How Charities Make Money (2024)

Charitable organizations survive primarily on donations, with the holiday season (and year-end tax deadline for charitable contributions deductions) making December the most active time for charitable giving. As a result, charities must get creative to stay afloat the other 11 months of the year.

There are five main ways charities and nonprofits raise funds and stretch their dollars: using volunteers, hosting gala fundraising events, selling products, sponsoring events, and advertising to bring in more donations.

Key Takeaways

  • The holiday season and year-end are lucrative for charities. The rest of the year, they have to hustle.
  • Charities and nonprofits are allowed to make money to fund operations and pay reasonable compensation to those in paid positions.
  • Galas, special events, and product sales all raise funds.
  • Donations, especially of time, keep many charities afloat.

Volunteerism

Donations bring in cash, but most charities stretch the money further by relying on the time that generous individuals donate to their favorite causes. And Americans are generous with their time: In 2019, 30% of Americans volunteered time, working for a combined total of 5.8 billion hours (worth an estimated $147 billion), according to the Volunteering in America report from AmeriCorps.

As of April 2022, data from AmeriCorps and recent Current Employment Statistics from the Bureau of Labor Statistics (calculated by Independent Sector) places the figure at nearly $200 billion, with the value of a volunteer hour amounting to $29.95.

There are even nonprofit organizations that help other nonprofits maximize their armies of volunteers. Most charities find volunteers to be a critical resource for their basic operations.

Gala Events

Many charities hold an annual gala to help raise funds. These can be quite costly upfront, but they can bring in a significant infusion of cash. One of numerous examples is the off-Broadway York Theatre Company’s annual Oscar Hammerstein Award Gala, which began in 1988. It includes a dinner, speeches, award presentations, and performances. Celebrity recipients have included Stephen Sondheim, Sir Cameron Mackintosh, Harold Prince, Carol Channing, and Angela Lansbury.

Charities can bring in big sums from a fundraising gala through a mix of wealthy ticket buyers and corporate sponsorships. Local food and liquor merchants often contribute their goods to the cause. Silent and live auctions for travel events, products, and other services donated by businesses can add to the funds gained from these events.

Product Sales

Selling a product for the cause is a moneymaker for many charities and nonprofits. The annual sales of Girl Scout cookies and Boy Scout popcorn are two high-profile examples of this.

Cookie sales have been a lucrative revenue stream for the Girl Scouts since 1917, when a troop in Muskogee, Okla., launched one to raise money. The concept went nationwide in 1922.

Girl Scout cookie sales bring in nearly $800 million a year. Indeed, the World Economic Forum says that the Girl Scouts make more money off cookies than Oreo. With an estimated 2.5 million girl and adult members worldwide and a yearly membership fee of only $25, cookie money clearly outpaces membership charges.

Total Boy Scout popcorn sales are harder to pin down as an annual total, but according to the West Side News & Greece News, which covers suburban Rochester, N.Y., in 2020, 9,000 boys across five counties averaged $1.2 million annually in sales. In 16 counties in South Central Wisconsin and Northern Illinois, the Boy Scouts of America Glacier’s Edge Council calls the sale its “largest annually," and it accounts for more than $600,000 in cash and prizes.

When you consider that the Boy Scouts have 2.2 million youth members between the ages of 5 and 21 nationwide, that’s a lot of popcorn generating a lot of dough.

30%

The percentage of Americans who volunteer their time to good causes every year, according to the Volunteering in America report from the Corporation for National and Community Service (CNCS).

Events and Performances

Gala events attract wealthy donors, but charities also rely on events that attract a wider audience. Nonprofit groups in the performing arts have an advantage in this area and can present concerts, dance performances, and music recitals. Broadway Cares/Equity Fights AIDS, for example, does very well with themed musical shows that include Broadway Bares, Broadway Backwards, the Red Bucket Follies (formerly Gypsy of the Year Award), and the Easter Bonnet Competition.

The artistically challenged need not despair, though. The top fundraising events, according to Onecause.com, include silent auctions, walk-a-thons, cook-offs, shoe drives, and an old favorite, the car wash.

Publicity

Even for charities, spending money can be necessary to raise funds. Advertising and promotions can expand a charity’s reach and awareness among potential donors. As with volunteerism, advertising doesn’t directly generate revenue but it can lead to donations. A celebrity endorsem*nt can multiply the impact a fund-raising campaign has.

How Many Americans Volunteer Their Time to a Charity?

According to data from AmeriCorps, in 2019, 30% of Americans donated their time to charities, accounting for 5.8 billion hours (worth an estimated $147 billion). AmeriCorps upped that dollar amount to nearly $200 billion in 2022 and put the value of a single volunteer hour at $29.95.

