Non-Profit Sports Sector: Challenges and Opportunities

This article discusses the nature of non-profit sports organizations, their sources of revenue, and the challenges they face in acquiring funds. It also explores the different financial models used by these organizations and highlights the opportunities for growth in the sports sector.

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Introduction
Non-profit sports organizations are those organization that does not have profit creating
objectives. They receive funding from donors for them to remain functional. Their leadership is
voluntary. Although the existence of these organizations is common, most of them tend to move
towards profit making due to the different preferences of the members and also changing
environmental and political climates, that exposes the organizations to several challenges like
lack of adequate funds (Kong 2008, p. 281-299).
Nature of the organizations
Sports organizations which are not focused on achieving profit, but they are aimed at
empowering the young generation by growing their talents and abilities. They mostly occur in
the form of associations. Their major source of income is donor funds. They are also aimed at
growing leadership skills at the community level.
Due to their non-profit oriented nature, these organizations are exempted from tax in many
aspects. Their organization depends on the size, achievements or discipline of a certain
association. Their management is voluntary (Maier, Meyer & Steinbereithner 2016, p. 64-86).
Due to this reason, the approach of their management may be less formal and even affected by
traditions.
The management of non-profit sports organizations is a complex process since it needs to be
dynamic so as to adapt to the changing trends in both the external and internal environment. This
is because the sector is highly affected by upcoming pressures, both internal and external, like
the issue of government intervention. Non-profit sports organizations have been legally

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permitted by various governments to raise revenue through means like fundraising and acquiring
money from donors so they can remain functional (Raz 2012, p. 283).
How the sector spends funds
Non-profit sports organizations divide their revenue into certain percentages according to their
plans. Some amount is shared among the stakeholders. Some are retained in the organization for
various purposes like branding the organization name through advertisements and making
products like shirts for sale to popularize itself. The rest is taken back to the community for
development, for example, they build sports academies where they train children for free so as to
build up their talents (Gillett and Tennent 2018, p.228-259).
Sources of revenue
There are several opportunities for acquiring revenue. One is that they charge some fee for their
services and also sell products. A good example is a public university that has several non-profit
sports clubs. During an event, they will sell tickets to those aiming to attend. The money paid is
an event fee. Likewise, they sell products like sports equipment.
This sector also gets revenue from charitable contributions. Individuals who are fans of a certain
non-profit club will support the team by giving donations. This is very well practiced in
developed countries like the United States (Kolyperas et al. 2016, p. 702-719). The corporate
philanthropy is another revenue source to this sector. Some corporations decide to support the
non-profits sports sector as an act of charity work. Others may decide to fund the sector with
certain business aims, like advertising their products. Example of corporations that fund sports is
banks and the Safaricom company.

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The sector also acquires revenue from the state or local governments. The government supports
many non-profit sports activities, especially those associated with public schools. Another source
of income is the Federated funds. These include the community funds, whereby communities
support non-profit sports activities within their reach. There are public charities that make grants
to support non-profit sports activities (Powell 2019, p. 195-214). These public funding may
receive funds from private foundations, the general public or even the government.
Another source of revenue for this sector are grants from foundations. Foundations are of three
types. These are corporate foundations, family foundations, and community foundations.
Fundraising is another method through which non-profit sports organizations earn revenue. They
do this through activities such as raffles.
Before anyone becomes a member of the organization, they have to pay the membership fee for
registration. This is another way of gaining revenue. Finally, non-profit sports organizations also
levy program fee to get revenue. This is the fee collected from events organized for non-
competitive purposes (Clausen et al. 2018, p. 373-392).
Challenges for revenue acquisition
There are several obstacles to revenue acquisition for this sector. For instance, in 2003, the
National Survey of non-profit and Voluntary Organizations in Canada found out that 161,000
organizations, that were non-profit and voluntary had problems in obtaining revenue. 48% of the
organizations had problems in getting funds from other organizations, especially the government.
20% had problems in acquiring funds from the public (Elson 2009, p. 36-74). The sports sector
was not an exception. One challenge is the ability to grow income. Raising money to increase
income is a challenge for this sector. Some sports clubs draw ideas of developing their income

