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Non-Governmental Development Organizations (NGDO)

Performance and Funds—A Case Study

Article  in  Journal of Human Values · July 2017

DOI: 10.1177/0971685817713279

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Article

Non-Governmental Development Journal of Human Values

23(3) 1–15
Organizations (NGDO) Performance © 2017 Management Centre
for Human Values
and Funds—A Case Study SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0971685817713279
http://jhv.sagepub.com

Marisa R. Ferreira1
Amélia Carvalho1
Filipa Teixeira1

Abstract
Non-profit organizations (NPOs) are facing growing pressure to become more performance oriented.
The existence of a rising number of NPOs and the scarcity of fund sources is an increasingly worrying
scenario. Our case study examines the experiences of three non-governmental development organizations
(NGDOs) and discusses the possible existence of a relationship among fund sources and organizational
performance. Non-profits are gradually required to respond to performance measurement directives
and their fund sources may be scarce, in terms of quantity and diversity. Two central findings emerged
from interviews and document analysis. First, there is a relationship between funds and performance,
additional/greater funds positively influence organizational performance. Second, funds diversity play a
critical role on performance, diversification of funds sources reduces the dependence of organizations
and consecutively improves their performance.

Keywords
NGDO, funds and organizational performance

Introduction
Organizational performance and fund sources are central themes in the analysis of organizations
(Marques et al., 2011; Thibodeaux & Favilla, 1996) and non-profit organizations (NPOs) are not excep-
tions (Winand, Rihoux, Robinson, & Zintz, 2012), however, little research in this field has focused on
the impacts and relations between funds and performance. Although it is important to mention the grow-
ing interest of NPOs, as they are important vehicles for creating and maintaining a strong civil society
(Eikenberry & Kluver, 2004). At the same time, the role of these organizations in society has been

1
School of Management and Technology, CIICESI, Porto Polytechnic Institute, Casa do Curral, Felgueiras, Portugal.

Corresponding author:
Marisa R. Ferreira, School of Management and Technology, CIICESI, Porto Polytechnic Institute, Casa do Curral,
4610, 156 Felgueiras, Portugal.
E-mail: mjf@estg.ipp.pt
2 Journal of Human Values 23(3)

crucial, not only at national, but also in an international level and Portugal is part of a set of countries
where NPOs are growing (Chaves & Monzón, 2012). Non-governmental organizations (NGOs) have
become reasonably noticeable in the field of international development in recent decades, although the
term NGO incorporates a vast type of groups and organizations and we will study specifically non-
governmental development organizations (NGDOs) that ‘are voluntary NPOs and NGOs working within
the framework of international development cooperation. They are concerned with poverty reduction,
social justice, human rights and the problems of marginalization within society’ (Caruana, 2003, p. 6).
This year (2015) is the:

first ever European Year to deal with the European Union’s external action and Europe’s role in the world.
For development organizations all over Europe it is an unparalleled opportunity to showcase Europe’s commit-
ment to eradicating poverty worldwide and to inspire more Europeans to get engaged and involved in develop-
ment. 2015 is also the year in which the Millennium Development Goals that the world agreed to reach in 2000,
and in which the international community will agree on the future global framework for poverty eradication and
sustainable development. (European Year for Development, 2015)

So, this moment is particular significant to NGDOs and is important to understand how these organiza-
tions act, how they get funds, how they work to empower human beings around the world who are mired
in poverty, which is profoundly related to their organizational performance.

