Funding Models for Nonprofits

As the name suggests, nonprofits don’t earn like ordinary businesses; instead, they have a different approach towards revenue. Nonprofits and their accountants need to keep on looking for new grants, donations, and other funding opportunities.

However, developing a sustainable funding model for nonprofit organizations is harder than it seems. There is a reputation to uphold (which means every earning avenue can’t be pursued), staff to pay for, events to arrange, opportunity costs to consider, and other out-of-pocket expenses.

Nonprofits can’t rely on a single source of income and need to find balance. Here are some funding models nonprofit organizations maintain and need to account for.

Direct Funding Models

This includes:

• Direct donors
• Grants
• Supportive foundations
• Corporate support
• Loans
• Memberships
• Investments (no return expectations), and more.

Hybrid Funding Models

Hybrid revenue models combine corporate social responsibilities, connections, and other sources. These include:

• Heartfelt connectors (asking people and the public for support against a specific cause)
• Beneficiary builders (driving donations through past relationships)
• Member funding (asking members and other groups for extra benefits other than their fee)
• Big bets (grants, donations, or other funds received from other corporations in exchange for a public association)
• Public funding (funds offered by government programs directly)
• Beneficiary brokers
• Policy innovators (organizations funded by the government other than traditional programs)
• Resource recycling (accepting donations in-kind and distributing the same, such as the Salvation Army)
• Market developers (applying a nonprofit model in a niche where for-profit is prohibited, such as organ donation, medical services, etc.)
• Local nationalization (providing local services against financial support in such a manner that the activity has national visibility.

The list above shows there are numerous nonprofit organization funding models out there to implement and account, each with its own set of requirements. Accounting for nonprofits is a rather complicated venture, which becomes even more difficult when these earning avenues combine.

If you would like expert accountants and bookkeepers for nonprofit organizations, we recommend you get in touch with us today and let us help. We’d be glad to not only help you record the funds properly but also facilitate in finding the right funding opportunity.  We have nonprofit accountants on our team to assist with bookkeeping and general accounting, but we utilize our more experienced nonprofit experts to partner with nonprofit organizations to develop strategies to ensure they have a plan for continued growth through our fractional CFO services.