Types of Fundraising

In general, there are three ways that nonprofit organizations generate the funds they need to support day-to-day oper­ations, expansion, and special initiatives: grants, earned income, and donations. This guide focuses on the latter, but here is an overview of each revenue stream.

Grant money comprises the billions of dollars distributed by the U.S. government, state agencies, corporations, and foundations to nonprofit organizations as well as individuals and businesses that meet certain criteria. These funds, which are awarded without the expectation of repayment, are typically obtained through long grant application or proposal processes. Successful grant seekers follow submission guidelines expertly and communicate their needs compellingly. For detailed information on the grant-writing process, see the Quamut guide to Grant Writing.

Many nonprofits, such as Goodwill Industries, sell goods and services to generate income and then use that income to support their initiatives. More and more charities are adopting this business model in light of heightened competition for donations and the larger numbers of MBA degree–holders working in the nonprofit sector. Organizations that consider this route must carefully consider the operational, staffing, and competitive issues inherent in doing business.

Individual donations make up the third piece of the fundraising puzzle (and are the focus of this guide). These donations encompass all funds that charitable organizations generate by asking individuals to support their causes—including revenue from special events, direct mail, door-to-door canvassing, auctions, telemarketing, and more.