Sunday, 17 November 2013

NGO Fund Sources

Non-Government Organisations are formed to deliver services towards various sections of society and to promote various underdeveloped segments. In order to deliver services every NGO whether it is Trust or Society needs funds on long term basis. Because without adequate funds it is not possible to convert various social services into reality. Amount of funds required by a NGO can vary with the size and scope of work they are planning to do. Whereas small NGO need limited budget to operate but large NGO may have annual budgets in millions or billions of dollars.
Donations are the major source of funds for NGO-Society and Trust in order to operate their activities. Donations can be received from various sources like Government Funding, Corporate Funding, Foreign Funding & Individual Donors.
To be eligible for Government funding NGO should complete 3 years and they should have 12A and 80G registration. Once they have completed 3 years and possesses 80G they can apply for huge amount of Government funds under various schemes.  There are various schemes available under State Government as well as Central Government.
Corporate funding can be received under Corporate Social Responsibility i.e CSR funds.  Under the new Companies Act , 2013 all profitable companies with a sizeable business would have to spend every year at least 2 % of 3 year average profit on CSR activities. This would apply to all the companies with net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or more, or a net profit of Rs 5 crore or more. During financial year 2012-13, state owned oil companies like ONGC and OIL Corporations spent almost Rs 385 crore in CSR activities as per statement from Oil Ministry. As per latest reports there are more than 500 corporate companies spending around 63 billion in CSR activities to fulfill the 2% norm.
Foreign Funding plays a major role in funding now a days. But in order to receive foreign funding NGO must register under FCRA (Foreign Contribution Regulation Act). In order to get permanent FCRA registration NGO should complete 3 years. Foreign Funding can be received under AIDS Control and Awareness, Women Empowerment, Eradication of Child Illiteracy, etc. But Foreign funding has always been a matter of controversy as it has been found to be a source of corruption for both government as well a nongovernmental level. Most development countries expect that on every dollar spent for developmental support, 40% returns back through volunteering and consultancy and only 60% actually reaches organizations.
Individual donors play a very important role as a source of funding for NGO. There are various fund raising activities that NGO’s organized on regular basis to attract donors like businessman, celebrities , politicians , and dedicated donors.

In order to receive funds from all the sources NGO should prepare Annual Project report so that they can show what kind o activities they have done and what they are planning to do.

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