Development, Advancement, and Philanthropy in Nonprofits, For-Profits, and Start-ups
Development, Advancement, and Philanthropy in Nonprofits
Typically, in nonprofit arts, development refers to the department or area that is focused on fundraising. This term is somewhat interchangeably used with advancement and philanthropy. Though interchangeable, these terms have slightly different connotations, nuanced application, and are sometimes more aligned with specific arts industries. Though not strictly aligned with the following definitions, one might consider the planning around fundraising activities to follow this logic:
Development in nonprofits refers to fundraising activities. This includes cultivating relationships with donors, writing grants, securing sponsorships, and building pathways to support and sustain the mission. These efforts run parallel with for-profit strategies, presented later in this reading, which are aligned with earned income when revenue-generating activities, such as ticket sales, partnerships, sponsorships, and market growth, are balanced against donations. A simplified view might be a theatre company that sells tickets while seeking donations to support production expenses not covered by ticket sales. Development work is well aligned with nonprofit needs, where quality arts experiences’ programmatic expenses and overhead exceed ticket cost. Ticket prices are structured to be accessible to the community rather than to generate profit. This requires the development of supplemental income from other activities like donations, grants, and events.
Within nonprofits, advancement can be used interchangeably with development, but more often is focused on mission impact, program expansion, and promoting the organization’s reputation. Frequently, this title is used in large-scale nonprofits, though not exclusively. The focus is on deepening community service through existing activities or augmenting elements of programming to improve access.
Philanthropy is central to most individual donor programs across any fundraising effort. However, within organizations that use this term centrally to describe those activities, they see these efforts as central to their identity and emphasize investment into their mission as key. Organizations view philanthropy as both funding source but also a central cultural value leading to their success. In fundraising, donors, foundations, and corporate sponsors provide resources without expecting direct financial returns, but when tied to philanthropic giving, these gifts are strongly associated with social impact, visibility, or alignment of values.
To reiterate, these terms may be used interchangeably within nonprofit arts organizations, but can sometimes have special meanings unique to an organization or more closely aligned to their giving priorities and practices.
Nonprofits fundraising efforts orient development and advancement toward community impact, which is a direct desired outcome of philanthropy. In contrast, while for-profit businesses may position themselves as community oriented, their focus is on profitability and market success.
For-profit Environment
All organizations must secure resources, grow (as and when planned), and demonstrate investor value. In a nonprofit, funding received is to be invested in the organizations mission along with any funds earned. Profit seeking businesses frame the pursuit of development, advancement, and philanthropy to improve returns for owners and investors. Not unlike nonprofits, for-profit businesses may frame their efforts in their industry, market or investment strategy, or regular business practice.
Businesses are likely to prioritize areas of sales, partnerships, or new market acquisitions within development departments and activities. These are focused on expansion, investment, and growth by building on the capacity of a businesses operations. These expanded operations target financial success and profitability for investors. While not entirely separate, advancement refers to efforts to extend and grow market position by scaling operations, innovating products, and improving market position. These factors are closely tied to growing a competitive advantage. This is likely to have a direct impact for investors, but often emphasizes brand building and market share. Many for-profit organizations will engage in philanthropic efforts framed in corporate social responsibility or direct giving initiatives tied to owner or investor interests. These are investments in reputation, brand value, and goodwill to the community; philanthropy is an instrument for enhancement rather than a core driver of business operations.
Across nonprofits and for-profits, there are likely similar themes within fundraising efforts, aligned with developing resources to execute business functions effectively, but also efforts are made to advance their position within their respective markets, either through reputation building or expansion of practice, but philanthropy is positioned differently, as nonprofits receive charitable gifts. These factors may shift in either environment depending on the age of development for the organization or business.
Start-up Environment
Start-ups sit at an interesting space between nonprofit and for-profit practices. The difference is tied directly to need and access to resources, growth focus, and, quite frankly, a limited scope for philanthropic practice.
Nonprofit fundraising in areas of development, advancement, and philanthropy follow similar logic noted earlier in the reading. However, early development efforts focus on donor cultivation and seed and small grant acquisition. Organizations must show evidence of mission relevance and community need over rapid financial scaling. Start-ups may rely heavily on a single donor, board philanthropy, and founder investment to prove organization relevance. Feasibility is still important, but may not be emphasized in early stages of organization growth. Advancement efforts are likely to still build reputation and promote mission legitimacy. This can include phases that rely heavily on community partners to support program delivery. From outset, even before nonprofit legal paperwork is filed, emphasis on philanthropy is essential to survival. Start-ups rely on the creating of a strong, clear case of support to secure early grants, board gifts, and initial donor buy-in. In early stages, prior to successful completion of 501(c)(3) filing, organizations may seek a fiscal sponsor or pass-through entity to support the receipt of contributions. A sponsor or pass-through creates a whole set of challenges around donor communication, financial obligations, and fiscal controls, but can serve to support start-ups seeking to build capital to effectively execute programs and cover overhead.
Development in for-profit start-ups often depends on venture capital, angel investment, or personal financing to grow the business, build a customer base and establish regular revenue streams. Advancement emphasizes market growth through rapid scaling, product refinement, and/or competitive positioning. Businesses need to be able to attract additional investors and build brand visibility in order advance their position in the market and remain a viable investment. In emphasizing profitable strategies, businesses are limited in their capacity to give or even focus on giving until they can establish stable revenue streams. Still, if business owners are philanthropists, they are likely to tie business success to giving. Some notable companies include Bombas, Newmans Own, and Patagonia.
Bombas was founded after learning socks were the most requested item at shelters. The company relies on the buy a pair, give a pair model to specially manufacture socks, shirts, and underwear for unhoused persons. As of late 2025, they boast more than 150 million items donated, socks starting the endeavor. Newmans Own, a food company known for its salad dressing, was started by actor Paul Newman in the 1980s. The business pledged ” let’s give it all away all” with all profits from its inception donated to charity. Over the first 35 years since the company’s founding, they have given away more than $600 million. Patagonia emphasizes environmental activism through a one percent of sales pledge. This effort was expanded when the founder transferred ownership to a trust and nonprofit designed to use all funds not reinvested into the company to respond to climate concerns. These companies represent a somewhat rare breed of business, social enterprises. These are created to balance profitability with a desire for direct impact. These businesses may develop using alternative business models like a benefit corporation, low-profit limited liability company (L3C), or limited liability company (LLC). These and other forms, depending on state regulated financial models, are legally defined alternatives to traditional for-profit and nonprofit entities which may have varied liabilitiy and tax structures.
The central distinction lies in where resources come from and how they are justified to stakeholders. Nonprofits reinvest all income into their mission, making philanthropy and fundraising integral to sustainability from day one. For-profits exist to generate returns for owners and investors, making development and advancement financially oriented, while philanthropy is framed as a supplement to core business goals. Start-ups make these differences visible: nonprofit start-ups survive only if they secure philanthropic legitimacy, while for-profit start-ups survive only if they secure investor or customer buy-in.
