Non-profit looking for ways to generate revenue

March 18, 2008 11:22 AM

Non-profit looking for ways to generate revenue. Please help us with ideas.

I work for a non-profit free school in Portland, Oregon. We are looking for new and interesting ways to generate revenue. So far we've come up with a few ideas to use our large space -
- starting a 3-5 year old preschool in our building to compliment our existing 5-18 year old free school.
- renting out one or two of the classrooms as office space.
- renting out our commercial kitchen on the weekends to caterers.
- hosting a once a month craft sale with a per table fee going directly to the school.

Now we need more ideas so that we have a lot to choose from during the upcoming school year (08-09).

Thanks for helping.

posted by saffronwoman to work & money (16 comments total)

Charity shop!
posted by By The Grace of God at 11:27 AM on March 18, 2008

Amateur theatre/performing groups are always looking for cheap rehearsal/performance space. Does your school have an auditorium with a stage that you could rent out during evenings or weekends?
posted by hurdy gurdy girl at 11:27 AM on March 18, 2008

Actually one of the companies we are considering renting out space to is a theater group that works with teens, so they will be using the stage space as well as their own office space. We're pretty excited about that.
posted by saffronwoman at 11:32 AM on March 18, 2008

renting out our commercial kitchen on the weekends to caterers.

This is a great asset. Think beyond just caterers to small businesses. You might contact your local cooperative extension and small-business networks to let them know you have a commercial kitchen available. Some cities have developed pretty nifty programs whereby someone who wants to run a food business can rent commercial space by the hour to produce the food under inspected, up-to-code conditions that they don't have in home kitchens. There's one in our community where people make salsas and pestos for specialty foods stores, and stuff like that.
posted by Miko at 11:40 AM on March 18, 2008 [1 favorite has favorites]

Beware that if the activity is regularly carried on and not substantially related to your organization's mission, then it will be subject to federal (and possibly state) taxes. The school expansion would certainly be ok, but the renting of facilities etc. would more than likely be taxable income. Not to say that you shouldn't pursue these options, its just something to keep in mind as you proceed.
posted by jtfowl0 at 11:45 AM on March 18, 2008

Well, this may be a bit on the ambitious side, but you could start a non-profit site like FreeRice. If you're not familiar with this site, Free Rice is a very simple site that donates rice to poor countries for every vocabulary question you answer correctly, this has the dual benefit of educating people and benefiting a cause. Free Rice makes money by allowing advertisers to sponsor the site.

So why not start a similar site benefiting free education? If you're worried about development costs, I doubt that it would be much of an issue, as anyone you hire could write-off the project for charity and a site like Free Rice really isn't very complicated to produce. An added benefit is that you have a much broader range to generate income from the site.
posted by ISeemToBeAVerb at 12:05 PM on March 18, 2008 [1 favorite has favorites]

The school expansion would certainly be ok, but the renting of facilities etc. would more than likely be taxable income.

Can you cite supporting details?

I work for a nonprofit, and we rent the site for corporate functions, private events, weddings, and community meetings. The funds go under our earned revenue lines, just as our retail and foodservice income does. All proceeds go to support our charitable mission. It's not at all uncommon; this has been true in all four nonprofits in which I've worked. Certainly there are IRS guidelines for revenue enhancing activities, but uses of a site which support the mission either directly or indirectly are normally not disallowed. Unless you have more specific information, all the school need do is check with its tax counsel. The uses being suggested here should not endanger their tax status.
posted by Miko at 12:24 PM on March 18, 2008

Ah, never mind, jtfow10. For the OP, if you do a search on "unrelated business income tax," there is plenty of info on the IRS and charity-aid sites. Again, I think the art is in clearly enumerating what "regular" and "related" mean. You may end up having to pay tax on income earned through these sources, as jtfow10 says, but your accountant can handle figuring that out. It doesn't endanger your tax-exempt status. It would make sense to take that into account while planning so your tax bills would be covered.
posted by Miko at 12:33 PM on March 18, 2008

Can you cite supporting details?

Whole bunch of examples here.

To clarify, engaging in activities of this type aren't endangering tax status--they simply have to pay taxes on the unrelated business income, unlike income from mission-related activities which are tax exempt. In practice, there is somewhat of an arbitrary line that the IRS draws in the sand regarding what is related income and what is unrelated.

