Charitable organizations survive primarily on donations. But for most, the holiday season is the only time that donations can be depended on to flow freely. They have to get creative to stay afloat the other 11 months of the year.
There are five main ways that charities stretch their dollars: By using volunteers, by hosting gala fundraising events, by selling products, by sponsoring events, and by advertising to bring in more donations.
Donations bring in cash, but most charities stretch the money farther by relying on the time generous individuals donate to their favorite causes. And Americans are generous with their time: About 25 percent of Americans volunteer time every year, working for free for a median of 52 hours a year, according to the Bureau of Labor Statistics.
- The holiday season is lucrative for charities. The rest of the year, they have to hustle.
- Galas, special events, and product sales are all used to raise funds.
- Donations, especially of time, don't directly generate revenue but they keep many charities afloat.
Many charities hold an annual gala event to help raise funds. These events can be quite costly up front but can bring in some a good infusion of cash.
Some charities have been known to bring in more than $1 million 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 of travel events, products, and other services donated by businesses add to the revenue brought in at these events.
Selling a product for the cause is a moneymaker for many charities. The annual sales of Girl Scout cookies and Boy Scout popcorn are two of the highest profile examples, bringing in hundreds of millions of dollars each year, much more than the fees it collects for membership.
Cookie sales have been a lucrative revenue stream for the Girl Scouts since 1917, when a troop in Muskogee, Oklahoma, launched a cookie sale to raise money. Their concept went nationwide in 1922.
An NBC News report estimates that the Girl Scouts bring in $700 million a year in cookie sales. A Fortune analysis says that the Girl Scouts make more money off cookies than Oreo does.
Events and Performances
Gala events attract wealthy donors, but charities also rely on events that attract a wider audience. Non-profit groups in the performing arts have an advantage in this area and can present concerts, dance performances, and music recitals.
The percentage of Americans who volunteer their time to good causes every year, according to the Bureau of Labor Statistics.
The artistically challenged need not despair, though. The top fundraising events, according to Charity.com, include marathons and bike-a-thons, spaghetti dinners, and that old favorite, the car wash. A holiday twist doesn't hurt, the site suggests.
Even for charities, spending money can be necessary to make money. Advertising and promotion 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 endorsement can multiply the impact.
The Bottom Line
There are many ways an organization can make money, and charities are some of the best at generating revenue. From product sales to fundraising events, charities can make revenue from many sources. The volunteers who help out for free make the margins even better for these non-profits.