Eight of the Best Charity Funding Sources
Charity organizations rely on varied sources of income to cover their costs and carry out their vital work. Donations from individuals and organizations play a big part in funding nonprofits, but there are many different revenue streams that charities can turn to. Here are eight key charity funding sources to consider.
1. Individuals
According to Giving USA, the majority of all giving comes from individuals, who gave more than $319 billion in 2022 (64% of the $499 billion given to charity). If you add in bequests, individuals account for nearly three quarters of all giving.
Clearly, reaching individual donors should be a central focus of your strategy. There are many ways to seek individual support, including social media, direct mail, advertising, public relations, events, subscriptions, merchandise, affiliate links, and more.
2. Crowdfunding
To reach new audiences, start a fundraiser on behalf of your charity. Crowdfunding gives you the means to build a wide network of empowered supporters, each advocating for your charity while also raising money for it.
Charity fundraising sites make it easy for both individuals and nonprofits to raise funds for specific needs – on GoFundMe, you can crowdfund for almost any cause.
It also provides a way of staying connected with the people who believe in your mission and want to support it in a meaningful way. You have the opportunity to keep donors updated on how your fundraising is going and how their contributions are making a difference to your organization.
Learn more about how GoFundMe works and check out these examples of individuals supporting charities through crowdfunding:
3. Foundations
According to Giving USA, foundations gave $105.21 billion to charity in 2022 (21% of all donations to charitable causes). This makes them the second largest source of funding for charities.
To receive funds from most foundations, your charity will need to be a registered 501(c)(3) nonprofit.
Foundation grants are most often awarded for a specific program or distinct purpose. Foundations often focus on giving to:
- A specific population: people in a particular demographic group or specific geographical area.
- Certain types of nonprofits. A foundation might direct money to nonprofits in areas such as environmental protection or poverty alleviation organizations.
- Particular types of support, such as funding new capacity, projects, or research.
Foundation types
- Family foundations are legal entities set up by an individual, family, or another group for a specific purpose, usually philanthropy. The Bill and Melinda Gates Foundation is one example, though most family foundations are small and focused on a single issue or particular location.
- Corporate foundations get grantmaking funds primarily through contributions from a for-profit business. These foundations are often the charity wing of a corporation. Examples include the Walmart Foundation and Ford Philanthropy.
- Community foundations have permanent funds or endowments established by many donors for the long-term benefit of residents in a specific area. Examples of community foundations include The Cleveland Foundation and The New York Community Trust.
How to find and apply for foundation grants
Use the following sites to review any foundation’s grants, application materials, and more:
- The Foundation Center’s Foundation Directory Online (FDO) helps you find a foundation’s website, contact info, and application forms.
- GuideStar is a directory of nonprofit organizations, including foundations, in the US.
4. Grants from local, state, and federal governments
Cities, counties, states, and the federal government issue grants to nonprofit organizations. Applying can be time-consuming and the rewards uncertain, but if you do earn a grant there are key benefits.
Biggest benefits of government grants
- Receiving a grant from a government agency can give a charity more credibility, which can help you secure more funding from other sources.
- Government grants are usually made in significant amounts that can make a real difference to your nonprofit’s bottom line.
- Grants from the government require no repayment (unless you don’t spend the money in the manner outlined in your application).
Biggest drawbacks of government grants
- Grant writing applications can be complicated and take a lot of time, patience, and persistence to complete—all for an uncertain reward.
- Government grants often come with conditions and milestones you must meet and report on (to demonstrate effectiveness).
- Often, any funds not spent as outlined must be returned.
- As with foundation grants, government grants are usually offered only to 501(c)(3) organizations.
- Grants are meant for specific short-term purposes, not long-term operating costs.
How to find government grants
Government directories and catalogs are the easiest way to find the support you need. Here are two of the most notable examples:
- Catalog of Federal Domestic Assistance is a listing of all US government grants, loans, and programs benefiting nonprofits, businesses, individuals, and families.
- Grants.gov is a great resource—check out their list of grants posted in the last seven days, and sign up to receive new funding notices via email.
5. Earned income
Earned income is distinct from other forms of charity funding (donations, grants, etc.) because it comes from the sale of products or services. According to the Urban Institute, more than half of nonprofit revenue in the US comes from fees for service and earned revenue.
If your organization doesn’t sell products or services, ask yourselves whether this is something you can (or should) add to your fundraising mix.
6. Corporate partnerships
Corporate social responsibility has become increasingly important to large and small businesses alike. Consumers trust socially responsible companies more and reward them with their dollars.
Here’s how the partnership between corporations and nonprofits usually works:
- Some businesses look for nonprofits to partner with and support. They may wish to fund specific initiatives, events, or fundraisers—such as crowdfunding fundraisers that allow them to leverage their presence on social media.
- Businesses might offer matching donations as part of your crowdfunding fundraiser.
- Beyond the dollars they direct your way, businesses often spend just as much (sometimes more) promoting their partnership as your organization does. In other words, they give you publicity. This can boost your revenue from other sources, including donations made by individual customers of the business.
- Businesses may provide volunteer grant programs that enable employees and others to more easily volunteer hours to your organization.
7. Planned giving programs
Planned giving is known by many names: bequest giving, gift planning, deferred giving, legacy giving, and estate planning. They all describe the same thing: someone leaving money to charity in their will.
Planned giving is becoming more and more popular. According to Giving USA, the practice grew by 2.3% in 2022.
Once your organization reaches a certain status, make a pitch for planned giving to your supporters. It could grow to become a significant source of your funding.
8. Volunteers
According to the United States Census Bureau, more than 60 million people in the US volunteered with an organization in 2021, contributing an estimated 4.1 billion hours to the public good.
The value of all those hours? Approximately $124.7 billion. So while volunteers’ time isn’t technically a revenue stream, your organization might want to view it as one. Boosting the number of hours volunteered for your organization is a huge and valuable win.
How do most nonprofits receive their funding
Individual giving and income from foundations are the two biggest charity funding sources, but most charities in the United States will base their funding models on a mix of the above revenue streams. This will be influenced by many different factors, including the sector the charity operates in, its mission, and the campaigns it runs.
For example, Feeding America reported in 2023 that fundraising accounted for 7.3% of its public support and revenue, and donated goods and services accounted for 87.9%. The Salvation Army, on the other hand, reported that over half of its total revenue came from direct contributions of cash and other financial assets.
Start fundraising for your charity
Along with our fundraising platform, GoFundMe offers a wide variety of resources for nonprofits, like these effective fundraising ideas. Take a look at these common fundraising questions if you need more information about how to fundraise effectively. If you haven’t already, start a fundraiser today.