How to Get Funding for a Nonprofit: Tips on Tapping into 12 Top Funding Sources

Starting a nonprofit is tough, mainly because getting money is a big hurdle. 

Did you know 76% of nonprofits struggle with how to get funding? It’s a common problem that stops many great ideas before they even start. 

But there’s good news: while finding funding is hard, there are plenty of opportunities if you know where to look. 

This guide will help you understand how to get funding for a nonprofit and share tips that have worked for others. First, I’ll explain the basics of how nonprofits get money. 

How Are Nonprofits Funded? 

While nonprofits have several ways to source funding, there are specific ways they are not allowed to generate income, primarily due to their tax-exempt status. They cannot have/make: 

1. For-profit Ventures: Nonprofits can’t operate or own businesses that are unrelated to their mission. If they do, the income generated from these activities might be subject to taxes, and it could jeopardize their nonprofit status. 
2. Political Contributions: Nonprofits, especially those with 501(c)(3) status in the United States, are restricted from campaigning or donating to political candidates. This restriction ensures their efforts remain focused on charitable, educational, or religious activities. 
3. Shareholder Payments: Unlike for-profit corporations, nonprofits cannot distribute profits to members, directors, or officers. All profit must be reinvested into the organization to further its mission. 
4. Equity Investments: Nonprofit organizations cannot offer company shares or distribute profits. They are structured to prioritize the interests of the public or community rather than private shareholders. 

Despite these limitations, plenty of legal and creative ways to fund a nonprofit exist. 

Read more: Nonprofit Tax Compliance: Three Things You Need to Know

How to Choose Your Nonprofit Funding Sources 

Choosing suitable funding sources is crucial for your nonprofit’s success. It’s about knowing what you need, who can help, and where to look. 

• Assess Your Funding Needs: First, determine exactly how much money your nonprofit needs and what it’s for. Make a budget that includes everything from daily costs to big projects. 
• Review Your Relationships and Resources: Look at who you know and what you already have. This includes people who already support you, like donors and volunteers, and any partners or community groups. 
• Explore What Competitors Are Up To: Check out other groups like yours to see where they get their money. This can give you good ideas and show you what might work for you, too. 
• Talk to Your Board: Your board members can help you find funding sources. They have lots of experience and contacts that can open new doors for funding. 
• Cast a Wide Net: It’s important to not just rely on one way of getting money. Try various ways, like grants, donations, and crowdfunding, to keep your nonprofit going. 

How to Get Funding From The Top 12 Nonprofit Funding Sources 

Here are 12 sources you can explore to achieve your nonprofit funding goals! 

1. Individual Donations 

Donations from individuals are an essential source of funding for your cause. These contributions can vary in size and frequency. It is crucial to establish a strong relationship with your donors by keeping them informed about how their contributions are being used and the impact they are making. 

Examples include one-time gifts (e.g., legacy gits), recurring donations (could be monthly or quarterly) or significant gifts from individuals deeply aligned with your cause. 

Pros of Individual Donations 

• Builds a community of supporters. 
• Potential for long-term relationships and support. 

Cons of Individual Donations 

• Engaging and retaining donors can be challenging. 
• May be necessary to implement data privacy measures. 

How Can You Connect With Individual Donors

• Personalize your outreach and thank-you messages. 
• Share stories, organize donor appreciation events, and offer exclusive updates. 

2. Government Grants 

Government agencies set aside to help nonprofits further their cause. They decide what kind of projects they want to support, and if your nonprofit’s work matches one of those areas, you can apply for some of that money. 

But getting a government grant isn’t just about asking nicely; you’ve got to fill out detailed forms and write up a proposal, telling them what you plan to do with their money, how it fits with what they care about, and how you’ll ensure the project’s success. 

Government grants could be project-specific grants for targeted initiatives, operational grants to support daily activities, or research grants for scientific or academic studies. 

Pros 

• Government grants are big enough to fund whole projects. 
• Government grants make your nonprofit look trustworthy. 

Cons 

• There’s little flexibility on how to spend the money. 
• The application process can be complex. 

How to Find Government Grants

• Stay informed about grant announcements and deadlines. 
• Ensure your proposals meet all application requirements. 

