Quick! What are the largest sources of revenue for nonprofit organizations? The public usually thinks the right answer is charitable giving, and this is certainly where most of the attention goes. But according to the Urban Institute’s Nonprofit Almanac 2008, 50 percent comes from fees for services and goods from private sources, and another 29.4 percent comes from government grants and fees for services. That’s nearly 80 percent of all of our revenue! Private contributions account for only a little more than 12 percent.

I usually focus on the “benefit” side of philanthropy—what can we do and how we can make sure our efforts have the greatest impact. That’s why I have so much interest in measuring the effectiveness of nonprofits—how can nonprofits get better and serve more people?

What do you make of the news from Giving USA about the drop in revenues for the nonprofit sector for 2008? Sean Stannard-Stockton in his blog, Tactical Philanthropy, asks whether we should call the glass half full or half empty: “Charitable Giving Exceeds $300 Billion. Second Highest Level of Giving Ever!” or “Charitable Giving Falls Dramatically. Largest Percentage Drop on Record!”

Last week I spent several days in Columbus, Ohio, at the DonorEdge 2.0 conference. You can find out more about the conference here. DonorEdge is a partnership between GuideStar and a growing number of community foundations committed to the proposition that, armed with better data and tools, donors will make better decisions and nonprofits will be more effective and efficient. Laura McKnight from the Greater Kansas City Foundation blogged about the conference, and we have more information on DonorEdge on the GuideStar site.

Dear Friend:

The IRS posts another set of tips for filers of the new 990, offers guidance on what to tell the IRS if your organization merges with another nonprofit or ceases operations, and announces events for exempt organizations.

The vast majority of U.S. charities are small organizations with annual gross revenues of less than $25,000. The people involved with these nonprofits usually volunteer their time or work for a pittance. Leaders of the remaining organizations, however, need to examine their compensation-setting processes carefully to ensure that they are following best practices.

There has never been a better time to explore alternate fundraising opportunities. The exciting thing is that there are a lot out there, including Web 2.0 strategies, and the possibilities are only limited by your imagination—not your resources.

The Chronicle of Philanthropy reports that U.S. charities raised $1.4 billion on-line in 2008, a 22 percent increase over the amount raised via cyberspace in 2007. Ten charities each raised $25 million or more, and three raised more than $100 million: the Fidelity Charitable Gift Fund brought in $409 million on-line, the United Way of America $245 million, and the American Cancer Society $101 million.

These results are phenomenal, yet true! It's also worth noting that between 7 percent and 12 percent of the U.S. population donates on-line, reaching $6 billion by 2006. Here are a few ideas on how to raise funds using new on-line tools.

Those three words say it all. In these uncertain times, nonprofits are asking, "What do we do now? How do we survive, manage, or even thrive in this economy?" I've spent this week calling about 50 CEOs from some of the groups in our Five-Year Sustainable Funding Program. I called to listen, to see how each group was faring, how their fundraising was going, what more they might need. Granted, their teams have had the benefit of our training and coaching, some for several years. What I heard was heartening.

A major step in transparency is unfolding in the nonprofit world. The vehicle delivering this change is the newly revised IRS Form 990, "Return of Organization Exempt from Income Tax," which nonprofit organizations have begun filing for the 2008 tax year. The impact that the increased transparency will have on nonprofit organizations has been severely underestimated. It is not sufficient for nonprofit staff and board members simply to be made aware of these changes. They must also be alert to the changes' strategic implications and have tools to manage them successfully. If prepared, nonprofit organizations can capitalize on the opportunities created by the increased transparency. If unprepared, they may be unnecessarily subjected to potentially damaging external risks. The key to strategic use of the new reporting requirements lies in nonprofit organizations' governance practices.

Smithsonian: