What Are the Different Types of NGO Financing?

Non-governmental organization (NGO) funding can vary by source, terms, and the type of organization funded. There are several different kinds of foundations and individual donors who provide NGO financing. Some give donations while others reward funds via a grant application process.

Two overarching types of NGO financing are restricted and unrestricted funds. Restricted funds must be earmarked for a specific purpose as dictated by the donor. The only typical requirement for unrestricted funds is that they be used to help the NGO accomplish its mission.

Restricted funds are often specific to a type of project or other need that is outlined during the grant application process. Typically the overall required focus is dictated by the donor, while the NGO can determine the specifics that apply to its particular needs. There may also be restrictions as to how or when the money will be spent once it is awarded.

Unrestricted funds can be an important part of NGO financing as they may be used to fill whichever need is most urgent. Often they will be used to cover non-specific operational and other ongoing costs that are usually difficult to fund with grant money. Common sources of unrestricted funds include donations from the general public, money earned by the NGO selling products or offering services, and institutional funding.

Often NGO financing comes from organizations or foundations with a related mission. For example, a foundation with an interest in promoting literacy may provide funds to buy books for an organization that is helping adults learn how to read. Funding may come from donors whose goals have a wider scope as well, including areas such as agriculture, global poverty, and healthcare.

Some kinds of NGO financing may be restricted to geographical areas. This can include local foundations or donors who wish to provide aid to specific locations. Geographically-limited funding can be restricted to any area, including a city, state, province, or country.

When an NGO is applying for financing, it is advisable to first research the opportunity. This includes contacting the donor for information about its requirements for application and information about when and if funding will be made available. It is also wise to determine if the NGO both fills the requirements of the donor and has a proper program or other initiative which can be funded with the donation. The donor should also provide information about how to properly complete the application.