3. Foundations 

Specific organizations are out to help nonprofits do their work. These can be private foundations set up by individuals or families, or corporate foundations created by businesses. 

Some grants might be for a particular project, like setting up a new community garden or running a health clinic. Other grants might help with the everyday costs of running your nonprofit, like paying rent for your office or salaries for your staff. Applying for grants takes time and effort, but it can pay off. 

Pros 

• Funding could be multi-year partnerships and support. 
• Enhances the credibility and visibility of your organization. 

Cons 

• Funding may only be available for specific programs or areas. 
• Highly competitive. 

How to Find Foundations With the Same Goals as Your Nonprofit

• Research and target foundations whose missions align with your work. 
• Develop a compelling case for support that outlines your impact. 

4. Membership Fees 

Many nonprofit organizations provide value to their members through resources, events, and networking opportunities. To sustain their operations, these organizations often rely on charging membership fees. 

By offering exclusive benefits to their members, nonprofits can foster a sense of belonging and connection with their supporters. Membership fees could be in the form of annual or monthly dues, premium memberships offering additional benefits, or corporate memberships for businesses supporting your cause. 

Pros 

• Provides a reliable source of income. 
• Deepens engagement with your organization. 

Cons 

• Management of membership programs can be resource-intensive. 
• Risk of exclusion if fees are only affordable to some potential members. 

How to Get Members to Pay Fees

• Communicate the benefits of membership to potential members. 
• Engage members with exclusive content, events, and opportunities. 

5. Selling Goods or Services 

Nonprofit organizations are adopting a new strategy to generate income by offering goods or services that align with their mission. This approach can serve as an additional source of revenue in addition to donations and grants. 

Some ways nonprofits can leverage this funding source include sales of merchandise (e.g., branded apparel, books, artwork), fees for services (e.g., educational courses, consulting), and 

sales from events like workshops and conferences. 

Pros 

• Diversifies revenue sources beyond traditional fundraising. 
• Enhances brand visibility and mission awareness. 

Cons 

• Requires investment in product development and marketing. 
• May need infrastructure for sales and distribution. 

How to Begin Selling for Your Nonprofit

• Identify goods or services that align with your mission and appeal to your audience. 
• Utilize online platforms and social media for broader reach and sales. 
• Ensure the quality and value of your offerings to build customer loyalty. 

6. Corporate Philanthropy & Sponsorships 

Corporations today are increasingly aware of their social responsibility and impact on their communities. As a result, you often find them supporting nonprofits and charitable organizations through philanthropy, sponsorship, and other means. 

This support could be through direct cash donations, in-kind goods and services, or sponsoring events and programs aligning with their corporate values and objectives. 

Pros 

• Access to substantial resources and networks. 
• Boosts credibility and visibility through association with respected brands. 

Cons 

• May come with strings attached or expectations of public endorsements. 
• Corporate interests can influence program or event content. 

How to Know to Spot Corporate Philanthropic Opportunities

• Target companies with CSR goals aligned with your mission. 
• Offer customizable sponsorship packages to meet corporate marketing objectives. 

7. Local Business Partnerships & Sponsorships 

Collaborating with local businesses through sponsorships or joint ventures is an effective way to generate financial support and establish stronger community ties. Such partnerships are often built on shared goals, mutual benefits, and a sense of community involvement. 

Local business partnerships can be through event sponsorships with mutual branding opportunities, collaborative fundraising initiatives, direct donations, or in-kind support from local businesses. 

Pros 

• Strengthens community bonds and support. 
• Enhances local visibility for both the nonprofit and the business. 

Cons 

• Requires significant local networking and community engagement. 
• Potential for conflict of interest with local political or economic issues. 

How to Find the Right Local Business to Partner With

• Build personal relationships with local business owners and managers. 
• Offer visibility in your local network and recognition at events. 

8. Event Revenue 

You can generate a significant amount of income through events, whether they are held in-person or virtually. Depending on the size and nature of the event, you could choose to include ticket sales, auctions, or sponsorships. 

