Professional Documents
Culture Documents
success of any NGO / community organization agency lies in its ability to raise
enough funds (monetary resources), or to convert other resources in such a way that it
can be exchanged for the money, or to plan its activities into fundable projects.
In the earlier days when ‘Alms Giving’ and charity was held a high and respected
place, the persons who were concerned with community affairs, were able to collect
the necessary funds from the wealthy people. But at present the motives behind
giving charity as well as the dimensions of the community problems have drastically
changed.
The resultant effect is that the resources are drying. At the same time more and more
money is required for welfare services of meeting the changing needs and adopting
better methods of helping the people. To get over this crisis, either the state aid is to
increase or the agencies have to depend largely upon the community’s support. It is
not possible to step up the aid from the Government. This necessitates a change in
our outlook and we should think of more suitable ways and means of raising money
from the public.
Resources are the inputs that are used in the activities of a program. Broadly speaking, the term
encompasses natural, physical, financial, human, and social resources, but the vast majority of
the resources are financial resources. In kind resources such as the provision of office space,
seconded staff, or partner participation at board meetings are a second level of resources.
Resource mobilization is the process by which resources are solicited by the program and
provided by donors and partners.
The process of mobilizing resources begins with the formulation of a resource mobilization
strategy, which may include separate strategies for mobilizing financial and in-kind resources.
Carrying out a financial resource mobilization strategy includes the following steps: identifying
potential sources of funds, actively soliciting pledges, following up on pledges to obtain funds,
depositing these funds, and recording the transactions and any restrictions on their use. The
process is generally governed by legal agreements at various stages.
Financial management refers to all the processes that govern the recording and use of funds,
including allocation processes, crediting and debiting of accounts, controls that restrict use, and
accounting and periodic financial reporting systems.
Explanation:
FUND-Literally means a sum of money on which some enterprise
is founded or expense supported.
MOBILIZE /RAISE- Means to bring about or to get.
CAMPAIGN-Means an organized and intensified series of operations in the advocacy
of some cause or object.
FUND RAISING- Means obtaining the requisite funds for the operation of a voluntary
agency.
SOURCES OF FUNDS
Government:
The major type of support extended by the Govt. to the voluntary agencies is in the
form of Grants – in – Aid.
Grants – in – Aid is a sum of money assigned by a higher to a lower authority
either out of the former exchequer or out of the revenue source specially designed
for the purpose. (E.g. Subsidy, Concession, Material incentive, Staff deputation)
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Types of Grants:
*One Year Grant *Plan Period Grant *Maintenance Grant*Development Grant*Non
recurring / Capital Grant *Discretionary Grant *Grants for Innovative and
Experimental Projects *Administrative Grant *Grants for Meeting Deficit *Grants for
Appointing Staff
Voluntary agencies are experiencing the following problem in raising adequate funds.
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Methods of Collection
Fund raising is not an easy task. It requires the services of trained and experienced
personals. The agency has to spend a lot of time in collecting funds relegating its
regular services. Even if the agency can spare time and personals, there is no
guarantee that the public will make positive response. The prospective donor may
also irritated if too many organizations appeal to them for funds. At times, the cost of
the campaign may exceed the collections made during the campaign. So, to solve the
problems connected with the individual agency’s attempt to raise funds, innovative
methods are being adopted. These methods are variously called as community chest /
joint budgeting, united fund / federated financial campaign etc. The main feature of
these methods is to raise funds collectively and appropriates it on the basis of already
agreed upon terms and priorities.
Community Chest:
The idea of community chest was first conceived in 1913 in Cleveland USA. A
community chest is a co-operative organization of citizens interested in fund raising
for welfare work and voluntary agencies needing the communities’ financial support.
Its main functions is to raise money through the community and distribute it according
to a systematic budget procedure and to ensure more co-operative planning, co-
ordination and administration of the community’s social welfare services.
Community chest is not an adhoc organization, but a permanent agency to raise funds
for continuing services.
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
FUNDRAISING - II
Many community organisations need to raise funds to be able to continue their work
in the community or to carry out special projects. Seeking funding is one of the most
important tasks facing these organisations. For a number of them it’s also a difficult
task.
