Improving the financial sustainability of nonprofit organizations through tourism‐related activities

Abstract

One of the greatest problems facing nonprofit organizations (NPOs) is the lack of funding, which directly jeopardises their work. NPOs working in tourist destinations have the opportunity of satisfying this need through tourism, by linking the objectives of their own activities to the objectives of tourist destinations. This article aims to establish whether NPOs working in tourism have capitalised on tourism as a means for increasing their own income. In other words, do NPOs that more frequently conduct tourism‐related activities have a higher level of financial sustainability, reflected in a higher share of income from self‐funding activities than from donations and grants? To this end, primary research was conducted using a questionnaire on a sample of 205 NPOs whose activities impact tourism and which operate in one of the four most developed tourist destinations in Croatia with regard to tourist traffic in the past 10 years (Poreč, Rovinj, Dubrovnik and Medulin). Research results indicate that an increase in the frequency of conducting activities directly impacting tourism is paralleled by an increase in the share of income generated by active self‐funding (income from selling products and providing services) and other types of self‐funding (income from memberships fees and assets), with a decrease in the share of income from donations and grants. This study contributes to the existing knowledge by connecting NPOs with the tourism system and by identifying and defining opportunities for NPO self‐funding through tourism as a means of improving NPO financial sustainability.