- Karen Eber Davis Consulting - https://www.kedconsult.com -

Better than Leftovers: Other Income

Are leftovers your favorite meal? They require minimal preparation, and when the flavors have melded they are even more delightful than the original dish. And—leftovers can be fun. Who does not like to find containers of forgotten goodies in the fridge? For nonprofit leaders hungry for income, other income is a lot like leftovers. It is usually simple, it pays for unappealing needs thus making it delightful, and when an unexpected resource, can be a fun surprise. This article provides a primer to help you earn more other income.

1. What is other nonprofit income?

This income is money you earn that has little or nothing to do with your mission. For many, it is an eclectic mix of dibs and dabs. You obtain it because someone wishes to buy an asset from you, either permanently or for a short time. Some common assets include your money (interest earned on your bank account), site (rent paid from corporate events on your site) and staff expertise (you lend your IT expert to another nonprofit to help them update their website for a fee).

2. What are some other examples of nonprofits earning other income?

3. What forms of support does other income take?

Other income is the broadest type of nonprofit income. It is a catchall category. One simple rule organizes it: it is money you collect that is only vaguely related, if at all, to your mission.

4. What are the tax consequences of other income?

You might need to pay taxes on this income. Listen to Podcast #11: Karen Eber Davis Interviews Tax Managers [1] for an overview on the subject’s complexity. This area is detailed and continually changing. You accountant will, most likely, need to research your obligations before offering advice. Do not try to figure this out yourself; consult your accountant.

5. Is this a common source of nonprofit income?

Surprisingly yes, it represents one of seven sources of nonprofit income. (Read about the others here [2].) Other income equals about ten percent of all nonprofit income. Nonprofits use this income to fund necessary but unappealing-to-donor needs, like driveway repairs, payroll taxes, and utility bills.

6. Besides the money, what are the benefits of this type of support?

7. What are the risks?

8. What is your organization’s experience with other income?

Leaders need to learn about their nonprofits’ experience with income unrelated to mission. Here are some starter questions:

9. What is the role of the board?

Overall, the board’s income work is to create strategies for all income, including other income. For this source, the board will want to balance any efforts to obtain it with the income produced. If you rent space for weddings, earn $200,000, and spend $50,000 in resources per year to earn it, it is likely you have a good balance. If you only clear $10,000 in good years, your leaders need to examine the opportunity. Is it a matter of skill? Pricing? The offer? The goal for all income is to maximize mission. Do your returns justify the resources required to obtain them? Does it allow you to maximize your mission? The board leads by analyzing this and all income sources.

10. How might we identify new sources of other income?

Start by identifying opportunities. Look at your current portfolio. Then, consider your assets. Listen to requests for services. Might you expand existing services to non-mission customers? Study similar organizations in other locales. What other income are they earning? Finally, innovate. Consider opportunities unique to your setting and skills.

Better than Leftovers

Other income is possible and likely for most nonprofit organizations. Since it provides 10 percent of all nonprofit income, it is worth some discussion and thinking. With a little focus, odds and ends of other income can provide you significant funds for your work—making other income even better than leftovers.

Resources

Other income is only one of seven nonprofit income sources. Visit our website for the earlier issues [3] of Added Value for articles on five of the other sources.

For more on nonprofits and funding opportunities, listen to our collection of audio downloads, especially Money-tastic #2: Nonprofit Income Opportunities [4] and Money-tastic #3: Creative Revenue Streams for Your Nonprofit [4]. Both are great ways to learn new income ideas to help your nonprofit.