Literature Review

Organizational Performance and Organizational Funds

The structural changes that occur at local and regional level need to implement original and innovative
strategies in order to generate inclusive and sustainable development (Freitas, Jabbour, Mangili, Filho,
& Oliveira, 2012). As the non-profit sector has grown more professionalized and agencies have expanded
their range of stakeholders, issues of accountability and performance measurement have become increas-
ingly important. Non-profits face increased pressures for accountability and performance in recent years
and the implementation of performance measurement systems assumes that managers will use perfor-
mance information to define and implement enhanced decisions (LeRoux & Wright, 2010). The analysis
of NPOs performance variables are essential for decision making for funders, clients, donors and all
stakeholders (Hwang & Powell, 2009; Petrescu & Tongel, 2006). Performance measurement helps to
clarify expectations, promote consistency, provide risk signals, allows precision and objective forecasts,
promotes motivation and improvement solutions to problems, improves accountability and increases
objectivity (Spitzer, 2007). Organizational performance is a multidimensional concept (Felício, Gon-
çalves & Gonçalves, 2013) and may be defined as the evaluation process between what was established
(goals/objectives to be reached) and the achieved results (Herman & Renz, 1999). According to theses
authors, the ‘real world’ generally uses financial measures to determine the performance of a certain
business and NPOs should focus their activities on achieving goals.
Performance is a key concern for non-profits, although our understanding of what drives performance
remains incomplete (Benjamin & Campbell, 2014). Researchers use various ways to measure NPOs
performance, such as qualitative measurements that address the difficulties with obtaining objective data
(Felício et al., 2013). A wide range of models and metrics are also used to measure performance and
significant sources of evidence include both external research as well as data generated within the organ-
ization (Carnochan, Samples, Myers, & Austin, 2013), as well as financial metrics, outcome measurement
Ferreira et al. 3

models, staff evaluations and capacity assessments (Benjamin & Campbell, 2014). NPOs can develop
some general categories to measure its performance, like measures of current achievement of activity,
use of resources, financial measures and the impact of the organizations initiatives (Paton, 2003). Perfor-
mance is not only measured through financial results, but also through their social and ecological perfor-
mance (Wals, 2007). We can also measure performance using the definition of client outcomes and logic
models, the design of data systems and organizational structures and processes (Carnochan et al., 2013).
Some authors operationalize organizational performance by using different dimensions, with extensive
support amid non-profit scholars, including client satisfaction, resource acquisition and reputation
among sector peers (Gainer & Padanyi, 2002). Organizational performance can also be measured through
their frontline staff (Benjamin & Campbell, 2014), service quality and customer satisfaction (Felício
et al., 2013), definition of strategic goals, according to their mission, vision and objectives (Winand et al.,
2012), number of clients, capacity and analysis of experienced versus budgeted costs (Kotler & Roberto,
1989), staff involvement in decision making and centralization (Winand et al., 2012). Carvalho (2005)
believes that performance can be measured through three components: human factors—successful new
approaches, achievement of objectives, improving the well-being of users; sustainability—financial
stability; success in controlling costs; effectiveness in attracting resources; quantitative analysis—
revenues higher than expenses; approved public funding and; rising of helped people, growth of reve-
nues, volunteers, donors and sponsors.
NPOs live infinite complications, among which stands out funding. Funding sources and programmes
are increasingly scarce, and weaken NPOs performance and survival. Fundraising, prepared by organiza-
tions, is increasing and financial resources are crucial, even for NPOs (Martín-Cruz, Martín-Pérez &
Gámez-Alcalde, 2012), despite the differences among all the different concepts of profit, NPOs do not
distribute profit, although they have to generate it so they can grow and become sustainable, in order to
create economic and social value for their stakeholders (Boluk & Mottiar, 2014). Raising funds is not
only about getting money, but also involves the promotion of the organization and increasing community
support and the success of fundraising depends on the relationship among donors, both, individual and
institutional (Pope, Isely & Asamoa-Tutu, 2009). Although NPOs are considered independent from
public and for-profit sector, sometimes they ask help to these other sectors in order to obtain resources
(Salamon & Anheier, 1997). Thus, it appears that there is a dependency related to external and internal
funding. It is important to consider that NPOs need more than funds, need public understanding and
participation of citizens, to achieve their goals and there are some factors that may determine how wor-
thy of support a given individual would believe it to be or not, like the perceived performance of the
specific organization in achieving its goals, the overall professionalism/reputation of its management
and the quality of service (Sargeant, West & Ford, 2004).
The origin of external/public resources is grouped into three major groups: 1) the state—governmental
public funds—these can be subdivided into arrangements, procurement and partnerships; 2) individual
and institutional donors, as well as partnerships with other organizations; and 3) self-financing (events,
sales, among others) (Guimarães, 2010). In Portugal, NPOs revenues are grouped in (i) public funds
(from government), (ii) own fees that includes revenue from the sale of goods and services and property
income, (iii) philanthropy which includes private philanthropy, membership dues, corporate gifts and
similar payments and (iv) others, so funds coming from some other sources like donations, bank loans,
proceed from the sale of assets or transfers from abroad (Salamon, Sokolowski, Stone, & Tice, 2012).
Although there are different forms of funding, it seems that the most common are the external sources,
of course the other sources are not overlooked since they do tight less NPO activity (Lu, 2015). NPOs
must choose the type of funding that better fits the organization, that is, the one that reduces the risks
associated with it and maximize its objectives. To NPOs that have the capacity of generating their own
resources, the risk of compromising their activities is lower, and thus have greater autonomy for their
4 Journal of Human Values 23(3)

