What does the term “earned revenue” refer to in nonprofit organizations?

The term “earned revenue” in nonprofit organizations refers specifically to revenue generated from providing services or goods beyond donor restrictions. This type of revenue is typically obtained through activities that are part of the organization's mission and can include fees for services rendered, selling goods, or other income-producing activities. Unlike contributions, which may be restricted by donors for specific purposes, earned revenue arises from transactional exchanges where the organization provides a service or product directly to customers or clients. This distinction is essential because it indicates that the revenue is derived from operational activities rather than funding or donations, allowing the organization to sustain and potentially expand its services without relying solely on philanthropic support.