This material will give some tips on how to go about successfully raising funds, from
how to create a fundraising plan through to completing grant applications. A lot of
what is covered can be summarised into the following six-step approach to raising
funds.
Fundraising plan
The most important step in successful fundraising is to have a plan. You need to take
time to think through strategies for achieving that plan. Also set a timeline and break
down tasks into manageable
pieces.
Producing a fundraising plan
involves the following 3 steps:
1. FIRST STEPS
• Identify the purpose of
obtaining funds.
• Check whether fundraising is
really necessary – consider what’s
available now and whether there are
other ways of achieving what you
want e.g. does another group have
the equipment that you could use?
Rather than money, could you get a
donation of a service or item instead?
• Think about whom will gain
from the fundraising e.g. will
your target group benefit?
ONCE DECIDED TO RAISE
FUNDS
• Establish a fundraising committee
• Describe the exact purpose for raising funds
• Set a budget
• Set goals
• Build a fundraising pyramid (see picture)
Fundraising pyramid
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Funding options
LOCAL FUNDRAISING ACTIVITIES
• Food and entertainment
• Sales
• Money for labour
• Sponsored activities
• Exhibitions or demonstrations
• Community services
• Competitions
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
• promote and foster the sponsor's name and products at, or during, an event, in your
annual report, or at the AGM
• have the organisation or its members become involved in promotional activities for the
sponsor
• give the sponsor the opportunity to market products at the venue or to the
participants
• distribute the sponsor's advertising material at clubrooms or to all participants
• have the sponsor's advertising on your venue
• have the sponsor use photos of events for their own promotions.
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Budgeting
Estimation of Financial Requirement of a Project
Budgeting:
Budgeting is the first step in the financial administration. It is a fundamental part of
the planning process. Budget is a statement showing the various sources from which
money is to be raised during a particular period and the programs and activities on
which this will be utilized.
Ø Indicates the financial conditions of the agency during the coming year.
Ø Indicates the distribution of funds for certain definite welfare services.
Ø Indicates the proposed expenditure for a specific period, and the purpose and the
proposed means of securing the income required.
Ø Is a basic means of controlling the programs as well as funds
Ø It is the program of work of the agency expressed in rupees and paise.
Definition
Budget means formal quantitative statement of resources allotted for planned
activities over stipulated periods of time. Future plans if its expressed in
quantitative numerical terms are called as budget.
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
BUDGETTING
STEPS
Average of the
last 3 years
last 3 years
Budgeted
Actual
Actual
years
year
Grants Recurring
Donations Salaries of staff
Subscriptions Food & clothing
Sale proceeds Raw material for crafts
Interest Medicines
Rent of building Rent
Fees Light water etc
Value of services Contingencies
Value of donations in kind Non recurring
Balance from the previous Van
year Equipment
To be collected Building / maintenance
Other items Other items
Total Total
Note: -
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
1. The list of heads of accounts is not exhaustive. An agency could adopt the above from as
far as possible leaving out items not applicable or adding a few items of Receipts and
payments, if necessary.
2. The value donations in kind to be shown / separately against the relevant items with extra
entry on the sides.
The above proforma explains not only the process of budget preparation but also indicates
how to estimate financial requirements of a project.
Financial estimates are usually done under two major headings i.e. recurring and non-
recurring.
Recurring expenses are those expenses which happens regularly, includes salaries to the staff
(Project Director, Professional, Administrative, field staff) expenses related to project activities
(depends upon the nature of the project) and contingencies expenses.
Non–recurring (capital expenses that happens once in a while) includes building construction
machinery and other project related expenses.
Expenditure pattern not only differs from project to project but it also differs from phase to
phase. The first phase (planning) consumes less resources and the second phase
(implementation) phase consumes more resources.
So, estimation of financial resources demand knowledge about the expenses that are to be
incurred under various headings and also the volume of resources required phase of a
project.
