Eli5: How do non-profits make money & pay their employees? Recently saw a video on YouTube where this random dude working for a non-profit for homeless, earns upwards of $200k every year. Where’s the money flowing from? Besides donations of course.
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Non-profit does not mean non-revenue. Many do mostly rely on donations but there are different ways to get donations, from simply asking, to holding fund raising events like walks or awards banquets, to reaching out to wealthy potential benefactors. But non-profits can also raise money from grants, from selling merchandise, or even selling services — look at places like a university, hospital, museum that could be pulling in many millions a year in tuition, medical bills, admission fees.
The main thing with a non-profit is that there aren’t shareholder and any leftover funds remains with the organization to further its cause… doing additional work toward the cause (more grants to fund cancer research, more toys for kids at Christmas) or save the funds for leaner years (donations go down in a recession, for example).
And workers at a non-profit can be paid well. They need to attract talent like any other job, and while some may give a “discount” because they believe in the cause, they still need competent people to effectively do jobs, and are limited by lack of stock options and such as additional compensation. They can’t expect a senior executive type to work for $50k if they’d make $250k at a for-profit company.
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