activities. So, revenue diversification permits organizations a degree of autonomy, the independence to
take some risks, and the ability to make decisions in a specific context (LeRoux & Wright, 2010). On the
other hand, funding diversity might also affect strategic decision making, so the over-reliance of NPOs
in a single source of funding may condition its development, as well as influence its autonomy and the
lack of predictability and regularity of income (Guimarães, 2010).
Thus, we can mention that funding has a positive effect on the NPO growth and consecutively in
organizational performance. Given the variety of resources available for raising funds, we can also point
some new forms of funds such as loans, subscription of shares or even crowdfunding (Meer, 2014).

Research Questions
Considering organizational performance and fund sources, there are some important research questions
that we can mention. The first research question is related with funding diversity and its impact in organi-
zational performance. When NPOs obtain funds through their own revenues (e.g., services and fees)
avoiding external funding, including public funds, might have smaller levels of dependence and there-
fore greater autonomy (Guimarães, 2010), at the same time external funds may lead to a reduction in the
power of autonomy, lack of predictability and regularity of revenue, limiting the strategic planning of
organizations (Sargeant et al., 2004). However, the real effect of revenue diversification is still uncertain,
since sometimes NPOs looking for multiple streams of funding may not suffer revenue losses from
government (Lu, 2015). Other authors mention that external funds might bring a vast range of advantages
like stability, since some incentives enduring over time, needing only to communicate intent of the return
to receive or renew itself automatically contributing to a more positive performance of the organization
(Jung & Moon, 2007; Salamon & Anheier, 1997; Shepherd, Williams & Patzelt, 2015). There is also the
possibility that government grants may increase private donations by providing prestige or credibility to
the organization (Hughes, Luksetich & Rooney, 2014), so in addition to stability, public funding is asso-
ciated with the recognition of organizational quality, making it credible, reputable and less vulnerable to
economic shocks. In this view, public funding is more regular and the amounts financed through external
sources tend to be higher than the ones collected through internal source (Jung & Moon, 2007).
The second research question is related with the amount of funds and its impact on organizational
performance. In spite of declines in government and private funding and an increase in the number of
NPOs, the level of dependency of an NPO should not be excessive, because sponsors might believe that
they are the owners of the project and this may influence and even shift the organization’s objectives and
missions (Eikenberry & Kluver, 2004). It is believed that higher levels of funds may improve and have
a positive impact on performance.
The third research question is linked with NPO dimension and its impact in funding performance.
Some authors mention that organization’s dimension has a very important impact and larger organiza-
tions tend to have better performances (Wals, 2007). While the concept of organization’s dimension can
be measured through different elements, like income/results, total assets (Borzaga & Tortia, 2006) or the
number of beneficiaries (Martín-Cruz et al., 2012), those authors agree that dimension is crucial to the
analysis of other indicators, especially for NPOs. Although, the acceptance of dimension importance is
controversial and some researchers reveal that organizational size is not a fundamental factor, noting that
what seems most important is the profile of the funding (Guimarães, 2010).
Finally, the fourth research question is related with NPO time of existence and funding performance.
There are many factors that can influence fund sources, but most recent organizations need to gain
greater visibility and space, so the effort for work fundraising is harder than for older NPOs, since
longevity may have positive impacts in NPO credibility (Sargeant et al., 2004).
Ferreira et al. 5

Research Methodology
The purpose of our research is to understand the relationship between fund sources and organizational
performance of NPOs, particularly NGDO. The research involved in-depth interviews with three manag-
ers from three different NGDOs and document analysis.
Despite the different research purposes, the interviews covered the following topics: (i) background
(e.g., position, responsibilities, professional training, tenure, etc.), (ii) organizational characteristics
(dimension, objectives and time of existence), (iii) organizational performance (methods, criteria and
importance) and (iv) organizational fund sources (diversity, resources and amounts). The aim of the
document analysis is to collect a series of data that allow us to identify which variables are behind the
presented figures. The annual report will allow us to identify the activities planned by the organizations
and the actual outcome, the financial report will permit us access to the various components and dimen-
sions of the NGDOs, and study the different financial statements. With the review of these documents,
we can make a comparison among different years (2011, 2012 and 2013) considering NGDO financial
position and performance. Data collected through document analysis will be completed by data obtained
in the interviews.

