October 2018 – Rick Szilagyi, Principal
A common topic relative to revenue for nonprofit membership organizations is non-dues revenue. The attraction, of course, to non-dues revenue is being able to fund the ongoing operations of the organization, including member benefits, without continually raising dues. Set up properly, the goal of a win-win can be attained, i.e., the nonprofit receives additional funding, and the funding entities benefit as well. Setting up the plan is not rocket-science. The sticking point is – as it is with many projects – the time it takes to formalize and then execute the plan.
Non-dues revenue comes from two main sources:
- Monies collected from members, for example, for meeting registrations.
- Funds from vendors who need to reach the organization’s membership to meet their business goals.
Organizations usually already have access to some vehicles which can be used to build non-dues revenue. Others can be considered by the Board of Directors. There are numerous individual instruments which can be used, but in general, these break down into three categories:
- Events (sponsors, exhibitors, attendees for meetings, conferences, etc.)
- Digital communications (ads on the nonprofit’s website, e-newsletters, social media, etc.)
- Paper communications (member packets, hard copy newsletters, postcards, etc.)
One quick note (certainly not a deterrent and something about which a seasoned nonprofit accounting department is surely aware): Paid advertising, for example, can be considered outside the mission of the nonprofit, and therefore, the portion of income coming from that source may be taxable. Unrelated Business Income Tax or UBIT is the issue. Again, not a problem, just something to know and report appropriately. That topic is addressed in the last article below.
- https://www.wildapricot.com/blogs/newsblog/2015/06/12/non-dues-revenue-the-basics
- https://www.webscribble.com/blog/6-sources-non-dues-revenue-association (You may have to copy and paste this link into your browser to access)
- https://blog.memberclicks.com/13-ideas-for-generating-non-dues-revenue
- https://www.nolo.com/legal-encyclopedia/taxes-nonprofit-corporation-earnings-30284.html
The Lexian Management newsletter is for informational purposes only.
Always consult your attorney, accountant, and/or insurance provider to obtain advice with respect to any particular issue or concern.