A: Simply put, earned income is revenue generated from the sale of goods, services rendered, or work performed. One nonprofit example that most people have some familiarity with is Girl Scout cookie sales. If you have ever purchased a box, you have contributed to the earned income of the Girls Scouts organization. Why is earned income gaining popularity with nonprofit organizations? As factors like increasing competition and a flagging economy have caused gift income, like foundation grants or donations from individuals, to level off for some organizations, nonprofits are looking to diversify or expand their bases of support to meet growing needs and to better sustain their operations over the long term. New players entering the field with new ideas about how nonprofit organizations should address society's ills are also spurring increased interest in earned income and other forms of social enterprise.
Earned income can be viewed as one part of a diversified financial or fundraising plan for nonprofits. A good primer providing background information on earned income is Social Enterprise: Hype or Reality? from the Social Enterprise Alliance, which says:
Earned income ventures by nonprofits generally do not free a nonprofit from other types of revenue… Earned income ventures have never generated limitless profit… Launching and running a social enterprise is as risky as launching and running a business in the for-profit sector… Social enterprise demands skill sets that may be lacking in a typical nonprofit... Social enterprise has the added challenge of managing to the 'double bottom line' of both mission and margin…
Here are some additional resources to help you access services and get up to speed:
Web sites:
- Cleveland Community Wealth Initiative, a program of the Mandel Center for Nonprofit Organizations and Community Wealth Ventures
- The Institute for Social Entrepreneurs provides seminars, workshops and coaching services for social enterprises in the United States and around the world.
- New Directions in Fund Development, a tutorial from the Truman Heartland Community Foundation's Nonprofit Business Solutions
Books that can be borrowed from our library:
The Foundation Center offers a full-day seminar, Earned Income: Assessing Your Nonprofit's Revenue Options. Register for the upcoming session taking place on Wednesday, April 15, in New York.
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Katie Artzner, Online Librarian, The Foundation Center