Rather than viewing events as a source of revenue alone, see them as valuable opportunities for engaging with the community, raising awareness for your organization’s mission, and cultivating relationships with donors. When you host successful events, you impact your target community more and become more likely to achieve your fundraising goals. 

Pros 

• Direct revenue generation through multiple channels. 
• Increases awareness and support for your mission. 

Cons 

• High upfront costs and planning demands. 
• Potential donor fatigue if you hold too many events. 

How to Get Started With Event Revenue

• Create memorable and mission-aligned events that attract attendees. 
• Leverage social media and community networks to promote events. 

9. In-Kind Donations 

In-kind donations are when businesses or individuals offer goods or services to a nonprofit instead of cash. Instead of paying for the services these professionals have now provided, you save more money and have more spare cash to further your mission. 

There are various ways to benefit from in-kind donations, such as receiving free equipment and supplies for daily operations, obtaining free marketing, legal, accounting and IT consultation services, and getting free venues for hosting meetings or events. 

Pros 

• Saves crucial funds for other needs. 
• Access to high-quality products and expertise. 

Cons 

• Managing donations can take time and organization. 
• Assessing the value of in-kind donations can be complicated for accounting. 

How to Encourage In-Kind Donations

• Make a wishlist and share it widely. 
• Acknowledge every in-kind donation publicly to encourage others. 

10. Fundraising Campaigns 

Fundraising campaigns are crucial for helping your nonprofit get the money it needs to do its work and make a difference. You can be creative with raising funds, like using social media to reach many people or sending donation letters to those who’ve supported you. 

The key is sharing a message that speaks to people, making them want to help. You can fundraise through email and social media campaigns, direct mail, galas, and charity events. Not sure how to go about organizing a fundraiser? Read our blog on 13 simple steps to fundraise. 

Pros 

• Broad reach, potentially attracting global support. 
• Versatile, with many forms and strategies to try. 

Cons 

• Can be resource-intensive to plan and execute. 
• Keeping up the momentum and interest can be challenging. 

How to Improve Your Fundraising Efforts

• Craft compelling stories that highlight your impact. 
• Regularly update supporters on your progress and successes. 

11. Peer-to-Peer Fundraising 

Peer-to-peer fundraising lets your supporters raise money for you. It’s like friends helping friends, which makes people really believe in what you’re doing. This way, you can reach more people and build a strong feeling of community. 

You can create personal fundraising pages that connect to your bigger mission, encourage your supporters to take on challenges or host their own events, and lead fundraising efforts on social media. 

Pros 

• Broadens your reach through trusted, personal networks. 
• Attracts new donors who are motivated by personal connections. 

Cons 

• Requires support to motivate and guide fundraisers. 
• Success is dependent on the commitment of individual supporters. 

How to Improve Peer-to-Peer Fundraising 

• Offer easy-to-use fundraising software tools and ideas. 
• Celebrate and thank your peer fundraisers in public forums. 

12. Board of Directors Fundraising Support 

Your Board of Directors does more than just make big decisions; they can also be a huge help in raising money. They know many people, have many resources and are great at planning ways to help your nonprofit succeed. 

By tapping into the board’s network, you can reach potential donors who might not be accessible otherwise. Board members can also lead by example, contributing their funds to inspire others or introduce you to nonprofit fiscal opportunities. 

Pros 

• Possibility of significant funding and strategic partnerships. 
• Reinforce the board’s engagement with your mission. 

Cons 

• Relies on the board’s willingness to be actively involved. 
• Potential for misunderstanding if roles aren’t clear. 

How to Connect With Your Board of Directors

• Clearly outline your needs and expectations. 
• Engage the board in brainstorming and planning. 

When you look into how your nonprofit can get money and make your plans smarter, you get a better picture of what each funding source can do for you. 

Using Membership Management Software to Raise Funds! 

Just because you’ve streamlined your nonprofit funding sources doesn’t mean you’ll hit your goals one time. Your workflow may need to be revised. This is why using the right tools can make fundraising much easier and more successful. 

With WildApricot, you spend less time on paperwork and more time helping your cause. Want to see how it can help you? Try WildApricot’s 60-day free trial and start making fundraising easier today.