As social enterprise has continued to gain traction, many more nonprofits are considering whether they can (or should) move away from donor-focused fundraising and focus on earned income. A couple of recent articles explore both sides of the issue:
10 Reasons for Nonprofits to Move to a Revenue-Driven Model: This Forbes article discusses the Global Good Fund’s decision to create revenue producing services, and highlights some arguments in favor of adopting a revenue model—including that it will allow the organization to be more nimble and responsive to change, attract skilled employees, and open doors to industry collaboration.
Social Enterprise Is Not the Answer to Fundraising Woes: This response to the Forbes article cautions nonprofits against thinking one-dimensionally about fundraising and revenue, and urges reform or innovation in the more traditional fundraising realm. The author emphasizes that nonprofits should be looking at their fundraising sources holistically, and evaluate whether an earned-income model fits with their organizations.
All in all, earned income is not an entirely new source of revenue for nonprofits—there are many organizations that have been providing goods or services for a fee for quite some time. The social enterprise movement, though, has encouraged more organizations to consider whether it is something that could work for them. This can provide tremendous opportunity for innovation, and allow nonprofits to capitalize on what they already do well. It also can allow organizations that are perhaps a bit too reliant on foundation or government grants to diversify. But an earned-income strategy is not a magic bullet or cure-all for what may ail nonprofits in terms of fundraising. For many organizations, it may complement—rather than replace—traditional fundraising sources.