NGOs rely on donations and grants from individuals, companies, and foundations, as well as government grants, membership fees, and corporate sponsorship. They do not sell products for profit and must follow laws regarding permissible types of support. Special events and social entrepreneurship can also provide support, and some NGOs may receive investments from private entities.
A non-governmental organization (NGO) is a type of non-profit organization that typically pursues its charitable mission internationally. While the laws that allow for the creation of NGOs are different in all countries, the way in which these types of organizations are supported is largely standardized. NGO support comes mainly from individual donations and donations from companies and foundations. Additional support sometimes comes from government grants and contracts, membership fees and corporate sponsorship. Certain organizations rely heavily on money raised at special events or through social entrepreneurship, while some organizations qualify for investments related to private entity programs.
Non-profit organizations are formed under the laws of their home countries, but like any business, they can obtain permission to operate anywhere in the world. International non-profit organizations are often referred to as NGOs to reflect their independence from their native governments. The distinguishing feature of a non-profit organization is that it does not sell a product for profit. Rather, it follows a mission and relies primarily on public support to operate. Public support takes the form of gifts and grants from a wide variety of sources.
Permissible types of support to NGOs are generally defined by law. If a nonprofit accepts certain types of support, it may lose its status as a nonprofit. Although nonprofit law differs by jurisdiction, the supporting provisions are mostly uniform. This is a necessary standardization so that donors can be confident that their gifts are permitted under the law, even if the NGO is organized under the laws of a different country.
Individual donations and grants from foundations and corporations typically represent the bulk of NGO support. Receiving donations directly from individuals is the most desirable form of support, as it generally gives the organization the most flexibility in how the funds are used. Donations are typically tied to program goals, so they can be much more limited in use.
Government grants and contracts are another category of NGO support. Just because an NGO is independent of the government does not mean it cannot receive money from government agencies to run programs. Some non-profit organizations are membership organizations and receive dues-paying support. In some cases, nonprofit organizations have special advertising relationships with companies and rely on corporate sponsorship to cover a large portion of the budget.
Special events and social entrepreneurship are two categories of NGO support that are particularly important to a given organization. Some nonprofit organizations have a special annual event that raises most of their operating budget. Other organizations sell a special product, the product of which support operations. In both cases, the nonprofit tries to better control the flow of money through the organization rather than waiting for a donation to arrive in the mail.
Finally, certain types of NGOs may receive investments from private entities that eventually must pay. These program-related investments provide initial support for a nonprofit organization to start a resource-intensive project. Typically, this type of investment is important for community economic development organizations.
Asset Smart.
Protect your devices with Threat Protection by NordVPN
