How Charities Make Money
Unlike a normal business, a charity is not focused primarily on making a profit. Under the law, a charity's main mission must be serving people, and at least a third of its support must come from the general public. However, charities still raise and earn money in many different ways, from fundraisers to galas. Many charities raise money in a variety of ways to make sure they are able to cover their operating costs and serve those in need.
Fundraising events are a popular way for charities to make money. Though there is high overhead to organize an event -- you must hire someone to plan it, rent a venue, provide food and entertainment -- a gala can raise an organization thousands of dollars in one night. Some charities throw fancy black-tie affairs that cost each guest hundreds of dollars to attend, while others offer low-key dinners or happy hours with a portion going to their company. Other charities will organize a movie night or a concert. Many charities raise extra funds with raffles or door prizes at their event.
Some charities also will sell a certain type of product to raise money. Often, a company will sell the same type of product at a certain time each year to build up a customer base. Think of the Girl Scouts, who sell their cookies in late winter/early spring, earning $714 million in 2010, or schools that sell wrapping paper and magazines around the winter holidays.
Another way charities make money is by asking for some. Most charities ask for contributions from potential partners. Some do so regularly, while others ask for money only for certain projects. For example, a school might ask families to donate money to pay for a new playground. A church might ask for a donation every week, while other organizations, such as the Salvation Army, ask for spare change during the Christmas holidays.
Grants are another way organizations fund their work. Grants can come from foundations, from the government or even from individuals. Usually, charities must apply for grants and explain exactly how the money will be spent. Additionally, they need to list potential outcomes.