Types of funds available for an NGO
Like any other organization, NGOs need funds to be able to run their projects. These organizations do not generate funding through normal channels like selling and delivering services, but they rely highly on donations and gifts from donors. While private donors are the most lucrative means at their disposal, there are a few other funding options.
In the following article, we will explore some of these funding operations and how an NGO can go about collecting funds from various entities. The main purpose of the article is to help you see which channels are available for your NGO.
Here is a list of different types of funds available for NGOs
If you are just starting with your NGO, the following article can be useful to help you explore new methods of funding or types of funds. Not all of these types of funds apply to everyone, but you are bound to find one that will work for your NGO. Here are a few of the most common funding channels an NGO can rely on:
Multilateral Development Banks
Multilateral Development Banks are international banks or agencies that fund agencies for specific causes. These funds are often designated for a specific purpose and should be used accordingly to the outlined designations. The World Bank and African Development Bank are two of the largest banks that could source funding for a variety of relief programs.
One can apply or ask many international organizations for funding if you meet the criterion. Much like an NGO, these organizations are also dependent on donations and gifts. An example of a grant-giving foundation would be William & Lily Foundation in Indonesia. However, they can fund smaller NGOs in a bid to help alleviate a specific situation or crisis.
Development Assistance Agencies
If you are a young NGO just breaking into the world of aid, you can look for development agencies in local countries. Much like the multilateral development banks, these agencies have specific conditions and goals they are targeting.
In most developed countries, a certain percentage of the GDP is set aside to help NGOs fighting for a specific cause. Many of these NGOs receive government funding, but they need to adhere to government policy. Depending on the country, it can often lead to a clash of interests.
Some of the largest donations can often be attributed to local businesses that want to be associated with your NGO. These businesses have fewer restrictions on how the funds are utilized and often it is done as a part of their CSR activities. However, international enterprises might have a specific plight, forcing you to dedicate the funds to specific areas.
There are high net worth individuals on the planet that all stand for something. These private donors can be approached and in rare cases, they might even approach you. It is also a way for them to give back to society, whilst improving their brand and being associated with something positive. However, sometimes they might lean more towards funding projects that match the causes they feel strongly about. So it might be useful for you to narrow your research accordingly. Many high net worth individuals also start their own charities or trusts for these purposes. Generally, funds from private donors don’t have as many restrictions.
Community foundations or simply people that live in your community can be a great source of funding for an NGO. The community can actively be involved and if they do not donate money, they can also donate their time to the cause. It is one of the best ways to generate funding for all your overheads and to get you started.
NGO Funding NGO
Starting an NGO is no easy feat, but there are many successful NGOs that have grown substantially to achieve international acclaim. If you are targeting the same cause, you might want to be affiliated with one of the larger NGOs. They can help you with advice and some funding to reach a specific goal. It is also great publicity for an NGO to fund smaller organizations to show growth in their yearly reports.
We have all heard of the United Nations and the humanitarian causes they stand for. If you have a viable NGO and you are making change, you can approach the UN for some additional funding. The UN is notoriously hard to please and one needs to have a goal and some progress to show. The UN is one of the largest organizations funding NGOs.
The last method of funding your NGO is having a few fundraising events. Fundraising events tie all of the above-mentioned points into one, but it is a way to entice new investments. These funds are often dedicated to the cause for the event and should be spent as indicated. It is a great way to give credit and recognition to current donors.
Outcome-based funding is based on performance & transparency. Much like one would work for incentives, with this form of funding, the organization will receive more or less depending on the outcome/impact they create. It is a great incentive for motivation and encourages NGOs to not just push forward and work harder to achieve their goals but also to ensure they measure the impact or the outcome they create with their activities. Artemis Impact is one such organization that connects projects with donors & ensures that projects meet monitoring & evaluation standards. Check for more information.
Individual funding for NGOs is notoriously hard unless you have a decent brand ambassador. However, The above-mentioned methods will allow you to get started and perhaps even prosper to reach your goals. Every little bit will help you grow and achieve what you set out to and oftentimes, you need to take the risk and ask.