Oil and water rarely mix: exploring the relative stability of nonprofit revenue mixes over time
Working paper 99 (June 2013)
In recent years, considerable attention has been paid to the commercialisation of the third sector. The general presumption is that nonprofits were previously more reliant on grants and donations and have diversified into commercial revenue. This paper explores whether nonprofits are increasingly adopting mixed revenue strategies - combining grants and donations with earned income - and the sustainability of these strategies over time. The research looks at nonprofits in the United States, using data from the National Centre for Charitable Statistics (NCCS) from 1998 and 2007.
The research found no evidence that nonprofits are increasingly adopting mixed revenue strategies, nor that they are deriving a higher proportion of revenue from commercial sources. The distribution of commercial and donative revenue was virtually unchanged between 1998 and 2007. In 2007 (as in 1998) most derived their income predominately from one of the two major revenue sources. While commercial and donative nonprofits generally maintained or increased their reliance on a single revenue source, just 28% of nonprofits which were mixed revenue in 1998 maintained this revenue mix in 2007.
Our results suggest that for most nonprofits, relying predominately on either commercial or donative revenue is more sustainable than attempting to achieve a balanced revenue mix. Exceptions may be certain fields of activity that have special appeal to both paying customers and philanthropic donors, most notably in the arts.
Simon Teasdale (TSRC), Janelle Kerlin, Dennis Young and Jung In Soh (Andrew Young School of Policy Studies, Georgia State University, Atlanta, GA, USA)