The buzz word in nonprofits these days is “earned revenue.” Sure, everyone is talking about it, but what does earned revenue mean and how can it benefit an organization like yours? Here are some general guidelines for ways your nonprofit could explore earned revenue opportunities.

But first, a word of caution.

Nonprofits are not-for-profit institutions. Yes, I realize this might seem obvious, but to keep your nonprofit tax status, you must follow specific rules while generating earned revenue. Any sales not tied to the mission could fall into the unrelated income category, and, if you do not get clearance from your accountant, this revenue could jeopardize your 501(c)3 status.

The above caveat having been issued, here are three broad brush approaches for generating earned income.

• Offering Products and/or Paraphernalia – Some people, and I tend to agree, think one of the simplest business models is selling merchandised products. A few examples of branded items include t-shirts, mugs, and other paraphernalia (with your logo) that people would purchase. To manage your expectations, this will not become a mainline source for sales, yet it could, if done properly, add additional revenue.
• Turn Training Programs into Consulting Services – An efficient and effective way to generate nonprofit revenue is expanding training services your nonprofit might be offering. Why? Because it is easier to re-package your knowledge rather than create something from scratch. A great example locally is Leadership Louisville, which leveraged its decades of teaching civic classes and now offers the Green Room, which teaches leadership skills to a new audience.
• Selling Services to Third Parties – Does your nonprofit have a distinctive approach to completing an important task? Maybe you have a shortcut that is more efficient and saves time and money? If so, it might be possible to sell this service to third parties.It is no easy task to start selling services (otherwise more nonprofits would do it), yet if done properly, this third approach can be lucrative.

Certainly, the ideas mentioned above are easier said than done. Yet, if you want to pursue earned revenue, you have to think anew. Here are a few questions to start the process:

• Where does your organization excel?
• What are the assets – processes, intellectual property, curriculum, systems, unique content, physical space – of your organization?
• What barriers are your customers, members and/or clients dealing with on an ongoing basis?

Once you start wrestling with these questions, you can begin thinking differently about ways of pursuing earned revenue opportunities for your organization.