The Future of Fundraising Revenue Sources

fundraising revenue sources

Many nonprofits are shifting their focus away from less reliable fundraising revenue sources and toward this new fundraising strategy.

For more than two years now, it’s been a tough environment in which to meet nonprofit fundraising goals. Even as some symptoms of the pandemic ebb, other economic conditions grow worse—rising gas prices, inflation, and cuts in government programs.

We’ve surveyed hundreds of nonprofits to understand where fundraising is now, and where it’s going in the future.

For more insights into important nonprofit trends and key strategies, all driven by data, download The State of Nonprofit Fundraising 2022 report.

Turning Away from Fickle Fundraising Revenue Sources

Getting a government grant requires a huge amount of effort in research and grant-writing, and these programs often have long waiting periods, making it difficult to budget around them. Worse, the likelihood of receiving a grant is low with so many other nonprofits in need applying at the same time.

It’s not surprising that this year, out of the 44% of nonprofits who saw government funding as a critical revenue stream in 2021, half of those organizations are turning their fundraising focus elsewhere. Only 22% of nonprofit organizations surveyed for The State of Nonprofit Fundraising 2022 said they are still relying on government as a source of revenue.

And it’s not just government funding where nonprofits are feeling leery about making big investments of time and energy. While 54% of nonprofit organizations looked to foundations for a significant chunk of their revenue last year, that number fell to 47% this year—indicating that the industry is starting to pivot away from revenue sources requiring lengthy application processes, or that offer few guarantees.

So where are nonprofits looking now for critical fundraising revenue sources?

One major area where we see nonprofits putting greater fundraising focus is corporate donors. Which is an understandable pivot in today’s fundraising climate; though many companies were hit hard by the onset of the pandemic in 2020, most have recovered and managed to flourish since. 

Instead of relying on an opaque system to award funding, corporate donations are part of an ongoing relationship. Once this relationship is built, corporate donors can become reliable partners for nonprofits—and don’t require lengthy applications or hiring professional grant writers. The rules for soliciting corporate donors are more transparent, and the right fundraiser with the right pitch has a much better chance of earning a win.

Don’t forget the power of small donors and individual donors! We’ve written a few times in the past on the topic of micro-philanthropy and micro-donations, and the cumulative value of many small donors participating all at once. 

Smart fundraisers are beginning to understand the hidden value in social media campaigns and landslide micro-giving. As it has been in both 2020 and 2021, “online giving” is still the most widely-used fundraising technology in 2022, with 38% of nonprofits seeing it as a critical revenue source. 

To be successful fundraisers in the future, nonprofits need individual and powerful strategies for courting both small, casual donors and corporate/major gift donors.

Check back next week for an in-depth exploration of strategies for recruiting small donors and micro-donors, and how to engage with them to boost your fundraising.

Big Gifts Are All About Building Relationships

As always, major donors remain nonprofits’ primary revenue focus. Across both years of The State of Nonprofit Fundraising report, roughly two-thirds of nonprofits reported a significant reliance on major donors for their annual fundraising, and 26% said developing those relationships was a planned fundraising activity this year. More and more, organizations say they are working hard to cultivate their major donor relationships.

This year, fundraisers are feeling the crunch of too many mouths to feed and not enough money to go around. 45% of nonprofits said competition for limited fundraising dollars was a significant challenge to meeting their fundraising goals.

Engagement with these major donors—and developing a strong, emotional connection to the cause—is key to winning those major donor gifts. But how are nonprofits doing it?

Special events are growing in popularity this year, as fundraisers start to see the value in holding events outside of their major fundraisers. 40% of nonprofits say that virtual events and virtual tours are a key method of donor cultivation.

Cater to them! Attending to the specific needs of major donors, corporate donors and sponsors pays off. Don’t just reach out to your contacts when you need them—offer other opportunities to be a part of the cause, and remember to ask regularly what focuses they want to see in your ongoing work. Always remind them that their participation and passion is critical to your mission!

Recognition and Personal Connection

When we asked nonprofits about their experiences with high-tech events in 2021, we found that sponsors weren’t huge fans of the move to purely online, virtual events, and 32% of nonprofits who held one reported losing sponsors in the process.

What’s a hybrid event? These ground-breaking fundraisers combine small, in-person gatherings and online donor participation into a single charity event. The live portion often caters to big donors, while a virtual program engages remote donors and those who cannot attend in person.

Only a small number of nonprofits held hybrid events in 2021, as they require a lot more work to put on. But of those organizations who held one were able to offer specific and unique experiences to each group.

As a result, nonprofits who could put in the work reported higher overall fundraising success at their hybrid events than those who held just a virtual event. But why?

Because small donors and major donors are two very different and distinct groups that must be catered to separately.

Of those nonprofits who held hybrid events last year, 63% said sponsor packages and promotions were a part of their event program, and donor recognition was a must-have feature. Major donors and sponsors want that live event experience for their gifts to feel worthwhile—recognition throughout the program, a table for guests with special perks, and time to socialize in-person.

A critical demographic: casual donors and micro-donors

But virtual and hybrid events both discovered a new audience out there that can really buoy nonprofits’ fundraising potential: the casual donor, who can attend an event online and participate from home; and micro-donors, who give $10-$25 at a time.

These donors are proving just as important in large groups, and nonprofits are focusing big time on methods of small donor cultivation like social media, email, and online fundraising events.

Tune in to the blog next week for more on this trending fundraising strategy, and how it can benefit your nonprofit’s revenue goals!

Share your thoughts