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This is an archived post from our old blog. It's here for the sake of posterity (and to keep the search engines happy). Our new blog can be found at

Reason #376 to Prefer Earned Income to Contributed

My love of earned revenue for non-profit organizations is hardly a secret. Mostly I've made the argument that earned revenue aligns your mission with your business, since the same people who are "consuming" your services are also paying for the. This isn't always possible in practice, but when it is, the affect is powerful.

Anyhow, Doug McLennan of Diacritical makes his own case for earned revenue here:

Give an arts organization $1000 and they'll put your name in the program. Buy $1000 worth of tickets and they'll tell you that the cost of your ticket only covered 55 percent (or 40 percent or 30 percent) of the cost of you being there. Then a few months later, long after the performance, they try to hit you up for more money. Gee thanks.

Maybe this is backwards. Who's the more valuable member of your community? The person who gives you money but otherwise doesn't have much to do with you, or the person who buys tickets and shows up for every performance?

McLennan's conclusion is that the ticket buyer is much more valuable in the long run because (s)he's likely to generate positive word-of-mouth for the organization. Of course, donors can also generate word-of-mouth, but in practice it's rarely anywhere near as persuasive as a positive review from an actual audience member.