Disclaimer: The information provided on this page is for educational purposes only and should not be considered professional or personalized financial advice. Every individual’s financial situation is unique, and it is important to consult with a qualified financial advisor or tax professional before making any financial decisions.
Yes! – Nonprofits can sell products as a way to generate revenue to support their mission and fund activities. As long as they adhere to the few regulations (that are specific to nonprofits who sell products), the advantages and overall benefits of product sales can be really impactful. The key is to make sure that all of the products being sold are closely aligned with the nonprofit’s mission and resonate with its target audience.
For example, an environmental nonprofit might sell reusable water bottles or eco-friendly t-shirts to promote sustainability. Or a nonprofit focused on education might sell books, educational materials, or training courses to empower knowledge seekers.
Let’s learn more about the rules and regulations surrounding nonprofit product sales, and then let’s take a closer look at some of the incredible benefits.
Regulations for Nonprofits Selling Products
- Unrelated Business Income Tax (UBIT): If a nonprofit sells products that aren’t directly related to its mission, it may be subject to a tax called the Unrelated Business Income Tax (UBIT). This tax could reduce the overall profit the nonprofit makes from selling products. To avoid any surprises, it’s a good idea for nonprofits to consider whether their product sales align with their mission first before launching sales and to seek guidance from a tax professional if needed.
- Sales tax: Nonprofits are usually exempt from paying sales tax on purchases made for their ‘tax-exempt purpose’. However, if a nonprofit sells products, it may need to collect and pay sales tax on those sales, depending on the laws of their state and local area. It’s important to research the rules in your area to be sure you’re following them.
- Charitable solicitation laws: When nonprofits sell products as part of their fundraising efforts, they may need to follow charitable solicitation laws. These laws vary by state and may require nonprofits to register with the state and provide certain information to donors, such as how much of the funds raised will be used for the nonprofit’s programs and services. While it may seem like a lot to keep track of, these laws are designed to ensure transparency between nonprofits and their supporters.
- Product liability: Nonprofits that sell products will need to be aware of product liability laws. These laws protect consumers and hold organizations accountable if their products are found to be defective or harmful. It’s important for nonprofits to ensure that their products are safe and of high quality, not just for legal reasons but also to maintain the trust and satisfaction of their customers. By being mindful of product liability, nonprofits can continue providing great products and services while also keeping their supporters happy and safe.
- Commerciality: While nonprofits are allowed to engage in some commercial activity, it’s good to be mindful of how much is too much. Nonprofits that stray too far from their mission and generate too much revenue from unrelated activities may risk losing their tax-exempt status. We know it can be tempting to pursue every opportunity to raise funds, but it’s important for nonprofits to stay true to their mission and focus on activities that align with their values and goals. By doing so, nonprofits can continue making a positive impact and stay in good standing with the government.
How Your Nonprofit Could Benefit From Selling Merch
Now that you’re familiar with the list of restrictions for nonprofits selling products, let’s dive into the list of benefits your nonprofit could experience by selling custom merch!
Generate Additional Revenue
For many nonprofits, fundraising is a constant struggle. By selling custom merchandise, organizations can open up new revenue streams that can help fund their programs and services. Selling merch can also be a great way to diversify your fundraising portfolio and help you be less reliant on one-time big donations or grants.
Raise More Money With Bonfire
When you sell merch on Bonfire, you’ll receive 100% of the profits from each sale, and you can set your own prices so you can ensure you’re getting the best return possible from every item you sell. You can also turn on additional donations for a campaign so users can make extra contributions at checkout!
Increase Brand Awareness and Visibility
Merch is a powerful branding tool that can help you spread awareness about your organization and its mission. When supporters wear or use your merch, they become walking billboards for your cause! This can be a great way to attract new supporters who may not have heard of your organization before.
Encourage Community Engagement
Selling custom merch can be a great way to engage your community and foster a sense of belonging among your supporters. When supporters feel a sense of ownership over your organization’s brand and mission, they’re more likely to get involved and advocate for your cause!
Our blog is full of comprehensive guides that can help your nonprofit effectively market your fundraising campaign and engage with your community. We cover everything from How to Use Your Email Newsletter to Promote Your Campaign to How to Promote Your T-Shirt Campaign on Instagram, and so much more!