I work for a nonprofit, and we rent the site for corporate functions, private events, weddings, and community meetings. The funds go under our earned revenue lines, just as our retail and foodservice income does.

Depending on the wording of the mission of your organization, these activities might be tax exempt. Or you might be paying UBIT. Again, paying UBIT is not an automatic deal breaker, it just means some extra paperwork and profit on the bottom line since you pay a cut to the government.
posted by jtfowl0 at 12:37 PM on March 18, 2008

Yeah, sorry, I was just slow on the uptake and misunderstood you. I thought you were saying the income wasn't allowable. My apologies.
posted by Miko at 12:42 PM on March 18, 2008

errr.....that should read "less profit on the bottom line since you pay a cut to the government."

slight derail:
IANA tax attorney or an accountant, but I have had a bunch of public and nonprofit management classes at the grad level that deal with this stuff. UBIT is pretty fascinating, really--if you read through some of the examples, "related" and "unrelated" income seems really arbitrary sometimes.
posted by jtfowl0 at 12:42 PM on March 18, 2008 [1 favorite has favorites]

Ok, these are good. Thanks for the tax info too. We're pretty sure that we can bend our mission statement to cover just about anything (we are a school after all and learning takes place everywhere).

Keep 'em coming.
posted by saffronwoman at 1:20 PM on March 18, 2008

Vending machines in the schools/staff lounges. You can make a bundle.
posted by blue_beetle at 1:37 PM on March 18, 2008

Events are a huge PITA to organize, but they do work. Part of my nonprofit job is organizing events and while they're kind of time and labor intensive, you'd be surprised at how much you can pull in. Throw a gala or a ball or an auction. Not all of them are all that difficult - the museum where I used to work makes nice money every year on a wine & beer tasting and silent auction: the local distributors all show up for free with free wine & beer; food is donated; the silent auction is all donations and the museum sells tickets for $40 a pop and it sells out every year to the tune of at least $10,000 straight profit. Lots of events are primarily or completely organized by volunteers - get them energized, ask them what they'd like to do. Find out where their connections are - do you have a kid in your school whose parents own a restaurant? Own a microbrewery? Own a gift shop? You've got potential donors for any event right there. And then build on your start - plan on doing it every year, bigger and better each time. And other people have events, too. What about renting out your space for weddings or corporate parties? Call the event planners in your community - everyone's always looking for new and different and cool spaces to throw parties in.

Can you piggyback on local festivals? The museum where I currently work puts up a booth at several local festivals. We sell small toys and rocks and hand out information (you'll have better luck if you're doing something other than just handing out brochures) on our programs and classes and usually make a couple hundred dollars at least each day; plus, we're getting the word out about our mission, which is priceless. You could do kids' activities at fairs and festivals and charge a dollar or two per kid.

Do you have a development staff? Because you should - every non profit should have at least one staff person whose focus is on nothing but making money, making money, making money.
posted by mygothlaundry at 1:57 PM on March 18, 2008

Do you guys ever do candy-sale type things? A lady I know was helping her son sell (okay, selling for him) chocolate Easter bunnies as a school fundraiser, and it was very popular. Wrapping paper sales are also great. A club I was in used to sell Poinsettias during the holidays. I think these things work better when you're selling something useful/interesting, rather than just chocolate bars.

My K-8 used to hold a "walk-a-thon" every year. I'm sure it was a pain in the butt to set up, but I think it raised a lot of money. Also, it might be a logistical nightmare trying to collect money from people after the event (for donors who pledged a per-lap rate).
posted by radioamy at 2:35 PM on March 18, 2008

I worked at a small independent school in the late 90s. The major fundraiser was a Spring Fair. It was a simple affair where each class of kids had a booth and presented something. The Kindergarten (my group) traditionally sold tomato seedlings that we had raised (good ROI on seedlings). There were games of chance, a dunking booth with a popular teacher as victim, a yard sale where everyone brought castoffs, and an auction. Food was also sold. Dance was taught and music was performed. It was a pretty good way to both celebrate the school's crunchiness and raise some cold hard cash.

Of course, someone has to coordinate, which is the hard-work part. If I remember rightly, a parent-board committee coordinated ours. The teachers just kinda went along with it.
posted by Miko at 8:32 PM on March 18, 2008