Certified Nonprofit Professional Practice Exam

What is the largest category of income or revenue for nonprofit organizations?

1. Donations

2. Fees for service

3. Grants

4. Membership dues

The correct answer is: Fees for service

Fees for service represent the largest category of income or revenue for nonprofit organizations. This income is generated when nonprofits offer services or products in exchange for payment. It includes a diverse range of activities such as educational programs, consultation services, and community workshops, which can be substantial sources of revenue. Nonprofits often aim to develop these types of revenue streams as they can create more sustainable financial models compared to relying solely on donations or grants, which can be more variable and dependent on external factors. By charging for services, organizations can also ensure they are meeting community needs while generating consistent income to support their missions. The other categories, while important, typically do not encompass as significant a portion of revenue as fees for service. Donations can fluctuate significantly based on donor trends and economic conditions, while grants often come with specific conditions and may not be renewable. Membership dues can provide a dependable income source, but they generally represent a smaller segment of total revenue compared to fees for service.