How Do Charities Make Money? Exposed!

Charitable organizations are sustained primarily by donations, and December is the busiest time for charitable giving due to the year-end tax deadline. In order to stay afloat the other 11 months of the year, charities need to be creative.

How Charities Make Money

Charities generate revenue and stretch their dollars in five ways: with volunteers, through gala fundraising events, through selling products, through sponsoring events, and through advertising for donations.

1. Volunteerism

Cash donations are important, but many charities also rely on the time that generous individuals donate to their favorite causes to stretch their funds further. Volunteering in America, released by the Corporation for National and Community Service (CNCS), found that in 2018, 30.3% of Americans volunteered their time, totaling 6.9 billion hours (worth an estimated $167 billion).

According to Independent Sector and the Do Good Institute,4 volunteer hours are valued at $28.54 per hour as of 2020, according to AmeriCorps data. Indeed, it seems that charitable giving was boosted by the COVID-19 pandemic.

There are even nonprofits that assist other nonprofits in maximizing the impact of their volunteer armies. Charities rely heavily on volunteers to operate effectively.

2. Product Sales

The sale of a product to raise money for the cause is a lucrative business for many charities. Among the most well-known examples are the Girl Scout cookies and Boy Scout popcorn sales.

Since 1917, when the Girl Scouts started selling cookies to raise money in Muskogee, Okla., cookie sales have proven to be a lucrative revenue stream. The idea went national in 1922.

As of now, Girl Scout cookie sales bring in nearly $800 million annually. According to the World Economic Forum, Girl Scout cookies make more money than Oreos. With an estimated 2.5 million girls and adults worldwide and a $25 annual membership fee, cookie money easily outpaces the money spent on membership.

In 2020, 9,000 Boy Scout popcorn sales across five counties averaged $1.2 million annually, according to the local news publication West Side News & Greece News, which covers suburban Rochester, N.Y. 

Boy Scouts of America Glacier’s Edge Council calls this sale its “largest annual sale” and it accounts for more than $600,000 in cash and prizes in 16 counties in South Central Wisconsin and Northern Illinois. With 2.2 million Boy Scouts in the United States between the ages of 5 and 21, that’s a lot of popcorn, generating a lot of dough.

3. Gala Events

A gala event is held by many charities every year to raise funds. While these events can be quite expensive upfront, they can bring in a significant amount of cash. Off-Broadway York Theatre Company’s Oscar Hammerstein Award Gala, which dates back to 1988, is undoubtedly one of the numerous examples. 

During this event, awards are presented, speeches are given, and performances are presented. Many celebrities have received the award, including Stephen Sondheim, Sir Cameron Mackintosh, Harold Prince, Carol Channing, and Angela Lansbury.

Charities can raise large amounts from a fundraising gala through a mix of wealthy ticket buyers and corporate sponsors. Food and liquor merchants typically donate their products. These events can gain revenue when businesses donate products, services, and travel events for the silent and live auctions.

4. Events and Performances

Although gala events attract wealthy donors, charities also rely on events that attract a wider audience. Performing arts nonprofit groups can offer concerts, dance performances, and music recitals in this area. Among Broadway Cares/Equity Fights AIDS’ themes are Broadway Bares, Broadway Backwards, the Red Bucket Follies (formerly Gypsy of the Year Award), and the Easter Bonnet Competition.

However, those with artistic challenges need not despair. Fundraising.com suggests marathons and bike-a-thons, spaghetti dinners, bake sales, yard sales, and even that old favorite, the car wash. It doesn’t hurt to add a holiday twist, the website says.

5. Publicity

It can be necessary to spend money for charities to make money. Promotion and advertising can help charities spread their message and raise donor awareness. The purpose of advertising is not to generate revenue, but rather to lead to donations. Celebrities can have an even greater impact by endorsing a campaign. It is possible to find nonprofit public relations firms that claim they can help you by making your case that you need their help.

Final Words

The best way for an organization to generate revenue is through fundraising, and charities excel at it. Charities make money by selling products and holding fundraising events. By bringing in volunteers for free, these nonprofits can increase their margins even further.

People Also Ask FAQs

Can charities sell products for profit?

The answer is yes. Girl Scout cookies, for instance, bring in nearly $800 million annually, more than the Girl Scouts make from membership fees.

What are other ways that charities can make money?

As well as selling products, charities can raise money through gala fundraisers, benefit performances, and good publicity, which can increase donations.

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