As a nonprofit organization you have to be resourceful to meet the budget needs for your program. Make sure you consider the following:

Fee For Services

Don’t be afraid to charge a fee to your clients. Clients need to show some level of commitment on their part for getting the service they receive; otherwise, your service will not be valued!

It is important to note that if you apply for foundation monies foundations will ask if your board of directors personally contribute to your organization.  They will also ask if the community you represent is supporting your cause and if the clients you serve and their families are doing their fair share as well. This may mean you have to establish a sliding fee scale or require so many hours of volunteer service. The most important part of having a fee for the service you offer is being consistent and fair to all parties involved.

Fundraising:

The main responsibility of a board of directors of a nonprofit is to ensure that the organization has the resources it needs to carry out the mission of the organization. However, with that said, this does not mean that the staff of the organization is in any way exempt from helping raise money for the organization. The truth of the matter is that fundraising should be seen as a  joint responsibility with both the board of directors other volunteers and paid staff all participating.

Determining what type of fundraiser works for you is not always easy. It helps to annually look at each planned fundraising opportunity as objectively as possible weighing the time and manpower needed and how much is actually raised in the process. It is not uncommon for  nonprofits get in a rut and do the same fundraiser time after time even when the activity is less than effective.  

Can Nonprofits Establish A Separate Business That Makes A Profit?

In short, the answer is yes, but you would need to investigate further with your own CPA and attorney before moving forward.

How to determine if a for-profit subsidiary can benefit your organization
http://www.kdv.com/industries/nonprofit/index.asp

Unrelated Business Income:

Even though an organization is tax exempt, it still may be liable for tax on its unrelated business income. Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the performance by the organization of its exempt purpose or function except that the organization needs the profits derived from this activity. An exempt organization that has $1,000 or more gross income from an unrelated business must file Form 990-T, http://www.irs.ustreas.gov/pub/irs-pdf/f990t.pdf Exempt Organization Business Income Tax Return. For additional information, see the Form 990-T instructions http://www.irs.ustreas.gov/pub/irs-pdf/i990t.pdf 

For additional information go to: Unrelated Business Income Tax - General Rules

Example of a sustained organization:

Pioneer Human Services- http://www.pioneerhumanservices.org/
7440 W. Marginal Way S.
Seattle, WA 98108
Phone (206) 768-1990 Fax (206) 768-8910

Serves over 6,000 client customers a year and 1,900 individuals at any given time, in its employment/training, behavioral health and community corrections programs; employs approximately 700 staff; and operates with an annual budget of approximately $55 million, most of which is earned through products and services.

DISCLAIMER: This information is not intended to provide legal or accounting advice,
or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.