Nonprofit Fundraising: Launching an Earned Income Strategy

An earned income Revenue model can be a  great option for non-profit fundraising! So in my last video just before this,  I talked about how to know if an earned income model could be a good fit for your  nonprofit organization. In this video I'm going to talk through the steps to  launch an earned income strategy, if you've decided that that is the best course  of action for your organization. [Music] Welcome or welcome back! My name is Amber  Melanie Smith and I'm a nonprofit founder and execut

ive director who makes these videos here on  YouTube all about helping people make an impact, especially through starting and running a  successful non-profit, social Enterprise organization, or socially conscious business. As  always I hope that you find this video is useful and helpful to you! Don't forget to give it a like  and let YouTube know that you've liked this video. Also I have a website, FounderToFullTime.com where  I have some online courses and resources all about starting a non-pr

ofit and developing a sustainable  fundraising plan that might be able to help you out, so feel free to go check those out too. All  right let's get into this topic! As I mentioned before if you missed my last video on this topic I  do recommend that you go check that out and watch it before this one as it will provide a helpful  lead-in to lay the foundation for this topic in this video once again I'm going to talk through  the actual steps to launch and earned income strategy to fundraise for

your organization once  you've determined that it is indeed a good fit for your particular Mission as a non-profit so let's  Jump Right In step one of launching a successful earned income strategy is hopefully what you  accomplished by watching my last video which is the whole process of assessing if it's a good  fit so this is where you are doing some market research you are looking at your organization's  capacity your organization's Mission etc etc so assuming that you have already done  that

step congratulations you're already a part of the way through the step the process of launching  and earning income model so let's skip right ahead to step two and that is identifying  your actual earned income strategy ideas so I talked about some examples of earned income  models in my last video but to recap earned income is when you are selling products or services that  align with your organization's Mission and further that mission so it could be anything from um  doing paid trainings or

workshops or renting out your facility if you have one of those as an  organization it could be selling specific products or Goods that relate to your organization's  Mission like food or apparel or equipment Etc could be a lot of different things but it's  just like you're starting a little miniature business inside your non-profit that is owned by  your non-profit organization but the big question is how do you hone in on the specific ideas that  are going to be the best for your organization

so let's talk through a couple of strategies to do  just that a sort of simple way to start thinking through some potential earned income model ideas  for your non-profit could be to take a look at your existing and planned future programming  so this could be small or large or medium-sized programs that your organization has on its sort  of back burner or wish list or perhaps uh ideas that you've thought of to expand your existing  programming you want to look at all of these program ideas thin

gs and once again a program is  the actual vehicle through which you deliver on your organization's Mission into the community  so if you are a hunger a fighting organization it could be your um your meal kitchen it could be  community garden it could be any sorts of things that help combat hunger so um you're looking at  your programming and you're thinking to yourself are there any opportunities here where you  might be able to charge a reasonable fee for delivering this program to a target  a

udience that can afford it and would be willing to pay for it they find Value  in this it's worth paying for for them um and doing so in a way that wouldn't harm the  constituents that you're serving who wouldn't be able to pay for it so build in that Revenue model  to your existing or planned future programming that is a very simple way of making sure that  whatever earned income ideas you come up with are automatically going to align with your non-profits  public serving Mission because as we'

ve talked about in the last video you can't just come up  with any random product or service to sell as an earned income model it has to be something that  connects to and aligns with your mission because if it's not at least in the United States the IRS  could say your non-profit is conducting unrelated business activities not related to your mission  and as a result we're going to charge you taxes and penalties for that so if you want to make sure  that you are in trouble with the IRS you've g

ot to make sure that your earned income strategy  is fully aligning with your your mission let's talk through just one example of this so you can  kind of see what I'm talking about coming to life so for example I mentioned a hunger fighting or  food insecurity combating non-profit organization that's that organization's Mission perhaps they're  already doing some things to this effect they've got their meal kitchen they're doing meal  drop-offs whatever it may be but one idea that they have on

their wish list is to start a  community garden well this might be an opportunity for an earned income model if for example they  choose to sell a portion of the produce created by that Garden to local restaurants to cover the  costs of that program and perhaps subsidize the cost of some of their other programming too and  then of course they're giving away the rest of the produce to their constituents that they need  to serve who wouldn't be able to afford to pay for it so everyone gets help an

d the non-profit is  able to bring in hopefully some consistent funding that can supplement the rest of their fundraising  so you want to think in those terms and your next step in this process is to generate at least three  to five different ideas that you can can explore further and do some further pricing analysis  on and fundraising analysis on and once you have developed those ideas you want to then take  a look at your organization's leadership and their skills and competencies because you

might have a  great idea but of course it takes human beings to execute on these ideas and make them successful so  you want to make sure that the people you have on your team are the people who have the right skill  sets to execute on the idea that you all land on so you would take your your list of  ideas you would then match it against the competencies and skills of your team  and of course considering other factors like is one idea going to be much more expensive and  uh difficult to implem

ent than other ideas and from there hopefully you'd be able to land on  an idea that you'd be able to try out I do go into this a bit more in depth in my find and grow  your funding online course on my website founder of fulltime.com if you want to go deeper on this  topic okay so once you've narrowed your list of ideas down to hopefully one maybe two really  really solid ideas you want to start building an actual business plan around the earned income  model itself and this is something that's

separate from your non-profits business plan because like  I said before an earned income strategy is kind of like running a miniature business inside your  non-profit so in this business plan you're going to want to include all the typical things that you  might find in a business plan like your products or Services description uh identifying who your  target audience is because you don't have to sell your products or service to everyone in the  whole community you're a whole public maybe it's

