Yes, Nonprofits Can Make Money — Here’s How to Do It Right

Not long ago, I was speaking with a nonprofit leader who said, “We can’t make money—we’re a nonprofit.”
This is one of the most common misconceptions in the sector. The truth is: nonprofits can generate revenue. In fact, creating sustainable, mission-driven revenue is often the key to long-term stability.

The challenge is knowing how to do it in a way that supports your mission and follows CRA nonprofit rules.

Why Nonprofits Should Generate Revenue

Relying only on grants and donations can leave your organization vulnerable. Funders change priorities, donors come and go, and government funding can shift overnight. A steady earned revenue stream helps you:

Smooth out cash flow between funding cycles.

Reduce reliance on one or two major funders.

Invest in programs and staff without scrambling for new grants.

Demonstrate financial sustainability to boards, funders, and partners.

Revenue is not the enemy of your nonprofit—it’s a tool to help you achieve your mission.

What CRA Says About Nonprofit Revenue

The CRA does not forbid nonprofits or registered charities from earning income. What they care about is how the money is earned and used.

Here are the key points based on CRA nonprofit rules:

Primary Purpose Test: Any revenue-generating activity must be connected to your charitable or nonprofit purpose.

Destination of Profits Test: Surpluses must be reinvested into the organization—funding your programs, building capacity, or supporting the community.

Related Business Rule (for registered charities): Charities can operate a “related business,” which is either directly connected to their purpose (e.g., a museum gift shop) or substantially run by volunteers (e.g., a church bake sale).

Unrelated Businesses: Activities that have nothing to do with your mission (e.g., a healthcare nonprofit running a car wash company) may put your status at risk.

Examples of Mission-Aligned Revenue

Seeing real examples can help spark ideas:

Eden Food for Change turned its community kitchen into a social enterprise. The kitchen now produces meals for schools and businesses and hosts corporate team-building events. The revenue funds free cooking programs and food-security initiatives.

Thrive Select Thrift by Big Brothers Big Sisters of Ottawa runs a thrift store that sells high-quality, secondhand items. The proceeds directly support youth mentoring programs, while also promoting environmental sustainability through reuse.

Ottawa Community Land Trust uses community bonds to raise funds for affordable housing and land preservation. Investors earn a modest return, and the organization secures long-term, mission-aligned assets.

Connected Canadians partners with large companies like Rogers to deliver digital-literacy training. These partnerships create a stable revenue stream while expanding access to technology for seniors and newcomers.

Automotive Industries Association of Canada (AIA Canada) offers paid training and certification programs for automotive professionals. The fees generate non-dues revenue and help raise industry standards—benefiting both members and the sector as a whole.

In each case, the activity ties back to the organization’s mission and strengthens its impact—exactly the kind of approach CRA nonprofit rules are designed to support.

Staying Compliant: Practical Steps

If you’re exploring revenue generation, here’s how to keep it compliant and safe:

Map the Connection: Document how the activity advances your mission. This helps explain it to your board, funders, and the CRA.

Check Your Governing Documents: Review your bylaws and incorporation documents to confirm revenue-generating activities are allowed.

Separate Tracking: Maintain clear records of earned income and related expenses. This protects you during audits and helps assess financial performance.

Reinvest Surpluses: Always direct extra funds back into programs, services, or capacity building—not into private pockets.

Consult Experts: If you’re unsure, seek advice from nonprofit finance professionals or review CRA’s published guidance on related businesses.

The Bottom Line

Being a nonprofit doesn’t mean you can’t generate revenue—it means you have to do it responsibly. When your revenue is mission-aligned and compliant with CRA nonprofit rules, it becomes a powerful way to strengthen your organization, serve your community, and reduce dependency on unpredictable funding.

The question isn’t “Can a nonprofit make money?” The real question is “How can we earn revenue that supports our mission and builds long-term sustainability?”

Frequently Asked Questions

Can nonprofits make money in Canada?

Yes. Nonprofits and registered charities can generate revenue as long as the income is used to support their mission. According to CRA nonprofit rules, any profits must be reinvested into the organization and not distributed to individuals.

What are CRA nonprofit rules about running a business?
CRA nonprofit rules allow charities to operate a “related business”—activities that are either directly tied to the mission (like a museum gift shop) or substantially run by volunteers (like a church bake sale). Unrelated businesses, however, could put charitable status at risk.

How can nonprofits stay compliant with CRA nonprofit rules?

To stay compliant, nonprofits should: