3 Ways You Can Approach Budgeting Season

We’re heading into yet another contentious budgeting season, and if your nonprofit organization is likely to be affected by federal, state, or local government budget cuts, however drastic, you have three choices:

1. Roll with it and adapt, 
2. Feel victimized and begin slashing and burning programs and services, or
3. Take charge of your revenue destiny.

Now if you read more closely, you’ll notice something about these three options. Yes, they seem to be about fiscal management and on the surface they are. But dig a little deeper and you’ll notice that what I’m really describing is mindset.

How is yours?

Leaders in the third category have eyes glued on mission delivery and consider new ideas and creativity to get there. And no one is standing in the way.

That’s the mindset that your organization needs. Whether you’re the CEO or a board member, now may be the time to consider adding or improving reliable revenue streams that supplement these traditional yet often unreliable sources. 

Earned and reliable revenue

Generally nonprofit organizations generate revenue from one of two types: contributed or earned sources. Contributed dollars, which may be restricted to a particular program or unrestricted, are donations from individuals, corporations, and foundations. Earned income, on the other hand, is revenue generated from an exchange of value. 

Where does earned revenue come from? Organizations are pretty creative when it comes to earned income. I’ve cataloged more than 81 types. Broadly they fall under three categories: 

1. Assets. Something you own, produce, or generate that can be monetized. These could be hard assets, such as real estate, products, or even waste, or soft assets, such as a service or intellectual property. 
2. Points of Leverage. Opportunities for earned revenue may arise from a new collaboration. Another point of leverage may come directly from your mission, such as by selling a service to a new audience or creating a social enterprise. Think Girl Scout Cookies. 
3. Marketing Mojo. Sheer creativity and marketing may inspire other earned revenue sources. Corporate sponsorship, events, tours, trips, membership, and merchandise are all sources of earned revenue that emanate from and fuel your marketing efforts.

The value of earned revenue is that it supplements contributed revenue and can be generated at any time. Organizations that become powerhouses at generating earned revenue become self-sufficient.

If you’re tired of budget whiplash, it may be time to take a fresh look at your business model and explore what new possibilities could expand your value while bringing you relief.

Gail Bower's Guide to Earned RevenueTo learn more about earned income, download Gail Bower's new Guide to Earned Revenue. It's free.