specifically targeting um smaller large  businesses or people who have dogs you know it could be any sort of target audience that's going  to be the best fit for your earned income idea pricing so what you think the market would pay  for your um product or service that would be a reasonable Fair fee um your financial projections  you know what costs you need to invest up front in order to get it running all sorts of things and  it's really important that you're also thinking of this in terms of

how it's going to either  be separate from or connect with your other fundraising efforts as an organization because  I want to clarify that an earned income model is not intended to bring in a hundred percent of  the funds that your nonprofit needs throughout the whole year it's only supposed to bring in a  portion of those funds it's supposed to supplement and subsidize the rest of your fundraising  efforts as a non-profit organization in the United States if you're a 501c3 you are expected  t

o bring in a certain amount of your annual budget through donations and grants and stuff  like that so you can't completely rely on this earned income model to bring in all of the money  that you need so be thinking about that as you go um secondly as I mentioned you might need some  startup funding to get things going so thinking through what those things are do you need a staff  person to manage the earned income uh program and if so what types of skills do they need what is  a fair salary so

looking at compensation analyzes on people who have that kind of job what is  a fair salary for that position do you need special equipment do you need a marketing budget  to get things up and running and let the community know that it exists etc etc so putting together  that budget to really account for those startup costs and also your ongoing costs for the earned  income model the fourth step in this whole process is something you can do before your business plan  is completely finalized and

that is to do a small pilot test of your earned income idea one way you  might do this is by doing just a short campaign where you're trying it out or maybe a one-time  event if it's something like selling a product you could see how people respond to the product  if they like it how they seem to react to whatever pricing you've placed on it Etc so doing that  really small Scale Pilot test can be a really helpful way to Think Through what are some of the  challenges or problems that could arise

if you did this ongoing and also assuming you have positive  results to your small pilot test this is a really helpful piece of information that you can put in  your business plan to finalize it any customer feedback questions that kept coming up over and  over again from customers will indicate to you the types of things that might be confusing to  them that you might want to clarify so using this pilot test as a way to really refine and instill  confidence in your team about the idea step five

to getting your earned income model up and running  is you've gotta get that startup funding for this um your organization might be in a strong in a  financial position already to just invest some of the excess funding you have into getting this  started knowing that it's going to grow and have a great return on investment soon enough but if  you're just starting out or maybe your non-profit is not in that kind of position you will need  to probably secure some kind of startup funding to get th

ings going I mentioned some possible  expenses before and this really could vary based on what exactly you are doing for your earned  income strategy the cost to Startup could be very low or they could be quite High really depends on  what you're doing so um regardless you you might need to raise some of the startup funding and  you can do this in a number of ways just like you would through the rest of your fundraising efforts  as a non-profit you could ask donors to support it you could seek s

ponsorships and Partnerships  to help bring in some of that startup funding um you could um in this case I think there might  be a great argument for a grant here because a lot of funders love to see that the money they  invest one time is going to grow into ongoing support for a non-profit so you might be able  to secure a grant to launch your earned income model that will then have a great return on  investment you'll be able to show that funder later hey look we took your ten thousand dollars

  and turned it into an ongoing fifty thousand dollars for the organization every single year  for example so definitely check out opportunities um along those lines for that that align with  your organization's Mission and issue area um you'd be surprised to think a lot of  business-minded funders are interested in opportunities to support like this because it  has such a long-term ripple effect on the mission the sixth and final step I'm going to talk about  here today is getting it up and run

ning and then evaluating how it's going and thinking about how  you might scale and grow it over time so it's time to launch at this phase you've got your initial  startup funding you've got your business plan you've identified the skills of your leadership  we're going to help with getting it off the ground um you have done your market research you've  done all this stuff and it's time to launch so it's you can launch small so you have already  done your pilot test you can build on that idea no

w instead of hosting a one-time event to try  it out maybe it's a monthly event where you're selling your products or Services maybe it's an  ongoing thing that doesn't have specific dates attached to it for the community can take a number  of formats so you have launched this and you are starting to collect data you're you're collecting  data on the amount of money that you're able to raise compared to what it costs you to run this  month to month quarter to quarter across your annual budget yo

u are collecting data on your  customers feedback what what do they think about it are there ways that they think the product or  service could improve so that you could sell even more grow even further are there opportunities to  scale and grow connected to partnering with other organizations for example let's say you are doing  the community garden thing that we talked about before and you're already selling your produce  to restaurants but your food bank down the street has said that they rea

lly need a new vendor for  vegetables and you have the vegetables that they want maybe you could be their new supplier and  they could pay you a discounted rate for those vegetables saving them money anyways because many  food banks might have to buy some of that produce from the grocery store or other sources anyway  if they can't get it donated so um Partnerships like that that can expand the reach of your  earned income model bring in more money for your cause and then of course help suppleme

nt the  costs of running your organization all right I am through the launch list I would love to hear  what you think now um between the last video and this one do you feel like earned income is the  right strategy for you please share what you're thinking in the comments your ideas any questions  you have I'm sure the community here would love to jump in and help you out so once again I hope  this was helpful to you as I mentioned before if you're starting a non-profit or in the process of  de

veloping a sustainable fundraising plan possibly to include an earned income strategy check out my  online courses at FounderToFulltime.com they can help talk you through all the steps and help get  you started there I also have a newsletter for non-profit leaders and change makers you can find  the link to that at below and subscribe and opt out anytime you need I'll share tips and resources  and sometimes funding opportunities that I come across in those newsletters and finally if you're  on F

acebook I have a group called Change the World or Bust where we've got now I think 4 500 or  some awesome amount of people from all over the world who are just trying to make a difference  and are looking to each other for guidance and support on their change making Journey! So I hope  that you can join us in that group as well. Once again I'm Amber Melanie Smith and I hope that  you found this helpful I'll see you later bye!