Provide a Tangible Way to Support a Cause
There are lots of people out there who want to support nonprofit causes but may not have the time or resources to volunteer or donate. By selling merch, nonprofits can offer supporters a tangible way to support their cause and (bonus!) show their support in a visible way!
Create Opportunities for Partnerships
Selling merch can also create opportunities for partnerships with other businesses or organizations. By partnering with like-minded companies or brands, nonprofits can amplify their message and even reach new audiences. Partnerships can also provide opportunities for cross-promotion and co-branded merchandise, which helps both parties increase visibility and revenue. Win-win!
Choosing the Best Custom Merch Platform for Your Nonprofit
Now that you’re ready to make merch for your nonprofit, let’s discuss the top things you should consider when choosing which custom merch platform you’ll use.
One of the most important factors to consider when choosing an online custom merch platform is cost. Nonprofits should consider not only the price of the platform itself but also any additional fees, such as processing or shipping costs. It’s also important to consider the profit margins offered by the platform – will you be able to make a significant profit from your merchandise sales?
Bonfire’s platform is free to use and requires no upfront costs! This makes Bonfire an excellent choice for nonprofits who are looking for cost-friendly online merch platforms!
Easy to Use
Nonprofits should choose a platform that is easy to navigate and use, both for the organization and for their supporters who will be purchasing merchandise. This can include things like the ability to create custom designs, the flexibility of the platform, and the availability of customer support.
Nonprofits should also consider the integration options available with a custom merch platform. Ideally, the platform should be able to integrate seamlessly with your organization’s existing website or social media channels, as well as any fundraising or CRM software (a platform that connects your different departments into one cohesive system) that you may be using.
Bonfire offers a YouTube Merch Shelf integration that enables you to sell merch directly on your YouTube channel and a Linktree integration that lets you add your store and products directly in your profile.
Bonfire also makes it easy for your supporters to launch peer-to-peer t-shirt fundraisers through our Giving Campaigns. We’ve built a suite of integrations with the top fundraising platforms, such as Classy and BlackBaud TeamRaiser, to allow for seamless p2p t-shirt fundraisers to be launched on behalf of your organization. Choosing a merch platform that can extend beyond your own nonprofit merch is a great way to set your organization up for success – both now and in the future.
One of the most important aspects to look for when choosing a platform is the availability of nonprofit-friendly features. These features can make a significant difference in maximizing your fundraising efforts and creating a seamless experience for both you and your supporters.
Some nonprofit-friendly features include:
- Customizable pricing
- Generous profit sharing (a substantial percentage of the profits from merch sales goes directly to your nonprofit)
- Additional donation options
- Supporter contact management
- Reporting and analytics
Nonprofit Features on Bonfire
Bonfire offers a full suite of features that were designed specifically to help nonprofits raise more money and connect with their community through custom apparel.
Reduced Donation Fees: Once your nonprofit is verified, all of your processing fees are significantly reduced from 8% to 3.5%.
Verified Nonprofit Badge: A green heart with a checkmark will appear next to your org name on your org page and campaign page. This is a symbol of trust that lets your supporters know their money will directly benefit your organization.
Customizable Organization Profile Pages: Your organization’s official profile page is your nonprofit’s home to tell your story, highlight active campaigns, and show off your fundraising stats.
Downloadable Supporter List: You have the option to effortlessly export the contact details of your supporters from all your connected campaigns – in a user-friendly .CSV format.
While nonprofits do, in fact, face certain restrictions when selling products like custom merch, the potential benefits are truly remarkable. Not only does selling products provide additional revenue to support your nonprofit’s mission, but it also fosters community engagement, raises awareness, and amplifies your cause.
By navigating the restrictions thoughtfully and harnessing the power of custom merch, nonprofits can unlock a world of possibilities – fueling their impact and creating lasting change.
Ready to start selling your own custom merch?
Launch a Bonfire apparel fundraiser for your nonprofit today!
Written by: Hayden Ireland / Content Specialist
Illustrated by: Madison Summers / Lead Marketing Designer