Running head: NONPROFIT ORGANIZATION 1
Non-Profit Organization
Institution Affiliation
Date
NON-PROFIT ORGANIZATION 2
Non-Profit Organization
The non-profit organization is a business that its revenue is not taxed by the government.
The groups that the impact of taxation acts on are the businesses who are the source of the
donations (Chan, Chau, & Chan, 1997). However, all the information regarding the transactions
of funds is kept public to all involved parties. That is all the donors are able to access the books
of accounts hence able to identify how the funds have been spent. Another source of funds that is
not taxed by the government in the nonprofit organization is funds obtained from fundraising.
Sources of nonprofit organizations funds
The first type of nonprofit organization’s donations is from charitable donors. These
donors are the well-wishers who contribute funds to the organization for a particular purpose.
The second type of source is grants from the government (Chan, Chau, & Chan, 1997). Grants
are funds that are given to these organizations to carry out their operations effectively. The third
type of source of funds is federated funds. These federated are individual non-profit
organizations who come together and fund the main organization. The main aim of this action by
these groups is to support the organization to carry out projects (Chan, Chau, & Chan, 1997).
The fourth source of funds is fiscal sponsors. These are investors who are sought by the
organization so as to fund its operation.
The fifth source of funds for the nonprofit organization is earned income. These are funds
that come from the organization’s mechanisms. Examples of mechanism include retail sale,
property lease, among others (Chan, Chau, & Chan, 1997). The six source is bequest or in other
words gift. It is a donation that is sourced from the will of a person who has died. That is there
are some cases where people may decide to give a proportion of his wealth to the organization
NON-PROFIT ORGANIZATION 3
after his death. The seventh source is corporate giving. The source can either be short termed or
in other instances it might be long-termed. The last source of funds to a nonprofit organization is
Foundations. Foundations can either be private or public and are a regular source of funds (Chan,
Chau, & Chan, 1997). Foundation includes family foundations, corporate foundations, and
community foundations.
How nonprofit organizations diversify revenue streams
One of the ways that nonprofit organization can diversify the source of its funds is
through leasing its land which is not in use or even buildings (Foster, Kim, & Christiansen,
2009). However, engagement to such activities can also result to leakages of the organization's
funds. Examples of leakages include advertisements, modeling, among others (Kearns, 2014). In
case the withdrawals are less than the expected income, the idea is viable. Another way that can
be used to diversify the fund's sources is through a collection of fee-service-programs. There
generally three main fee-for-service programs which include a mandatory fee, voluntary
donations, and the requested fee.
NON-PROFIT ORGANIZATION 4
References
Chan, T., Chau, G., & Chan, D. (1997). Sources of funding and monitoring effects on nonprofit
organizations from an agency perspective.<Asian Review of Accounting, 5(2), 66-77.
10.1108/eb060690
Foster, W. L., Kim, P., & Christiansen, B. (2009). Ten nonprofit funding models.<Stanford Social
Innovation Review, 7(2), 32.
Kearns, K. P., Bell, D., Deem, B., & McShane, L. (2014). How nonprofit leaders evaluate
funding sources: An exploratory study of nonprofit leaders.<Nonprofit and Voluntary
Sector Quarterly, 43(1), 121-143. 10.1177/0899764012458038