Sample
We choose NGDOs from the same areas of expertise, working in cultural, education and health, with
cooperation and development missions and with different dimensions.
NGDO A focus its intervention on the Portuguese-speaking countries and assumes the mission
of promoting socio-economic and cultural development. It operates throughout the Community of
Portuguese-speaking Countries (CPLP), carries out initiatives in key sectors such as education, health
and food security, believing that only through the empowerment of populations it is possible to boost
communities’ sustainable development. NGDO B aims to design, implement and support cooperation
programmes and projects for development, as well as the protection and promotion of human rights.
It also aims the intervention within the areas of teaching, education and culture, scientific and technical
assistance, employment and training, protection and defence of the environment, rural development,
education for development and all types of activities which are intended to promote and improve the
living conditions of populations, in support of sustainable development and the fight against poverty.
NGDO C aims to support human development in poor regions, particularly in Africa, where it is cur-
rently operating with volunteers in various regions of Mozambique. They have three main pillars—tutor
project, volunteering and fundraising—and the link between these three pillars is the core of this NGDO.
The tutor project is the central activity and intends to support children from Mozambique, improving
their life conditions, including their family and the surrounding community, so intends to ensure the full
development as an active individual in the society of their country. The other two pillars are important
supports to the central activity.

Findings

NGDO A: Performance and Funding

Considering the model of Carvalho (2005), concerning the human component, we can see that NGDO A,
year after year, has overcome new approaches, providing an increase of improving the lives of users and
6 Journal of Human Values 23(3)

achieving goals. Regarding sustainability we can mention that the cost of the projects, supplies and ser-
vices and other expenses and losses have been decreasing, although the same is not true for human
resources expenses, since it suffered an increase in the last year. Finally, considering quantitative issues,
for all the years, income is higher than expenditures, the number of projects have been increasing, as well
as the number of people helped. For a more detailed analysis see Table 1.
According to the interview, the classification of the organization can be viewed from two different
perspectives, can be considered as a regular organization if classified according the European standards
and can be considered as a large organization considering the national standards. We will use total assets
in order to classify the dimension of this NGDO. In 2013, NGDO A had in cash and equivalents a total
of €7,431,872.96, an amount that represents 22.07 per cent of total assets, and 77.1 per cent of assets is
represented by the other accounts receivable, which totals to €25,112,146.92. Compared to the previous
year, total assets increased slightly (in 2012 was €33,163,996.82 and in 2013 €33,674,529.18). With
regard to net fixed assets, the organization had in the last three years similar values (in 2011 represents
€1,122,851; in 2012 a total of €1,140,015.03; and in 2013 amounted €1,103,504.01). Given these
figures, we view NGDO A as a large organization.
Considering organization performance, our interviewer underlined the difference among project and
organizational performance. He mentioned that we must accept that all criteria vary depending on a huge
range of external factors, like the country where they work. From his point of view, nowadays projects
are increasingly a result of office work, instead of field work, and stakeholders like to see the upward
curve, where this same curve means the improvement of some indicators, nevertheless, sometimes
reports do not reflect the true reality, because such evaluation is done by applying certain existing criteria
and the results may be biased.
According to the 2013 annual report, this year was marked by the economic turbulence and instability,
one of the most visible reflections of the European economic and financial crisis. There was a reduction
in the budgets coming from public sources, result of the public deficit, so there was a direct impact on
the budget available for the cooperation, with negative implications for NGDO A. Nowadays, the pro-
jects undertaken by NGDO A are funded mostly by external sources, particularly by the European Union,
Camões (Cooperation and Language Institute) and the Calouste Gulbenkian Foundation. As can be seen
in Table 2, in 2013, the European Union contributed more (61 per cent) for the projects developed by
NGDO A, followed by the portuguese government (35 per cent) and other sources (4 per cent), where
partnerships (with private entities, universities, polytechnics, among others) are included.
Through document analysis it can be seen that receiving funds is not regular, that is, the amounts are
different from year to year. The amount of 2011 is greater than the obtained funding in 2012, and different
from the one obtained in 2013. These sceneries might be explained considering austerity, that had
important impacts particurlarly in the deployment help area, where the paradigm shift for this sector was
inevitable. Contrary to the recession spiral, NGDO A has adjusted to a new reality, bookmarking different
areas of intervention. Our interviewer mentioned that criteria that help in obtaining financing are, mainly,
substantial proposals, ‘when there is a good one, there is always resources’, since he considers that
dimension is not a valid criteria for the selection, but the security, be a solid institution financially
talking. He also mentioned that diversity of funding is crucial for the sustainability of any organization,
affecting positively organizational performance.

