What is meant by “program revenue” for nonprofits?

Program revenue for nonprofits refers specifically to the income generated from activities directly associated with providing the services or programs offered by the organization. This type of revenue is essential because it supports the mission of the nonprofit and reflects its operational effectiveness in delivering services. For example, if a nonprofit organization runs a community health program, the fees collected for participating in health services or wellness workshops would qualify as program revenue.

This distinction is crucial in nonprofit accounting, as program revenue provides insight into how well the organization is utilizing its resources to fulfill its purpose. It showcases the financial sustainability of the programs and their reliance on fees or payments for services rendered, rather than solely depending on donations or fundraising efforts. Understanding this concept helps nonprofits strategically plan and enhance their service delivery while ensuring they remain accountable for the funds generated through their programs.