Are Charities Allowed to Sell Products to Raise Money?

Yes, they are. While not strictly a charity, the Girl Scouts sell cookies, which bring in nearly $800 million yearly, more than the Girl Scouts make in membership fees.

What Are Other Income-Generating Strategies for Charities?

Aside from selling products, charities can also raise money through gala fundraising events, benefit performances, and good publicity, leading to increased donations.

The Bottom Line

There are many ways an organization can raise money, and charities are among the best at doing so. From product sales to fundraising events, charities have many options when looking for ways to generate funding.

However, many charities and nonprofits must create enough revenue to ensure longevity because donations rarely cover both operating costs and the work a charity exists to do. This is why you hear about charities "making money" or "generating revenue." It's essential for a charity to operate somewhat like a business if they want to continue doing good.

How Charities Make Money (2024)

FAQs

How do charities profit? ›

Most fundraising falls into one of two main categories: donations or trading. This includes one-off donations people make to charities, regular direct debits, sponsorship for events like marathons, and legacies – the money left to charities by people in their wills. Some charities sell goods or services to raise money.

What is a major source of income for charities? ›

There are five main ways charities and nonprofits raise funds and stretch their dollars: using volunteers, hosting gala fundraising events, selling products, sponsoring events, and advertising to bring in more donations.

How does a nonprofit make money? ›

The purpose of a nonprofit organization is to serve the public good. There are many different types of nonprofit organizations. Their goals could be educational, charitable, or religious. Nonprofit organizations profit through fundraising events, galas, and small business sponsorships.

Why are charities so successful? ›

The most successful charities around have a clear goal. For instance, Shelter UK aims to eradicate homelessness and inadequate housing in the UK. Marie Curie's goal is to provide dignified end of life care to all. While there are many other elements that go into these charities, they have a clear focus and end goal.

How does a CEO of a nonprofit get paid? ›

One of the most infamous cases was the one involving the United Way, whose former CEO was convicted of fraud in 1995. The bottom line is that non-profit founders and employees are paid from the gross revenues of the organization. These salaries are considered part of the operating costs of the organization.

How much of a donation actually goes to the charity? ›

Factors Affecting the Percentage of Donation. How much of your donations actually go to charity? Some charities allocate 60% of donations to their cause, preserving a large portion of funds to pay staff high salaries, while others allocate 95% of their goods and funds to people in need.

Where do most charities get their money? ›

Of all donations made to nonprofits, over 80% come from individuals. For this reason, it's wise to focus on individual donors and make them a central focus of your funding model. Individual donors can make one-time or recurring donations.

Who pays the most to charity? ›

RankNameWealth (£m)
1Sir Chris Hohn5bn
2Alan Parker2.915bn
3Henry Engelhardt and Diane Briere de I'lsle863
4Sir Paul Marshall800
6 more rows

Who gives more to charity rich or poor? ›

Giving by income level

Middle-class Americans donate a little less. But the lower-income population surprises by giving more than the middle—and in some measures even more than the top. (As a percentage of available income, that is. In absolute dollars, those in higher income groups give much, much more money.)

Who is the highest paid nonprofit CEO? ›

In 2022, the nonprofit organization in the U.S. with the highest paid CEO was Sentara Health, with an estimated salary of 33.22 million U.S. dollars.

Can a founder of a nonprofit get paid? ›

It is legal for nonprofit founders and officers to receive a salary for their work for the nonprofit. Let's talk about how much you can pay yourself.

How do non profits make so much money? ›

Non-profits rely on several funding sources, including grants, private donations, and product sales. While there are rules about how money is used, non-profits can pay their staff – especially directors and CEOs – very well.

Why do charities ask for $19 a month? ›

One common theory links it to charities' obligation to provide a receipt for an annual contribution of $250 or more, per Internal Revenue Service rules. A $19 contribution across 12 months amounts to $228, less than the receipt-sending threshold.

Why is charity high risk? ›

There is the potential for abuse of a charity's finances at different stages of its operations, and the risks differ. For some charities the risks may be higher because of their fundraising activities.

Are charitable organizations profitable? ›

Are Nonprofits Allowed To Make Money? The short answer to this question is: "Yes, absolutely!" How nonprofit organizations make money to live and grow is certainly important. The important restriction that applies is that these organizations are not permitted to distribute their funds to any private individual.

Can you make money owning a charity? ›

Yes, it's possible to make a living running a nonprofit organization that you started from the ground up—but keep in mind these important considerations before taking the leap.

How do nonprofits raise money? ›

Nonprofit Fundraising Strategies by Channel

Common channels include email, direct mail, social media, phone calls, your website, etc. Each channel has different pros and cons, and many fundraisers take a multi-channel approach to reach as many of their supporters as possible.

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