Revenue Generation
Who is Responsible for Generating Revenue?
Revenue generation is the process by which the organization secures funds for its operations.
As an organization matures, the ESC believes that both the staff and the board must function together in an effective manner, with a joint responsibility to generate the revenues necessary for the organization to succeed. The board must assume responsibility for generating revenue necessary to carry out the mission of the organization. Eventually, there must be a fundraising committee of the board (commonly known as the development committee) and a staff member (other than the executive director) who fills the position of development director.
Unearned and Earned Income
Every organization should be familiar with the five major categories that comprise unearned operating income. The list below is in ascending order of complexity; i.e., even the smallest organizations must raise funds annually to survive, and as they grow in fundraising ability, they should consider taking on the next category. Eventually, every organization should seek income from all five categories.
- Annual Fundraising Every organization must organize an annual fundraising drive. Creation and distribution of the annual fundraising letter is usually accomplished by the staff.
- Major Gifts Major gifts (at least $1,000) are gifts from individuals solicitated by the proper person representing the organization. Solicitation is by personal contact and is best done by board members because of their contacts in the community.
- Special Events These parties, dinners, or auctions for large groups of people, who are interested in the organization but equally interested in attending an enjoyable event, require a great deal of work by a committee of volunteers who enjoy putting them on.
- Grants Foundations and government agencies give sizeable amounts of money to organizations. The grant-writing process is time-consuming and can be expensive, but the amount of money received from a successful grant can be substantial.
- Corporate Sponsors Sponsors range from local businesses to large national corporations. Normally only well established large organizations can arrange sponsorships.
Two categories of unearned income are not concerned with generating operating revenue:
- Capital Campaigns Campaigns to secure funds for facilities in which to conduct operations must be planned over a period of 3 - 5 years and conducted over a period of 1 - 3 years, involving professional consultants other than ESC.
- Endowment An endowment ensures long term viability. Organizations with a large donor base, who have been in existence for many years, could undertake to raise an endowment.
Earned income is income earned when the organization provides programs, services, or products for which a fee is charged, such as tuition for schools and tickets for performances. This category is unique to each organization, but one that most organizations overlook.
Deliverables
The ESC gives workshops about revenue generation, including one on fundraising and another on grant writing. There are many excellent reference books and websites on the internet that treat unearned income in detail. ESC will conduct brainstorming sessions about possible sources of earned income and can evaluate whether an organization is ready to conduct a capital campaign. ESC will also conduct fundraising sessions with your board and staff to accomplish understanding and commitment to necessary roles and responsibilities related to revenue generation.