June 9, 2020

Weaning Off Charitable Giving

Even before COVID-19, the charitable giving paradigm was in the midst of significant transformation. Now non-profits should diversify revenue streams to thrive.

There is no shortage of worthwhile causes in the social sector. For every issue is there sure to be a number of mission-driven organizations attempting to advance change. One of the themes we at BCE regularly hear from our clients is that dollars from charitable contributions are getting increasingly competitive. Even with increasingly sophisticated mission-driven marketing, capturing new donors is challenging. And what is more, charitable giving tends to be cyclical. Organizations are not competing for a limitless pool of capital, but finite resources.

One potential source of relief is earned income. Non-profits are looking for ways to leverage internal capabilities and competencies to create shared monetary value for programs and their participants. Here are a few of the initiatives that these organizations should consider to achieve this goal:

  • Model or IP licensing: non-profits are typically built around a solution for a specific social issue but have trouble scaling. Packaging that secret sauce can help drive impact in new geographies or provide the skills, capabilities, or even technology that organizations need to effect change in new areas. There are numerous examples of nonprofits licensing their brand, including the American Red Cross and National Wildlife Federation. These programs have helped these nonprofits to both expand their brand presence and drive significant revenue since inception.
  • Market access facilitation: many non-profits boast networks of program participants who create value added products and services. Providing access to markets can help create shared monetary value that can support program participants and non-profits alike. New technology platforms are making easier than ever to connect these products and services with markets and consumers. This may require investment in people and products, but has the potential to broaden the reach of your organization and message to new communities who are passionate about supporting impact. The Arcadia Center for Food and Agriculture has built itself around this model, selling local and sustainable food via mobile markets and online platforms, sourced from program participants.
  • Cross-sector collaboration: for-profit companies increasingly recognize the importance of incorporating mission-driven values into their organizations. Identifying partners with requirements for products and services that non-profits can help source can promote sustainable and socially-sound practices in corporate supply chains. This is similar to facilitating market access, but adds the strategic benefit of promoting your brand and program in a new ecosystem of partners and potential advocates. One compelling example of this approach comes from Unilever and The Power of Nutrition, who launched a partnership to improve hygiene and reduce undernutrition among mothers in India. This initiative leverages the strengths of both organizations to scale impact in a geographical area with significant need, while also driving revenue and brand visibility for The Power of Nutrition.

COVID-19 has intensified competitive dynamics in the non-profit sector. While the future of charitable giving remains uncertain, mission-driven organizations should look for new ways to generate funding. Diversity in revenue sources can offer greater stability for programming and lessen the reliance on an increasingly competitive donor landscape. Non-profits should explore earned income initiatives that align to their internal strengths and program goals to accomplish this strategic objective.

Related team members

Richard Crumb
Managing Partner & Co-Founder Menlo Park
Jaime Batista
Principal Yarmouth
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