NGDO B: Performance and Funding

Performance of NGDO B can be analysed in Table 3. We can see that, year after year, the human
component has overcome different methods, providing an upgrade in users’ lives, as well as, in the
Ferreira et al. 7

Table 1. Measures of Organizational Performance for NGDO A

ONGD A 2011 2012 2013

1. Human Component
  1.1 Success in new approaches - - -
  1.2 Goals achievement - - -
  1.3 Improving the life of users - - -
2. Sustainability
  2.1 Success in controlling expenses
  2.1.1 Project costs – . .
  2.1.2 Supply and services - . .
  2.1.3 Human resources expenses - - -
  2.1.4 Other expenses and losses - . .
  2.2 Attracting resources
  2.2.1 Social fund ) ) )
  2.2.2 Obtained funds - . -
3. Quantitative component
  3.1 Income higher than expenses - - -
  3.2 Approved public funds
  3.2.1 Projects approved - - -
  3.2.2 Obtained funds - . -
  3.3 Number of helped people
  3.3.1 Health - . -
  3.3.2 Education - - )
  3.3.3 Food security – - –
  3.3.4 Development/culture/tourism - . -
  3.3.5 Environment - . -
  3.3.6 Education for development - . -
  3.4 Number of volunteers - - -
  3.5 Number of donors and sponsors – – –
Source: Authors’ own.
Note: - increasing; . decreasing; ) neutral.

Table 2. Funding Diversity for NGDO A

Funding Diversity 2013 2012 2011

Public funders (subsidies, grants, etc.) €15,808,787.15 €15,248,550.18 €25,363,391.74
Private funders (donations) €0.00 €0.00 €0.00
Sales and other current income €0.00 €0.00 €0.00
Source: Authors’ own.

accomplishment of objectives. Regarding sustainability, it can be concluded that projects costs, the cur-
rent expenses (external services) have been declining over the years, excluding 2013. The employee
benefits show an increase over the years. Resources attraction, particularly those obtained through the
provision of services in 2011 and 2012 presented values lower than the previous year, however in 2013
had an increase of 900 per cent. The membership contributions exhibited the same decrease pattern, most
8 Journal of Human Values 23(3)

Table 3. Measures of Organizational Performance for NGDO B

ONGD B 2011 2012 2013

1. Human Component  
  1.1 Success in new approaches - - -
  1.2 Goals achievement - - -
  1.3 Improving the life of users - - -
2. Sustainability
  2.1 Success in controlling expenses
  Supply and services . . -
  Human resources expenses – - -
  Other expenses and losses . . .
  2.2 Attracting resources
  Provision of services - . -
 Membership . . .
 Donations . . .
3. Quantitative Component
  3.1 Income higher than expenses - . -
  3.2 Approved public funds
  Projects approved - - -
  Obtained funds . . .
  3.3 Number of helped people - - .
  3.4 Number of volunteers - - -
  3.5 Number of donors and sponsors . . .
Source: Authors’ own.
Note: - increasing; . decreasing; ) neutral.

probably because of the departure of some members. Donations also exhibit a uniform pattern, and from
year to year decrease sequentially. The total of revenues displays an overall amount of €33,908.44.
Finally, quantitative issues present, for 2011 and 2013, incomes higher than expenditures, although this
is not true for 2012. The number of projects increased as well as the number of volunteers. The number
of helped persons increased in 2012 compared to 2011, however, suffered a decrease in 2013. A different
scenario is presented for fundraising, since obtained funds, donors and sponsors decreased.
The balance sheet shows a decrease of total assets in 2012 compared to the previous fiscal year. However,
in 2013, it is noted that an increase in total assets over the previous year in the amount of €3,799.33.
According to our interviewer, NGDO B is a small organization. The respondent considers that:

dimension can be considered one of the significant factors, however, not the main. The existence of an organiza-
tion (number of years) is also crucial, for example if we want to apply for projects of the European Commission
is necessary to have at least 3 years. The same rule is valid if we want to apply to Camões Institute, we must have
three years of existence or partnerships capable and sufficient on the field.

