“Passion projects” are self-funded; they are NOT unfunded.
Historically, a passion project is independently produced because established companies do not think—or cannot be convinced—that investing in its production will be profitable.
The individual behind the project may think that it can be profitable or may care more about its artistic merits than short-term returns on investment. They are so passionate about the project that they will seek alternative sources of funding to produce it, including individual investors, fiscal sponsors, product placement fees, etc. They are even willing to pay cast and crew out of their own pocket—if necessary.The risk is higher, the investment and budget are smaller, and thus it’s not unheard of for cast and crew to work for an acceptable reduced rate—usually defined by guilds and unions—but no one is expected to work for free just because it's a “passion project.”
“Passion projects” may not be profitable, but they should NOT be called “nonprofit” endeavors.
There are plenty of films that don’t turn a profit—“box office bombs”—but there’s no such thing as a “nonprofit” film.
The Utah Filmmakers™ Association is a 501(c)(3) nonprofit organization, and part of its mission is making movies, but it cannot do so without paying people for their work; it’s literally against the law.
The films that the UFA™ produces—through its production division, Section One Entertainment—can technically be profitable, but no individual associated with the organization (its board of directors, officers, trustees, Associates, etc.) may directly benefit from those profits.