Foreign Contribution (Regulation) Act, 1976 (FCRA) was enacted in the year 1976
with the prime objective of regulating the acceptance and utilization of foreign
contribution and foreign hospitality by persons and associations working in the
important areas of national life. The focus of this Act is to ensure that the foreign
contribution and foreign hospitality is not utilized to affect or influence electoral
politics, public servants, judges and other people working in the important areas of
national life like journalists, printers and publishers of newspapers, etc. The Act also
seeks to regulate the flow of foreign funds to voluntary organizations with objective of
preventing any possible diversion of such funds towards activities detrimental to the
national interest and to ensure that such individuals and organizations may function in
a manner consistent with the values of sovereign democratic republic.
The organizations seeking foreign contributions for definite cultural, social, economic,
educational or religious programs may either obtain registration or prior permission to
receive foreign contribution from Ministry of Home Affairs by making application in
the prescribed format and furnishing details of the activities and audited accounts.
The registration is granted only to such association which has proven track record of
functioning in the chosen field of work during last three years and after registration,
such organization is free to receive foreign contribution from any foreign source for
stated objectives. Registration is granted only after thorough security of the activities
and antecedents of the organization and office bearers thereof. However, such
organizations which are newly established and do not have proven track record of
functioning may also receive foreign contribution for specific activities, for a specific
purpose and from a specific source after seeking project based prior permission (PP)
from the Ministry of Home Affairs.
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Indian non-governmental organizations (NGOs) have not only been getting money from big donors like
the US, Germany, the UK, Switzerland and Italy, but are also receiving contributions from Pakistan. In
fact, Islamabad has consistently been donating money to various associations in the last three years.
Although the amount contributed by Pakistan is quite small when compared to that given by the
bigwigs, it has put Islamabad in the august list of donors. The contributions by Pakistan and the other
big donor countries have gone to NGOs engaged in carrying out cultural, economic, educational,
religious or social programs in different parts of India.
Statistics released by the home ministry regarding 'foreign funds to NGOs' show that India, which has a
total of 33,937 registered associations, received Rs 12,289.63 crore in foreign contributions during
2006-07 as against Rs 7,877.57 crore in 2005-06, a substantial increase of nearly Rs 4,400 crore
(56%) in just one year.
The US, Germany, the UK, Switzerland and Italy were the top five foreign contributors during 2006-07.
These five countries have consistently been the big donors since 2004-05. Spain, the Netherlands,
Belgium, Canada and France are the other countries which figure prominently in the list of foreign
donors.
The US has been the biggest donor to Indian NGOs in the last several years. It contributed over Rs
2,971 crore in 2006-07 alone. As far as Pakistan is concerned, the country contributed Rs 43.28 lakh in
2004-05, Rs 71.70 lakh in 2005-06 and Rs 21.99 lakh in 2006-07.
In response to a query on whether NGOs getting money from outside had been known to divert the
funds for illegal work or to spread terror activities, the home ministry, in a written reply in the Lok Sabha
on Tuesday, said, "There are no specific inputs to indicate misuse of foreign contribution by the
registered associations (under the Foreign Contribution Regulation Act) for terrorist activities."
The ministry pointed out that no association having a definite cultural, economic, educational, religious
or social program could accept foreign contributions without registration or prior permission under the
Foreign Contribution Regulation Act (FCRA), 1976. "However, as and when complaints relating to the
violation of the provisions of the FCRA against associations come to the notice of the government,
appropriate action is taken," it said.
Such activities may include prohibiting the NGOs from receiving foreign contributions, freezing their
bank accounts and prosecuting them in a court of law. On the basis of various complaints, as many as
44 NGOs have been prohibited from receiving foreign contributions whereas the bank accounts of 11
others have been frozen. Besides, the cases of 17 organizations have been referred to the CBI for
detailed investigation.
Among the states, Tamil Nadu has the distinction of having the highest number of registered
associations (3,009) and getting the highest amount of foreign contributions in India. Maharashtra,
Tamil Nadu, Delhi, Andhra Pradesh, Karnataka, Kerala, Jharkhand, West Bengal, Gujarat and
Rajasthan are the top ten states which received major foreign contributions in 2006-07
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Foreign Contribution
• Foreign contribution means the donation, delivery or transfer made by any
foreign source of any
a) article, not given to a person as a gift, for personal use, if the market value in India
of such article exceeds one thousand rupees;
b) currency, whether Indian or foreign;
c) foreign security as defined in clause 2(i) of the Foreign Exchange Regulation Act,
1973.
