In November, a study by Civic Leadership, an umbrella organization of the nonprofit sector in Israel, revealed that more than 70% of Israeli nonprofits are facing significant financial hardship. About 40% reported a decline in support from government and philanthropic sources and roughly 18% said they were struggling to meet their ongoing financial commitments. This crisis is unfolding precisely when Israeli society needs these organizations more than ever, at a time when welfare, health and education systems are under immense strain and unable to fully meet the growing needs.

These findings highlight how overreliance on philanthropy can leave social organizations vulnerable to forces beyond their control and emphasize the urgent need to build financial stability through diversified income streams. The question of how nonprofits can develop their own sources of revenue, whether commercial, cooperative or innovative, is no longer a distant strategic concern but a pressing, everyday necessity.

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While long-term financial stability is often the primary motivation for developing self-generated income, organizations that embark on this journey quickly discover the many additional and unexpected benefits. 

First and foremost, independent income enables nonprofits to plan for the long term. Philanthropy, by its nature, tends to be short-term. Most foundations provide time-limited grants, while projects designed to create real impact typically require multi-year planning. As a result, nonprofits are often forced to take significant risks on initiatives whose funding beyond the first year is uncertain, leading to interventions that may end before achieving meaningful outcomes. In contrast, self-generated income provides a stable and relatively predictable revenue stream that allows organizations to focus on sustainable solutions rather than constantly chasing short-term grants.

Moreover, substantial self-generated income empowers nonprofits to act according to their own vision and values without being constrained by donor restrictions or foundation priorities. Philanthropy often shies away from funding overhead costs and tends to favor new and innovative projects over continued support for existing ones. By developing paid services, social products or commercial collaborations, nonprofits gain flexibility in setting priorities, determining their pace of growth and shaping their implementation models. When done thoughtfully, initiatives such as paid training programs, community services or content products can create double value by strengthening the organization financially while advancing its social mission.

Paradoxically, nonprofits that succeed in building independent income mechanisms are often perceived, even within the philanthropic world, as being more effective and innovative and hence become more attractive to donors. In other words, organizations that take steps to reduce their dependence on philanthropy often end up raising even more of it.

Over the years, we have accompanied social organizations in building self-generated income streams as a core pillar of long-term sustainability. Time and again, we have seen that financial resilience is not created through new missions, but through a deeper understanding of existing assets and capabilities, and the courage to utilize them strategically.

One nonprofit serving children with visual impairments identified that its building was primarily used during afternoon hours and stood empty the rest of the time. Through a strategic process, the organization developed a long-term rental model with shared equipment usage, transforming an underutilized asset into a meaningful revenue stream that now supports its core social mission.

Another nonprofit, providing speech therapy services and operating an audiology lab for children with hearing impairments, recognized an opportunity to expand its impact while strengthening its financial base. By partnering with health maintenance organizations (HMOs), the organization began renting out lab hours in southern Israel, reducing waiting times for hearing tests. At the same time, it expanded speech therapy services to additional populations beyond deaf children, turning professional expertise into both public value and sustainable income.

In a third case, a nonprofit focused on women’s economic empowerment realized that its strongest asset was its community of program graduates. The organization established a low-cost members’ club offering ongoing training alongside a monthly sponsorship model for businesses targeting women. In return for access to the alumni community, the companies provided both sponsorship and significant discounts to members, creating a win-win model that generates ongoing revenue while reinforcing the organization’s core activities.

There is no doubt that philanthropy will continue to serve as a central pillar of social funding in Israel and across the globe. Yet alongside it, innovative financing models and the development of self-generated income streams have become both a moral and strategic imperatives. Nonprofits that aspire to ensure sustainability, independence and long-term impact must craft a clear strategy to grow their independent revenue streams, blending social mission with entrepreneurial thinking as the key to building a stable, effective and relevant organization for years to come.

Lior Zivan is the vice president of impact and innovation at the SFI Group, which supports nonprofits in creating independent and sustainable funding models.