What Are Charitable Enterprises?

What are you looking for?

• What is a “charitable enterprise” and how is it different from regular fundraising?
• When does selling a product make more sense than making a direct ask?
• How do I evaluate whether my bake sale, raffle, or product sale is actually worth the effort?

A Bake Sale by Any Other Name

What is a charitable enterprise? Bake sales. Pancake breakfasts. Trappist beer. T-shirt sales. Rummage sales. Raffles. Egg roll sales (a perennial favorite in my parish and my house). These are the kinds of “fundraisers” that most people think of first when they start talking about raising money.

Rather than calling this fundraising, I prefer to call these “charitable enterprises.” Why? Because the mechanics are fundamentally different from what professional fundraisers mean when they talk about fundraising.

With every example above, you are selling some thing that has a cost attached to it. The difference between that cost and what you charge is your profit — or what you have “fundraised.” Each one of those enterprises is like a little business that will hopefully end up making more money than it cost to operate.

That distinction matters. A charitable enterprise generates revenue through commerce. Fundraising — in the professional sense — generates revenue through philanthropy. Both put money in your organization’s account, but they work differently, they scale differently, and they require different skills.

The Landscape of Charitable Enterprises

Charitable enterprises come in more flavors than most people realize. Here’s a quick taxonomy:

• Food-based events. Bake sales, pancake breakfasts, spaghetti dinners, fish fries, chili cook-offs, parish egg roll sales. These are the most common charitable enterprises in church and small nonprofit settings. They’re social, they’re familiar, and people understand them immediately.

• Product sales. T-shirts, candles, wrapping paper, cookie dough, Girl Scout cookies, monastery preserves, Christmas ornaments. The organization buys (or produces) a product at wholesale and sells it at retail markup. School fundraisers lean heavily on this model.

• Resale operations. Thrift stores, rummage sales, used book sales, clothes closets. These enterprises take donated goods and sell them. Goodwill, Salvation Army, and St. Vincent de Paul Society have built nationally recognized brands on this model.

• Games and chance. Raffles, 50/50 drawings, casino nights, bingo. These enterprises sell the chance to win something, with the house keeping the margin. They can be lucrative but carry legal requirements that vary by state.

• Service-based enterprises. Car washes, yard cleanups, babysitting nights. These trade labor for revenue. They’re common in youth group fundraising and tend to generate modest returns relative to the effort involved.

• Recurring retail. This is the most sophisticated version — an ongoing storefront or online shop that operates year-round. Monastery gift shops, hospital auxiliary thrift stores, and museum shops fall into this category. These require real business management but can generate substantial, predictable revenue.

Each of these has different economics, different labor demands, and different potential for mission alignment. The important thing is to understand which category yours falls into, because the evaluation criteria differ.

Indirect vs. Direct

I’ve heard charitable enterprises referred to as “indirect fundraising” as compared with “direct fundraising.” This is a useful distinction.

Indirect fundraising focuses on selling a product or experience that will provide funding. The donor receives something tangible in return — a plate of pancakes, a raffle ticket, a jar of monastery honey. The transaction feels commercial, even though the profit supports a charitable purpose.

Direct fundraising focuses on selling the mission of the organization. The donor gives because they believe in what you’re doing. The “return” is the knowledge that they’re making a difference. There’s no product changing hands — just a compelling case for support and an invitation to participate.

Both approaches have a place. The trouble starts when an organization defaults to indirect fundraising without examining why.

Why People Choose the Enterprise Route

Often, people choose a charitable enterprise model because they are embarrassed to ask people to support their mission. They think fundraising is begging and that it is beneath them. Or they’re just afraid. So they feel safer offering an item for sale because it makes any rejection less personal. A “no” to a box of egg rolls is not a “no” to you or to your mission. It softens the blow.

I understand that instinct. Nobody enjoys rejection. But if discomfort with asking is the primary reason you’re running a bake sale instead of making a direct appeal, that’s worth examining honestly. You may be leaving significant money on the table — and more importantly, you may be depriving your supporters of the chance to participate in something they genuinely care about.

People want to give to causes that matter to them. When you replace “Will you help us feed hungry families?” with “Would you like to buy a brownie?”, you’ve lowered the stakes — but you’ve also lowered the meaning.

That said, there are excellent reasons to run charitable enterprises that have nothing to do with avoiding the ask. Let’s talk about those.

When Enterprises Make Strategic Sense

A charitable enterprise earns its place when it does more than generate revenue. The best ones serve at least two or three of these purposes simultaneously:

Mission alignment. When the enterprise itself advances your mission, you’ve found something worth doing. A thrift store attached to a food pantry serves clients who need affordable clothing. A job training program that sells the products its participants make is doing mission work and generating revenue. The enterprise isn’t a detour from the mission — it’s an expression of it.

Community building. Some enterprises create gathering points that strengthen your community in ways a direct mail appeal never could. The parish pancake breakfast after Sunday Mass isn’t really about pancakes. It’s about fellowship. It gives people a low-pressure reason to linger, to meet someone new, to feel like they belong. That sense of belonging is what turns occasional attendees into committed supporters.

Awareness and foot traffic. A well-run enterprise can introduce your organization to people who might never otherwise encounter your mission. Goodwill Industries is the textbook example — millions of Americans shop at Goodwill stores without thinking deeply about the job training programs those stores fund. But the storefront creates visibility. It puts the brand in the community. And a percentage of those shoppers eventually become donors, volunteers, or advocates.

Leveraging available resources. Sometimes you have access to something valuable that costs you little or nothing. A monastery with brothers who brew beer. A parish with legendary egg roll makers. A food bank with a commercial kitchen that sits idle on weekends. When you can turn an existing resource into revenue without significant new investment, a charitable enterprise can be a smart use of what you already have.

The Monastery Model

One place where you consistently find successful charitable enterprises is in religious life. The Benedictine charism of Ora et labora — prayer and work — has produced some of the most enduring enterprises in the nonprofit world: Trappist beer (Chimay, Orval, Spencer), monastery cheeses, fruit preserves, coffins, even dog biscuits.

These enterprises work exceptionally well for a specific reason: the cost of labor is absorbed by those living the monastic life. A brother who spends his morning brewing beer is not drawing a salary. His housing, food, and healthcare are provided by the community. That dramatically changes the economics of the enterprise.

Most parish and nonprofit operations don’t have this advantage. Your volunteer labor might approximate it for short bursts — the Saturday of the rummage sale, the evening of the pancake supper — but you can’t sustain it the way a monastery can. Keep that in mind when you look at monastic enterprises and think, “We should do that.” The model works because of structural conditions that are hard to replicate.

The ROI Reality Check

Here’s where charitable enterprises often fall apart: the math.

A typical bake sale at a parish or small nonprofit might gross $500-$1,500 on a good day. Subtract the cost of ingredients (even if donated, those donations had value), supplies, and the opportunity cost of the volunteer hours that went into baking, setup, and cleanup. Your actual return might be $300-$800. For a Saturday’s worth of work from a dozen volunteers, that’s a modest haul.

Now compare that to a well-crafted appeal letter sent to 200 households in your database. Cost of postage and printing: maybe $200. A reasonable response rate of 10-15% with an average gift of $75-$100 gives you $1,500-$3,000 in net revenue. One person writes the letter. One person stuffs envelopes (or you use a mail house). The ROI isn’t even close.

Raffles can do better — a well-organized raffle with donated prizes and strong ticket sales can net $5,000-$20,000 depending on your community’s size and the prizes involved. But raffles also carry legal complexity (more on that below) and still require significant volunteer coordination.

Rummage sales occupy interesting middle ground. A well-organized rummage sale with good donated inventory and strong community turnout can net $2,000-$5,000 in a weekend, and your cost of goods is essentially zero since everything was donated. The labor is still significant — sorting, pricing, displaying, and cleaning up after a rummage sale is genuinely exhausting work — but the margins are better because you’re not buying inventory.

The point isn’t that charitable enterprises are always a bad deal. The point is that you should know the numbers. If your annual bake sale nets $400 and consumes 200 volunteer hours, that’s $2 per volunteer hour. Those same volunteers, trained to make phone calls for your annual fund, might generate twenty times that amount.

When Enterprises Don’t Make Sense

Be honest with yourself about whether your charitable enterprise is serving your mission or just filling a comfortable role in your organizational routine. Enterprises deserve scrutiny when:

• The primary motivation is avoiding the direct ask. If you’re running a product sale because nobody on your board wants to ask for donations, you have a board development problem, not a fundraising strategy.

• The ROI is poor and declining. Many enterprises coast on nostalgia. “We’ve always done the spaghetti dinner.” That’s not a strategy. If your net revenue has been flat or shrinking for three years, it’s time for an honest evaluation.

• Volunteer burnout is accumulating. Enterprises are labor-intensive. If the same eight people are doing all the work every year and they’re getting tired, you’re burning through your most valuable resource — committed volunteers — for a modest financial return. Those volunteers won’t burn out once. They’ll burn out permanently.

• It’s cannibalizing your direct fundraising. This is subtler but real. If your supporters think of themselves as “customers” of your bake sale rather than “donors” to your mission, you may have trained them into a transactional relationship that limits their giving. The person who spends $20 at your rummage sale may feel they’ve “done their part” for the year — even though they might have given $200 to a compelling annual fund appeal.

How to Evaluate Your Enterprise

If you’re running a charitable enterprise and wondering whether it’s worth continuing, here’s a simple framework:

1. Calculate true net revenue. Include all costs — materials, supplies, facility use, marketing, and a reasonable estimate of volunteer hours at your local minimum wage. That last part stings, but it tells you what those hours are really worth.

