Identify Your Income Strategy

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Organizations often waste time and money because they fail to identify a strategy for revenue development. The second step in the revenue development process helps you select a strategy to generate revenue. Most capacity building organizations use one of four income strategies: enhancing an existing revenue source, starting a new revenue source, forming an alliance or partnership to share an organization's revenue sources, or forming an alliance or partnership to acquire in-kind resources. When identifying an income strategy, consider the following questions: Do I build on an existing revenue source? Or, can I "borrow or use" a revenue source from someone else?

Enhance an existing revenue source.

Enhancing an existing revenue source involves applying resources of money, counsel, and time to improve upon one or more revenue sources that already exist within your revenue-generating portfolio. If you have direct mail, you might add a new program to further sort your file of donor names to get a higher yield from certain portions of the file. If you regularly solicit foundation grants, you might add staff or a consultant to bolster research or inquiries, or follow-up on turndowns.

Start a new revenue source.

Starting a new revenue source involves applying people, money, and expertise to initiating and sustaining a new source of income. An organization might start a major gifts or planned giving program, create an institutionally related foundation, start an endowment, or create a sister corporation to launch a business. All of these would be in addition to existing revenue efforts and would therefore require additional resources to implement.

Form a partnership to share an organization's revenue sources.

By entering into an alliance or partnership, your organization can benefit from another organization's monetary source in a way that is beneficial to both entities. The success of a partnership or alliance for sharing revenue sources lies in a well-thought-out plan that is documented within a formal agreement.

Form a partnership with an organization to acquire in-kind resources.

By entering into an alliance or partnership, your organization can benefit from in-kind services by developing an agreement where the value of time and services, materials, space, or other in-kind contributions meet a cost share. As with developing partnerships to share revenue sources, the strength of a partnership or alliance to share in-kind resources depends on the strength of a documented, formal agreement.

Weigh the strengths and weaknesses of each income strategy.

When deciding whether to enhance an existing revenue source, start a new revenue source, or form a partnership to share revenue sources or in-kind resources, you'll need to consider a number of criteria, including:

  • Investments required
  • Risks
  • Organizational culture
  • Staff resources
  • Timelines

After weighing the different strategies and criteria, your organization can prepare to identify an income strategy by prioritizing the criteria that is most important to you.

Click to open interactivity Pick an income strategy that works for your organization.

Pick an income strategy that works for your organization.

Download the Comparison Table

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