NOTE: Contributions made by a citizen of India living in another country, from his
personal savings, through the normal banking channels, is not treated as foreign
contribution. It is advisable to obtain the passport details of the concerned citizen of
India before accepting such contributions.
Foreign Source
• Government of foreign country or any agency of such government.
• International agencies, not being of
a) United Nations or its specialized agencies
b) World Bank
c) International Monetary Fund
d) Such other agencies as so notified by the Central Government.
• Foreign Company or Corporation incorporated in foreign country
• Trade Union in a foreign country
• Foreign Trust or Foundation or Society or Club formed or registered outside India
• Company where more than half of shareholding held by foreign Govt., foreign
citizens, foreign corporations
• Citizens of foreign countries
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Types of permission
An association having a definite cultural, economic, educational, religious or social
program can receive foreign contribution after it obtains the prior permission of the
Central Government, or gets itself registered with the Central Government.
Registration
• Means permanent permission to accept foreign contribution from any foreign
source.
• Granted to associations with proven track record having definite cultural,
economic, educational, religious, social program.
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
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TOP DONORS)
Foreign Contribution (Rs. in crores
2000-01 2001-02 2002-03
Ford Foundation, USA 41.32 56.05 121.94
World Vision International, 80.43 78.33 90.24
Vicent E Ferrer Spain 63.26 63.06 79.16
Christian Children Fund.USA 43.07 44.27 75.15
Foster Parents Plan International, USA 76.37 72.37 53.73
TOP PURPOSES
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Trends
Year Registered Associations Amount of foreign contribution
received (in Crores)
1993-94 15,039 1865
1994-95 15,723 1892
1995-96 16,740 2168
1996-97 17,723 2571
1997-98 18,489 2864
1998-99 19,834 3402
1999-00 21,244 3924
2000-01 22,924 4535
2001-02 24,563 4872
2002-03 26,404 5047
Accountability
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Why accountability?
D.A is the arm of the state; they can enact & enforce law. D.A at times regulates the
activities of other administration. Because of these public expect that D.A should rise
above the normal patterns of management in commerce & industry
Accountability is like electricity, is difficult to define, but possess qualities that make
its presence in a system immediately detectable.
Accountability means liability to give a satisfactory account of the exercise of the
power, falling which some kind of evil or punishment may follow.
Hierarchy
Span of control
Unity of command Well known accountability facilitating
devices.
Inspection
Supervision
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Political
Legislative
Financial, Judicial / normative accountability
Accountability is determined by
• nature of political structure.
• nature of social organization
• nature of political culture
• level of popular expectations
• value system of the public
• levels of administrative morality
• power relations.
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Financial Accountability
1. An NGO should operate in accordance with an annual budget that has been approved
by the board prior to the beginning of each fiscal year.
2. An NGO should create and maintain financial reports on a timely (at least quarterly)
basis, accurately reflecting the financial activity of the organization, including the
comparison of actual to budgeted revenue and expense.
3. Quarterly financial statements should be provided to the board of directors. The
statements should identify and explain any significant variation between actual and
budgeted revenues and expenses.
4. An organization should subject its financial reports to an annual audit by a Chartered
Accountant.
5. An NGO should provide employees and volunteers with a confidential means to report
suspected financial impropriety or misuse of organization resources.
6. An NGO should have written financial policies governing the following matters, where
appropriate: (a) investment of the assets of the organization; (b) internal control
procedures; (c) purchasing practices; (d) reserve funds; (e) compensation, including salary
and benefits; (f) expense account reporting; and (g) earned income.
7. The organization should have clear and written policies on loans and staff advances.
8. Wherever possible, the organization should ensure that its funding base is diversified.
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Management of NGOs –Mobilizing & Managing Financial Resources – S.Rengasamy
Discipline:
In attention to duty, inefficiency, insubordination, immorality, lack of integrity,
violation of the recognized code of ethics.
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