Non-Profit Organizations: Self-Financing
Background
For the realization of organizational goals by NGOs as non-profit organizations, the respective NGOs need to adopt self-sustaining measures and systems. Non-profit organizations generally depend on charitable institutions, donor agencies, and multilateral lenders for the funding of their programs as well as the associated administration costs. However, in the recent past, non-profit organizations across the globe have witnessed a decline in grants and donations from international and local donors. This is compounded by the dynamic global economic circumstances as well as diverse political influences that have had a negative impact on the grants available for non-profit organizations. In consideration of this, it has become important
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Self-financing has become an instrumental source of funding for non-profit organizations due to increasing limitations of grant-making. In self-financing, the organization is involved in the sale of a service or a product or is in partnership with other corporations to secure employment for their clients. This plays an important role in generating extra revenue essential in financing the organization’s projects. This approach towards financing is associated with numerous benefits that include diversified revenue base, augmented income, enhanced funding flexibility, better management and high efficiency, better organizational planning, enhanced financial discipline and oversight, enhanced organizational visibility, increased self-confidence, strong board of directors, and an appealing impression on donors (Atkinson & Messing, …show more content…
The number of projects and their size is an effective indicator of the financial stability of a non-profit organization. In this, an increase in the number of projects that the organization is funding in comparison with the number of projects funded over the previous years is a clear indication on the financial stability and financial sustainability of the organization. This must be taken into account in consideration of the total size of the projects being undertaken. The total size of the projects refers to total amounts money allocated to the projects (Ortiz,
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