Diversifying revenue sources: Where do nonprofits find funding?

Most nonprofits need revenue to sustain their work. Research suggests that diversifying revenue streams can help organizations weather financial uncertainty, a particularly urgent lesson as federal funding cuts and freezes have destabilized organizations across the sector. With revenue sources drying up, it is important to understand how nonprofits can continue to support their work.

Where do nonprofits seek funding, and which organizations have access to different funding streams? Here’s what we learned from a survey of nearly 4,000 U.S.-based nonprofits, fielded between August and October 2024.

Which revenue sources currently support nonprofits?

We asked nonprofits whether they receive funding from four sources: individual donors, grants from foundations and nonprofits, earned income (revenue from sales, fees, and dues), and government funding. Findings from 2022 data indicate earned income accounted for 71% of total nonprofit revenue, with contributions and government funding adding 18% and 11%, respectively. We wanted to know what percentage of nonprofits relied on each revenue source, rather than the total amount received from each source. Importantly, these findings are for nonprofits that responded to our survey, not the full sector.

Individual donors were the most common revenue source, followed closely by foundation and nonprofit grants. By comparison, earned income and government funding were less commonly mentioned. Across all four revenue sources, very few nonprofits reported relying on a single one: Just 7% relied solely on individual donors, only 1% on foundation grants, and less than 1% on earned income or government funding.

Which nonprofits rely on different revenue sources?

We also examined which types of nonprofits—based on size, age, leadership demographics, and population served—relied on different funding sources. Several patterns emerged:

Larger and older nonprofits have more diversified revenue sources. The smallest nonprofits were significantly less likely to report foundation grants and government funidng as revenue sources. By contrast, the largest organizations were more likely to report both foundation and government funding.

Similarly, older nonprofits (founded before 1990) were more likely to report foundation grants (94% on average), earned income (67%), and government funding (66%) as revenue sources, while the newest organizations (founded in 2010 or later) were less likely to report all three (81%, 42%, and 32%, respectively). However, similar percentages of all organizations received funding from individual donors (97% average for older organizations vs. 94% for newest organizations). This indicates that building a diversified revenue portfolio takes time and/or resources most new organizations don’t have.

Nonprofits led by Black CEOs and majority Black boards were less likely to rely on earned income. We also found differences in revenue sources based on the CEO’s race/ethnicity. Nonprofits led by Black, Hispanic/Latinx, and Middle Eastern/North African CEOs were less likely to report receiving funding from individual donors compared with the overall sample (88-90% vs. 97% overall). Nonprofits with Black CEOs were also less likely to rely on earned income (43% vs. 51% overall).

Board composition showed similar patterns. Nonprofits with majority Black boards were less likely to have individual donors (90%) and earned income (41%) as revenue sources than other nonprofits, particularly nonprofits with majority white boards (96% and 55%, respectively). This pattern mirrored findings for nonprofits serving predominately Black communities. In fact, nonprofits with majority white boards and serving white communities were more likely to rely on all four revenue sources than other nonprofits.

What this means for nonprofits

Nonprofits’ reliance on individual donor and foundation grant support underscores their central role in nonprofit funding, while fewer nonprofits receive earned income and government funding. The fact that very few nonprofits relied on any single revenue source exclusively points to a sector that largely embraces—or perhaps requires—diversification.

At the same time, a nonprofit’s revenue profile was shaped by more than strategic choice. Nonprofits’ reported revenue sources depended, at least in part, on their size, age, and leadership. Smaller and newer organizations were less likely to seek foundation and government funding, and nonprofits led by or serving communities of color looked to different sources of support than their peers.

For nonprofits, these patterns raise practical questions: Does the organization rely heavily on certain revenue sources? If so, which streams might be realistic to add given organizational size and capacity? For smaller or newer nonprofits, individual donors may be a viable revenue source, while foundation grants require infrastructure and a track record that takes time to build.

For funders, our findings prompt a different question: Are application processes and eligibility requirements unintentionally limiting which organizations can access support? Understanding which nonprofits currently rely on which revenue sources—and why—is a first step toward ensuring their grantmaking reflects community need.