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streams from the success of other clubs in the sports organization. This is dangerous since it may
not work out as expected, leading to failure of the club as a whole. Another challenge is that the
sources of income from small non-profit sports organizations are of limited income. This has
rendered these organizations into a situation of fighting for their survival.
Most non-profit sports organizations do not have influential impacts on demonstration. Many
donors require facts, as well as figures for them to approve their support. The public is also not
willing to support the organizations if they are not able to perceive the value of the money they
give out. Another challenge is that most non-profit sports organizations find it very hard to
maintain sustainability. Some clubs are there today, and tomorrow they are gone due to financial
constraints. This makes donors and the public to lose confidence in funding such clubs and the
organization as a whole, thus focusing their interests elsewhere (Siliunas, Small & Wallerstein
2019, p. 109-128).
The last challenge is that non-profit sports organizations struggle so much to engage their
donors. Donors need to be kept interested always. They need to be appreciated. If this is not well
done, they lose interest and walk away. Keeping the donors interested is not a simple task for the
organizations. For example, in the2003 report, the sports and recreation organizations of Canada
reported that over 50% of the organizations face serious challenges in acquiring funds, such as a
reduction in government funding and lack of funders’ willingness to give financial support
(MacIntosh, Arellano & Forneris 2016, p. 38-57).
Financial models

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One of the models that non-profit sports organizations use is the heartfelt connector. They ensure
that they have no discrimination towards their fans and even sponsors. They create connections
with their volunteers through fundraising.
Another model is the beneficiary builder. These organizations try to build long-lasting
relationships with people who have gotten an advantage from their services so as to continue
gaining their support. Another model is the member motivator. People who are members of the
organization also give donations to encourage others to give.
Figure 1: An illustration of the funding models for non-profit organizations.
Links

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Sports organizations which are non-profit are excepted from paying income tax because they do
not have profit generating objectives. For example, in the United States, such organizations are
allowed to seek tax exception by applying to the internal revenue service (Hall 2016, p 3-42).
They are able to get revenue from the public due to culture f volunteering. For instance, in
England, there is a strong culture of volunteering. The government lays down policies that allow
the public to express their views and encouraging their participation in sports.
For them to gain government support, these sports organizations have to meet certain
performance conditions as required by the government, which may affect the public as well.
They have to prove their performance. For example, in England, Sport England, a non-profit
sports organization may enter into a contract with the government, for them to receive
government funding and in return give their support to certain government policies. This is well
elaborated in a theory book about volunteers in sport by Routledge Amazon.com (LaVoi, Becker
& Maxwell 2007, p. 7-20).
Opportunities
There are several opportunities for sports to operate as businesses. One is the availability of
adequate reliable data, that is recorded by the organizations. The organizations use this data to
analyze their performance to improve on management and building of an effective team (Troilo
et al. 2016, p. 72-83). Teams in the NBA use this strategy and have gone far. Availability of
smart arenas is another opportunity. These areas are fitted with modern technology like wi-fi,
that helps fans to use their mobiles for entertainment even while walking (Brown, Dickhaus &
Long 2012, p. 149-175).

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Drones will also be used for surveying available parking spaces. A good example is the
Sacramento Kings arena, opened in 2016, that has certain mobile applications for checking in.
The third opportunity is the ability to engage fans at a deeper depth. For instance, savvy leagues
like NBA have partnerships with you-tube, where they post their videos for viewing (Lev-Aretz
2011, p. 137).
The fourth opportunity is the use of technology as a sponsorship, as well as integration. Fans
who are active on social media tend to purchase a certain brand due to its association with a
certain team. The last opportunity is the globalization of teams. This has been accelerated by
technology such as social media, helping to expand markets for sports (Lev-Aretz 2011, p. 137).
.
Conclusion
The field of non-sports organizations is growing at a fast rate although the challenges tend to
increase. As a result, the organizations have come up with measures to sustain themselves, such
as employing more qualified coaches for better performance, even though most of the leadership
is voluntary.

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