Giving Compass' Take:
- Membership programs for nonprofits and NGOs can be a potential and helpful solution for sustainable revenue and earned income.
- How can donors support nonprofit organizations that may want to pivot in this direction?
- Read about the nonprofits' road to revenue generation.
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In the past, it was only for-profits in the private sector who would talk about improving and optimizing “earned income” and “revenue generated.” Nonprofits face the ongoing challenge of increasing their financial independence—without sacrificing their mission or reducing their credibility—but there has always been a certain stigma attached to “earning” money, as opposed to grants or donations. However, in recent years, the for-profit and social sectors have moved closer together: While businesses focus more on stakeholders and shared value, nonprofits are coming under increased pressure to create and strengthen their revenue opportunities.
As a first step in moving from donations and grants toward more sustainable and recurring revenues, memberships are a great tool to strengthen loyalty among supporters and to increase earned income for sustainable recurring growth.
Memberships are more complex than recurring donations in terms of how nonprofit income is managed. However, they also are a window of opportunity, even in more “abstract” organizations. Not only do member fees provide financial support in the long term, members receive special perks and additional engagement opportunities, and thanks to a closer information exchange, are more firmly within the organization’s grasp. Members receive regular communication on the value of the mission, and in return are more open to sharing personal details that deliver insights on their motivations and needs.
How to set up your program will vary depending on where your organization sits on the spectrum. However, in our direct work over the last years on earned income for nonprofits, we have seen three key areas where nonprofits anywhere on that spectrum can apply business insights to optimize recurring revenues:
- Offer Three Packages
- Identify the Right Benefits
- Determine the Right Price
Read the full article about membership programs by Fabian Farkas, Shikha Jain & Ruben de Lange at Stanford Social Innovation Review.