2. Compare against alternatives. What else could those volunteers be doing? What else could that facility time, that marketing energy, that leadership attention be used for? If a direct mail campaign or a small donor cultivation event would generate more net revenue with less effort, that’s important information.

3. Assess mission alignment. Does the enterprise connect to your mission in a way your community can see and feel? A food bank running a community kitchen fundraiser dinner makes intuitive sense. A food bank selling candles does not.

4. Check the trend line. Is revenue growing, flat, or declining? Are volunteer hours increasing while revenue stays the same? Three years of data tells you more than one year’s snapshot.

5. Ask your volunteers. Not “Do you want to keep doing this?” (loyalty will always say yes) but “If we had this same Saturday free, what would you most want to do for our mission?” You might be surprised by the answers.

Tax and Legal Considerations

A few things to be aware of — and I want to be clear that this is general guidance, not legal advice. Talk to your accountant or attorney about your specific situation.

Unrelated Business Income Tax (UBIT). If your nonprofit regularly conducts a trade or business that isn’t substantially related to your tax-exempt purpose, the income from that activity may be subject to UBIT. A food bank selling food-related products is probably fine. A food bank operating a car wash every weekend is in murkier territory. The IRS looks at whether the activity is regularly carried on and whether it’s substantially related to your exempt purpose.

State raffle and gaming laws. Raffles are regulated at the state level, and the rules vary enormously. Some states require a gaming license. Some limit prize values. Some prohibit raffles entirely for certain types of organizations. Before you print those raffle tickets, check your state’s requirements. Your state attorney general’s office or your state association of nonprofits can point you in the right direction.

Sales tax. In many states, nonprofits are exempt from sales tax on items sold in connection with fundraising — but the exemptions have limits. Some states cap the number of tax-exempt sale days per year. Others exempt only certain types of organizations. Again, check your state’s rules.

Donor acknowledgment. When someone buys a $50 raffle ticket or a $25 plate at your gala dinner, the tax-deductible portion of that payment is only the amount that exceeds the fair market value of what they received. If the dinner plate costs you $15 to provide, the deductible portion is $10. You’re required to provide a written acknowledgment stating this for any payment over $75 where goods or services were provided in return.

The Hybrid Model

The smartest organizations don’t choose between charitable enterprises and direct fundraising — they combine them.

Here’s what this looks like in practice: You run your parish egg roll sale, but you don’t just sell egg rolls. At the checkout table, you have a simple card that says, “The egg roll sale supports our food pantry, which served 450 families last month. If you’d like to make an additional gift to help us serve more, you can do so here.” A QR code links to your online giving page.

You’ve just turned a $10 egg roll transaction into a $10 egg roll transaction plus a potential $50 gift. The enterprise created the touchpoint. The direct ask created the philanthropy.

This works because the enterprise has already done something powerful: it got the person in the door, engaged with your community, and feeling good about your organization. That’s the perfect moment to deepen the relationship with a direct appeal.

Other hybrid approaches:

• Rummage sale with a mission wall. Set up a display showing photos and stories from your programs. Let people see what their purchases support while they browse.

• Product sales with a giving tier. “Buy a jar of honey for $12, or sponsor a jar for a family in need for $20.” Same product, but the second option is philanthropy dressed in enterprise clothing.

• Event enterprises with cultivation built in. Your pancake breakfast isn’t just breakfast — it’s a chance for your executive director to stand up for two minutes and share a story about impact. Next month’s direct mail lands in a mailbox that already feels warm toward your organization.

The enterprise creates proximity. The direct ask inspires generosity. Together, they’re more powerful than either one alone.

Getting Started (or Starting Over)

If you’re launching a new charitable enterprise, start small and measure everything. Run a pilot. Track your costs honestly. See whether the community responds. Scale what works; cut what doesn’t.

If you’re inheriting an enterprise that’s been running on autopilot for years, do the evaluation framework above before the next cycle. You might discover it’s a hidden gem that just needs better marketing. Or you might discover it’s a beloved tradition that costs more than it raises — and that’s a conversation worth having with your board.

Either way, go in with your eyes open. A charitable enterprise is a tool. Like any tool, it works beautifully when applied to the right job and poorly when forced into the wrong one.

One more thing. If you do decide to wind down an enterprise that isn’t performing, handle it with care. The volunteers who’ve been making egg rolls for fifteen years aren’t wrong for loving that tradition. Thank them genuinely, honor what they’ve built, and — if possible — redirect their energy toward something that uses their gifts in a way that serves the mission even better. The people are always more important than the program.

Related Articles

Looking for more on charitable enterprises and special events? Try these:

• How do I set up a “Clothes Closet” ministry?
• What do I need to run a silent auction?
• How do I run a raffle?
• What is a rummage sale? How do I run one?
• What is product marketing fundraising?
• Can you raise money with service projects?

Check out The Fundraiser’s Playbook for the full library.