Running a nonprofit may not be about profits — but money absolutely matters. To fulfill your mission, serve your community, and grow your impact, your organization needs consistent, reliable funding. Understanding how to raise those funds — and how to measure what’s working — is vital for long-term sustainability.
In this guide, we outline common nonprofit revenue streams, how to evaluate them with clear KPIs, and why strong financial stewardship is essential for both compliance and trust.
Common Revenue Streams for Nonprofits
Diversification is key. A healthy nonprofit rarely relies on just one source of income. Here are the most common revenue streams available:
- Donations: Gifts from individuals, corporations, foundations, and government agencies make up the backbone of most nonprofits. Annual appeals, capital campaigns, and recurring donations all fall into this category.
- Grants: Funding from federal, state, and local governments, private foundations, and other nonprofits can provide substantial support — but often comes with strict requirements for use and reporting.
- Corporate Sponsorships: These partnerships can provide cash or in-kind support in exchange for brand exposure, event visibility, or alignment with your mission.
- In-Kind Contributions: Goods, services, or investments (such as stocks and bonds) donated to your organization can reduce costs and expand your capabilities.
- Earned Income: Fees for services, program tuition, product sales, or membership dues represent revenue your nonprofit earns — often tied directly to your mission.
- Investment Income and Loans: Interest and dividend income or strategic borrowing can supplement funding — though these come with risks and oversight responsibilities.
How to Measure What Works: KPIs for Nonprofit Revenue
Not every stream is right for every organization. As you explore new funding models, use these Key Performance Indicators (KPIs) to assess which channels are most valuable:
- Total Revenue by Source: Track gross income for each stream to identify your top performers.
- Revenue Growth Rate: Are donations or grants increasing year over year?
- Cost-to-Revenue Ratio: Measure the fundraising cost vs. revenue generated. Some campaigns may cost more than they’re worth.
- Donor Retention Rate: Recurring donors are more valuable (and cost less) than one-time givers.
- Donor Acquisition Rate: Track new donors per campaign or source.
- Grant Success Rate: How many grant proposals result in funding? Improve over time by tracking and refining applications.
- Return on Investment (ROI): Evaluate which fundraising efforts yield the best financial return.
Pro Tip: Pair financial KPIs with mission-related outcomes. Are the revenue streams not just profitable — but aligned with your purpose?
Why Compliance and Stewardship Matter
Even though nonprofits are mission-driven, they are held to high standards by the IRS, state regulators, grant makers, and the public. Accurate recording, classification, and management of funds is critical.
Each type of revenue — from earned income to grants to stock donations — must be properly accounted for under GAAP (Generally Accepted Accounting Principles) to maintain your tax-exempt status and public trust.
What’s Next?
In our upcoming blog series, we’ll break down the accounting treatment for each type of nonprofit revenue, including:
- Does your nonprofit have a conditional contribution?
- Best practices for recording donor-restricted funds
- How to recognize and allocate grant funds
- GAAP rules for in-kind donations
- Earned income vs. contributions — and why the distinction matters
Need help assessing your revenue mix or improving your nonprofit’s financial reporting? Leave a comment below, or feel free to contact me directly. I’m happy to help!