When I think of passive income, I think of trust funds, stock dividends, and real estate investments. However, these are not options for nonprofits that want to add passive income to their revenue streams. The best passive income for a nonprofit is an endowment, but unless you’re a university, hospital, or place of worship, this is oftentimes not an option.
Passive income for small or mid-size non-profits usually means a “percentage of purchase” program with a retailer. Passive implies that income comes in with little or no work on your part. That isn’t quite true. Even with everyone’s favorite, Amazon Smiles, it still takes some work to keep it going.
One of the challenges of attracting passive income is that it usually means a partnership or collaboration with a for-profit entity. For example, Amazon Smiles donates 0.5% of purchases made when the shopper designates your charity. That equals to 10 cents donated for every $20 spent. I’m not sure the average shopper/donor know how small their “donation” really is.
The Amazon Associates program donates up to 10% to the charity, but to receive those funds, the charity has to put the Amazon logo and link on their website and the donations are limited to certain categories of products.
A similar program that has been around for a long time is the grocery store rewards program. The scale is smaller, but it donates 1% of the donor’s total grocery purchases. The donor has to link your charity to their rewards card. Restaurants and office supply retailers also offer “percentage of purchase” programs.
The success of “percentage of purchase” programs depends on the amount of time and marketing energy expended by the nonprofit to get its donors, volunteers and other supporters to shop at the specific retailer. It’s unlikely that someone who is unfamiliar with your organization will support you through these programs.
For those of you have a facility, you may consider renting it for meetings or other events. I worked for a small environmental education nonprofit that had a beautiful building with classrooms and exhibition space. People would call asking if we rented our space for weddings and other events. We put together a business plan, projected income and invited wedding planners to our location. It took a couple of years to work out the kinks, but rental income became part of the annual budget planning.
In my experience, the vehicle donation program is one of the easiest passive income streams. That is because I worked with a third-party facilitator, CARS, Charitable Adult Rides and Services, located in California. CARS is a nonprofit that contracts with other nonprofits to handle vehicle donations. Through their link on your website, CARS will arrange to pick up the vehicle, take it to auction, and send you a check.
My last example of passive income is when the nonprofit establishes a for-profit entity, like a resale shop or lawn care service. For example, if your nonprofit offers shelter and other resources to people who are homeless, then maybe you also have a job training program. Your for-profit business would employ the individuals in that program. Obviously, there’s much more involved than these few sentences allow, but I’m sure you understand the concept.
The bottom line for all nonprofit organizations is to be creative. How can you maximize your resources? How can you encourage your donors to support your organization in more than one way? Good luck!
At DMGroupConsulting, our goal is to help you achieve your goals. Contact us at https://dmgroupconsulting.com/contact/.