built and sustained. Nonprofit executives, to their detriment, are not as explicit.
 

Shattering the Myth About Diversified Revenue
The Chronicle of Philanthropy

Clara Miller argues that diversifying revenue is not always the answer for nonprofits.
 

Beyond Sustainability: Identifying the Right Resource Mix for Growth
Nonprofit Quarterly

This article is excerpted from chapter 10 of the book, Finance Fundamentals for Nonprofits: Building Capacity.