Revenue in a nonprofit comes from either gifts (think donations or grants), or by selling products or services. Every nonprofit has its own mix of revenue streams. More seem to be gift driven than sales drive, but both are out there.
When it comes to payroll/raises they work similar to any other company out there. They need to have money in their account to cover payroll. Raises are likewise handled in a similar way to the for-profit companies. Raises happen over time, and depending on your roll will be given by the directors or by the board (if you’re a director). Often people don’t stay in the same position long enough to trigger raises (outside of director roles). So many of the pay increases some from a change in role, promotions, or changing nonprofits.
The goal behind pay and promotions is similar as in the for-profit world. A nonprofit wants to ensure that they are valuing their employees. Pay is an important aspect to keeping your best & brightest around. Over time you invest more and more in them, and they become more critical to the life of your nonprofit. Taking care of them with pay and benefits allows them to stay with you.