Thus, it is clear through the document analysis that NGDO B shows a reduction in cost-related current
expenses (external services) in 2011 and 2012, although the same is not true for 2013. Considering the
employee benefits we can see an increase, and this growth is justified by the intervention of the organiza-
tion in different areas and countries, although the obtained funds suffered a reduction, the number of
projects increased. Income statement presented over the years examined a positive value, except in 2012
Ferreira et al. 9

when there were expenses in excess of the revenue and earnings before interest and taxes were lower
than net income before taxes.
The funds of NGDO B is very important for the development of its activities. Initially the organiza-
tion was funded mainly by the Camões Institute, scenario that changed overtime. Our interviewer, when
faced the question that what types of funds (internal and external) have greater representation in the
organization, said that:

[…] there is a first level of funding, the most obvious since we are a civil society organization, through payments,
i.e. we have individual and collective members, and these members pay a value. It is usually a very small amount
of funding, very insignificant, because although there are many members, mainly individual, there is always a
problem of receiving that payment. Then we want that our partners became also donors, we are talking about
companies and higher education institutions. We have some companies that are associated and contribute to the
funding of the organization and we also have higher education institutions, which are many, and contribute not
only with money, for example the School of Engineering of Polytechnic of Porto helps with water, electricity,
internet; a company of marketing consultants is responsible for our commercial cards and our website main-
tenance, as you can see all of this services are very important funding. Nowadays, our organization, monthly
publishes a newsletter specifically dedicated to national and international funding and give this information to
its partners. This information is organized by us and shared, only, with our partners; it is an internal information
and intends to be an important added value to all. We regularly met and discuss which types of funding would be
more adequate to our projects and this modus operandi is exactly the opposite of what we did in the past, since
we use to get funds exclusively from public sources. We analyse the multitude of lenders, mainly international,
and see what we can do in order to be aligned with their main goals. So, funders are varied, and the diversity of
funding is essential for organizations.

The external services made by the organization in 2012 and 2013 represented more than 60 per cent of
the level of internal financing, so the organization gets funding through the memberships contributions,
the external services made and a few projects. Therefore, it means that the organization is dependent on
40 per cent of external funds, but also of private funding (See Table 4).
The respondent believes that:

there is a greater probability of obtaining resources when we make available to stakeholders a set of economic
and financial information, because if we are talking about enterprises, most of their motivations are determined
by profit, they will think - what our enterprise gain with that? Well, when you put the question in these terms, and
quite rightly, that has to be translated into concrete gains, the enterprise has to realize what will win if decide to
participate in a certain project and this will obviously arouse interest, to know how the project works, how is the
sustainability of the organization or the organization’s level of success.

With regard to the diversification of the types of funding, our respondent states that an organization must
diversify the sources of funding, because if this does not happen the degree of dependence increases,
jeopardizing sustainability.

Table 4. Funding Diversity for NGDO B

Funding Diversity 2013 2012 2011

Public funders (subsidies, grants, etc.) €13,368.54 €16,027.97 €46,359.85
Private funders (donations) €1,880.63 €13,795.04 €17,280.28
Sales and other current income €18,937.71 €3,765.00 €3,145.00
Source: Authors’ own.
10 Journal of Human Values 23(3)

NGDO C: Performance and Funding

Considering performance for NGDO C (see Table 5), through the human component, we can see that the
organization has been able to successfully complete the planned tasks, however, we can mention that
NGDO C, sometimes, needs to give up of some tasks in order to achieve others, non-predictable previ-
ously. Bearing in mind the importance of improving the users lives, NGDO C claims that, year after year,
improve the quality of life of children fighting with extreme poverty, and their central objective is to
spread their help and help more people. Considering the sustainability component, the organization
faced a decrease in external services, but an increase in staff.
In 2011, there were no any extra subsidies and in 2012 and 2013, the amount of subsidies increased,
registering approximately €30,000. Finally, in relation to the quantitative analysis, in 2011 revenues
were higher than costs (in 2011 the revenues were higher than the expenses), contrary to what happened
in 2012. The public results approved in 2011 and 2012 carried a slight increase, suffering a fall in 2013.
Although this cut in the obtained funds has been harmful to NGDO C, they manage to increase the num-
ber of children helped in the whole period, as well as the number of volunteers and donors.
The size of the organization according to the total assets, in particular required by cash and equiva-
lents in 2013 has a value of €46,000.23 and fixed tangible assets a small value of €307.80. According to
this data and our interviewer, NGDO C can be considered as a small organization. The organization has
not been expanding in geographical terms, continuing limited to Mozambique. According to the data
reported in the activities report and financial statements, in 2011, the cost of international volunteers
were the largest cost of NGDO C, representing 42 per cent of total costs. These costs are partly supported
by public subsidies, which releases funds from NGDO C to other important areas such as communica-
tion, direct costs of the central project and human resources.
The performance of NGDO C is based on three fundamental pillars, which are related to each other
and support all the work done by the institution: 1) Project Tutor at Distance (PTàD); 2) Volunteering; 3)

