How Charities Make Money

Charitable organizations survive primarily on donations, with the holiday season (and year-end tax deadline for charitable contributions deductions) making December the most active time for charitable giving. Charities have to get creative to stay afloat the other 11 months of the year.

There are five main ways that charities make money and stretch their dollars: using volunteers, hosting gala fundraising events, selling products, sponsoring events, and advertising to bring in more donations.

Volunteerism

Donations bring in cash, but most charities stretch the money further by relying on the time that generous individuals donate to their favorite causes. And Americans are generous with their time: In 2019, 30% of Americans volunteered time, working for a combined total of 5.8 billion hours (worth an estimated $147 billion), according to the Volunteering in America report from the Corporation for National and Community Service (CNCS).

As of 2020, AmeriCorps data puts that figure at nearly $200 billion, with the value of a volunteer hour amounting to $28.54, according to Independent Sector and the Do Good Institute. Indeed, it seems that charitable giving overall increased due to the COVID-19 pandemic.

There are even nonprofit organizations that help other nonprofits maximize their armies of volunteers. Most charities find volunteers to be a critical resource for their basic operations.

Gala Events

Many charities hold an annual gala event to help raise funds. These events can be quite costly upfront, but they can bring in a significant infusion of cash. One of undoubtedly numerous examples is the off-Broadway York Theatre Company’s annual Oscar Hammerstein Award Gala, which began in 1988. It includes a dinner, speeches, award presentations, and performances. Celebrity recipients have included Stephen Sondheim, Sir Cameron Mackintosh, Harold Prince, Carol Channing, and Angela Lansbury.

Charities can bring in big sums from a fundraising gala through a mix of wealthy ticket buyers and corporate sponsorships. Local food and liquor merchants often contribute their goods to the cause. Silent and live auctions for travel events, products, and other services donated by businesses can add to the revenue gained from these events.

Product Sales

Selling a product for the cause is a moneymaker for many charities. The annual sales of Girl Scout cookies and Boy Scout popcorn are two high-profile examples of this.

Cookie sales have been a lucrative revenue stream for the Girl Scouts since 1917, when a troop in Muskogee, Okla., launched one to raise money. The concept went nationwide in 1922. As of 2020, Girl Scout cookie sales bring in nearly $800 million a year. Indeed, the World Economic Forum says that the Girl Scouts make more money off cookies than Oreo does. With an estimated 2.5 million girl and adult members worldwide and a yearly membership fee of only $25, cookie money clearly outpaces membership charges.

Total Boy Scout popcorn sales are harder to pin down as an annual total, but according to the local publication the West Side News & Greece News, which covers suburban Rochester, N.Y., in 2020, 9,000 boys across five counties averaged $1.2 million annually in sales. In 16 counties in South Central Wisconsin and Northern Illinois, the Boy Scouts of America Glacier’s Edge Council calls the sale its “largest annually,” and it accounts for more than $600,000 in cash and prizes. When you consider that the Boy Scouts have 2.2 million youth members between the ages of 5 and 21 nationwide, that’s a lot of popcorn generating a lot of dough.

Events and Performances

Gala events attract wealthy donors, but charities also rely on events that attract a wider audience. Nonprofit groups in the performing arts have an advantage in this area and can present concerts, dance performances, and music recitals. Broadway Cares/Equity Fights AIDS, for example, does very well with themed musical shows that include Broadway Bares, Broadway Backwards, the Red Bucket Follies (formerly Gypsy of the Year Award), and the Easter Bonnet Competition.

The artistically challenged need not despair, though. The top fundraising events, according to Onecause.com, include silent auctions, walk-a-thons, cook-offs, shoe drives, and that old favorite, the car wash.

Publicity

Even for charities, spending money can be necessary to make money. Advertising and promotion can expand a charity’s reach and awareness among potential donors. As with volunteerism, advertising doesn’t directly generate revenue, but it can lead to donations. A celebrity endorsement can multiply the impact. Companies exist that promise to help your nonprofit with public relations by making their best case that you need their assistance.

The Bottom Line

There are many ways an organization can make money, and charities are among the best at generating revenue. From product sales to fundraising events, charities can make revenue from many sources. The volunteers who help out for free make the margins even better for these nonprofits.