How do nonprofits make money? 5 revenue streams explained

If you're new to the nonprofit world, the financials can feel confusing. Can nonprofits make money? How do they pay staff? Where does the funding actually come from?

The short answer: nonprofits absolutely generate revenue. They just use it differently than for-profit businesses. Instead of distributing profits to shareholders, every dollar goes back into the mission. And yes, nonprofits can and do pay staff. Salaries are just another operating expense, like rent or software.

In this guide, we'll break down the most common ways nonprofits make money and how to build a funding strategy that keeps your organization stable and growing.

Key takeaways

• Nonprofits can (and should) make money 💰 Revenue funds salaries, programs, and impact.
• Diversify your income streams 💸 Avoid relying on a single funding source to reduce risk.
• Memberships can generate sustainable revenue 🛍️ Add recurring revenue through options like membership dues.
• Reinvest surplus into your mission 🎯 Nonprofits can run a surplus. It just goes back into programs and operations, not shareholders.
• Manage your revenue streams with Givebutter 🧈 Launch donation forms, fundraising pages, events, auctions, and more with Givebutter's all-in-one fundraising platform.

Can nonprofits make money?

Yes, nonprofits can generate revenue through a variety of sources. The key difference between 501(c)(3) organizations and for-profit businesses is that nonprofits must reinvest any surplus into their operations, instead of distributing it to shareholders.

How do nonprofits use the money they make?

Nonprofits use revenue to advance their mission and goals. This typically includes program delivery, staff salaries, marketing, fundraising costs, and building reserves for long-term stability.

Nonprofits can achieve a lot on a small budget with the right team, loyal volunteers, and affordable systems and tools.

Back to basics

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The 5 main ways for nonprofits to make money

Nonprofits don't rely only on donations or crowdfunding. There are many funding sources nonprofits can tap into, from donations and grants to earned income and investments.

1. Donations 💰

⭐ Best for: Raising funds (and awareness) at scale

Individual and corporate donations are among the most common ways nonprofits raise money. Most people are familiar with donating to organizations, and it's one of the simplest ways to give.

Donations can come in various forms, including:

• Individual donations
• Major gifts
• Recurring donations
• Crowdfunding campaigns
• Peer-to-peer fundraising
• Corporate donations

Create a better donation experience with smooth, friction-free donation forms.

Dive deeper

Learn how to start a fundraiser from scratch →

2. Grants 🏛️

⭐ Best for: Raising a large amount of money from one source

Grantmaking organizations can provide significant funding, but success depends on strong alignment between your mission and their priorities.

Common sources of grant funding include:

• Government agencies
• Private foundations
• Community foundations
• Corporations
• Family foundations

Securing grant funding starts with finding the right grant-giver and making a strong application. Find the best grants for nonprofits, then learn how to write a grant proposal that gets results.

Dive deeper

Learn how to manage your grants effectively →

3. Fundraising events 🎟️

⭐ Best for: Turning engagement into dollars

Fundraising events are a powerful revenue source for nonprofits, especially with a loyal community or strong sponsor support. Events can raise money through ticket sales, merch sales, corporate sponsorships, prize donations, and upsells.

Popular fundraising events include:

• Galas
• Auctions
• Sports tournaments
• Community events
• Trivia nights
• Bake-offs and cook-offs
• Seasonal events

More to explore

Browse the most popular fundraising event ideas for nonprofits →

4. Earned income 🛍️

⭐ Best for: Adding extra income to your fundraising strategy

Earned income is a revenue stream many nonprofits underuse. If your organization offers services, sells products, or runs a membership program, it can generate both one-time and recurring revenue.

Examples of earned income include:

• Merchandise or product sales
• Paid-for services
• Membership dues

Monthly or annual memberships are especially effective for creating reliable revenue and deepening community engagement.

It's also important to note that to maintain tax-exempt status, your products or services must align with your organization's mission. Not sure if your earned income qualifies? A quick check with your accountant can help add clarity.

5. Investments 📈

⭐ Best for: Growing your funds over time

For nonprofits with cash on hand, investing can increase long-term impact. Smart investing can build reserves and provide more flexibility.

Common nonprofit investments include:

• Endowments
• Bonds
• Stocks
• Mutual funds
• ETFs
• Cryptocurrency

Any nonprofit considering investments should consult a financial advisor. It also helps to build your nonprofit finance knowledge so you can make confident decisions.

How nonprofits can stabilize revenue

A strong fundraising strategy includes multiple income streams to create stability. You can also stabilize revenue by improving the donor experience, strengthening relationships, and leveraging technology.

• Diversify funding 💰 Build a mix of fundraising streams, including donations, grants, products, and events.
• Build reserve funds 🏦 Set aside funds to build a safety net for leaner months.
• Reduce friction when donating ⚡ Make giving easier with user-friendly donation forms and fundraising pages.
• Promote recurring giving 📆 Build sustainable revenue with recurring donation programs.
• Prioritize relationships 🤝 Focus on retaining existing supporters and cultivating long-term connections with donors, sponsors, and grant-makers.
• Invest in your team's knowledge 📝 Build skills in fundraising, finance, grant writing, and donor stewardship. Don't forget to share that knowledge with your board.
• Start before you scale 🌱 If you're just getting started, focus on building consistent revenue before committing to full-time salaries.

More to explore

Discover even more ways to raise money for a nonprofit →

Handle multiple revenue streams in one place with Givebutter

Building a financially strong nonprofit starts with understanding where your money comes from and making it easier to bring in more of it.

With Givebutter, you can manage multiple fundraising efforts in one place. Create donation forms, host auctions, launch raffles, run peer-to-peer campaigns, and more without juggling separate platforms. When everything is connected, it's easier to see what's working, better support your donors, and focus on what matters most: your mission.

Sign up for Givebutter and start building a stronger, more diversified fundraising strategy.

FAQs about how nonprofits make money

Can nonprofits make a profit?

Yes, nonprofits can run a surplus. The difference is what happens to that money. Instead of distributing profits to owners or shareholders, nonprofits reinvest any surplus back into their programs, operations, and mission.

How do nonprofits make money to pay employees?

Nonprofits pay employees through various revenue streams, including individual and corporate donations, grants, fundraising events, investments, and product and service sales.

How do the founders of nonprofits make money?

Nonprofit founders and leaders can earn income by drawing a salary from the organization for the roles they serve in, such as Executive Director or CEO. Reasonable, market-rate compensation is how nonprofits attract and retain great people.

How do nonprofit owners make money?

Nonprofits don't have owners in the traditional sense. Instead, they're governed by a board of directors. Founders and executives can earn a salary for the work they do, but no individual can personally profit from the organization's revenue.

How much money do nonprofits make?

Nonprofit revenue varies widely, but studies show that individuals gave $592.5B to U.S. nonprofits in 2024. Corporations contributed an additional $44B, while foundations gave $109.8B.

How do nonprofit hospitals make money?

Nonprofit hospitals generate revenue from multiple sources, including grants, donations, and investment income. They also receive funding through patient care programs such as Medicaid and insurance plans.

How do small nonprofits diversify revenue?

Small nonprofits can diversify revenue by adding funding sources and reducing reliance on a single grantmaker or major donor. Map your current revenue sources, identify gaps, and add streams gradually based on your team's capacity.