The Myths of Earned Revenue
When you hear "earned revenue", you probably do not immediately think of nonprofits. After all, nonprofits are mission-driven organizations that answer to a double bottom line and their priority is not making money. Isn’t making money bad for a nonprofit? In reality, many nonprofits draw on earned revenue activities to support operations and ensure they have diversified funding sources. So, let’s dive in and clear the confusion around earned revenue. Here are some of the most popular myths you might have heard around this subject:
MYTH #1: Earning money means you can’t be a nonprofit!
The term nonprofit refers to a tax status, not a business model. Have you ever attended a class offered by a nonprofit – maybe at the YMCA or even at Mission Capital? Did you buy a t-shirt or coffee mug with your favorite nonprofit logo on it – maybe that Sierra Club mug is your favorite? And who is strong enough to resist the Girl Scout cookie drive? (Hello to the summer thin mints I hid in my freezer!) Nonprofits provide (SELL!) goods and services that create earned revenue every day in order to help further their mission and support their programs.
FACT: The revenue that comes from these kinds of streams are especially helpful because the net earned from these opportunities are unrestricted dollars that can cover overhead and operating costs – keeping you focused on expanding and strengthening your programs while helping to lessen the fundraising burden.
MYTH #2: Nonprofits don’t know how to sell products and services – I’m not a used car salesman!
Having sales targets and revenue goals can seem very unfamiliar and nerve-racking. However, nonprofits are great at telling people about the amazing work they do (selling the mission). The challenge may arise when trying to change your fundraising spiel (you should give us money because of all of the great things we are doing to serve the community) to a sales pitch (you should pay for this thing because it helps you in these ways).
FACT: Nonprofits advocate for their mission all the time. It may take some practice to switch your angle, but you're already halfway there!
MYTH #3: We can’t charge the clients! Many can’t afford it.
We often hear “people who need our services can’t afford to pay for them, that’s why we exist”, and that is primarily true. However, there is a distinction between a beneficiary (a client who benefits from your programs or services) and a payor (a customer that pays for services).
FACT: Beneficiaries and payors aren’t always the same person! Spend some time identifying your potential payors and you will gain an entirely new base of people that supports your mission. Best of all, they have the potential of becoming future volunteers or donors.
We hope this helps to clear up some misconceptions around earned revenue. If you’re excited about an idea you have that might earn money for your organization, but aren’t sure where to start, contact us! Sign up for our Fall 2019 Revenue Generator team workshop.