Table 5. Measures of Organizational Performance for NGDO C

ONGD C 2011 2012 2013

1. Human Component  
  1.1 Success in new approaches - - -
  1.2 Goals achievement - - -
  1.3 Improving the life of users - - -
2. Sustainability  
  2.1 Success in controlling expenses  
  Supply and services . . .
  Human resources expenses – - –
  2.2 Attracting resources – - )
3. Quantitative Component  
  3.1 Income higher than expenses - . –
  3.2 Approved public funds - - .
  3.3 Number of helped people - - -
  3.4 Number of volunteers ) ) -
  3.5 Number of donors and sponsors - - -
Source: Authors’ own.
Note: - increasing; . decreasing; ) neutral.
Ferreira et al. 11

Table 6. Funding Diversity for NGDO C

Financiamentos Obtidos 2013 2012 2011
Public funders (subsidies, grants, etc.) €27,224.28 €27,224.28 €0.00
Private funders (donations) €39,875.02 €56,145.00 €56,895.00
Sales and other current income €1,500.00 €1,217.70 €0.00
Source: Authors’ own.

Fundraising. It is based on these three pillars that NGDO C maintains its projects (see Table 6). As we
can see, NGDO C is financed mainly through internal funds. Being the Projetct Tutor at Distance (PTàD)
that has the greater representation for the organization, represents 54 per cent of the funding in 2011 and
50 per cent in 2012. This project aims to move persons to become guardians/protectors/tutors of a child
(from 2 to 18 years ) for a minimum period of one year, guaranteeing to fund monthly their living
expenses, particularly in food, clothing, health and education. Donations made by these tutors revert
entirely to the children, and NGDO C only acts as an intermediary. Monthly each child receives
€20 coming from one or more tutors. Table 6 describes the types of funding and the amounts that the
organization has raised for the years under study.
Currently, NGDO C has public subsidies of €27,224.28, contributions, donations and money raised in
events in the amount of €39,875.02. Donations represent the largest share in the obtained resources
(Table 6). Funds diversification is unequivocally imperative, at all levels, but specifically in terms of
management. Aside the importance of diversification, showing the importance of the project to all the
stakeholders is absolutely essential as well as the positive impacts that have in all of them—enterprises,
people involved, tutor, children. Our respondent mentions that:

if an organization is doing a work that is understood as very necessary and important, support can come from
many sides, like business and private individuals. If it is a more limited project, and not everyone realizes how
important it is, it is much harder to get funds, because if people do not consider it as important will not respond
to the call. If the organization is focused on funds diversification, I believe organizational performance improves.

In the point of view of our respondent, the more stable funding are those that are intended to cover the
costs of the projects, which are derived from the European Union, the European Voluntary Service, the
Portuguese Cooperation and Camões Institute, so mainly all the external sources are very reliable and
assure a certain level of solidity for the organiztion, even if we consider that some external funds are
confined in a given period of time. Internal funding may or may not be stable, it depends, in a general
way our interviewer consider it as less reliable. Our respondent considers that the size of the organization
is not a determinant factor to obtain funds, is much more important than the central activitites defined by
the important projects that organizations have. NGDO C also considers that organizations transparency
is undeniably vital, giving economic and financial information to stakeholders is very important to obtain
funds, as well as explain and publish the way money is used by the organization.

Discussion
Our research intends to analyze the relationship between the performance of NGDOs and its fund
sources, more specifically proposes to understand if a greater diversity of funding has an impact on the
organization’s performance (or not). After reviewing the literature, formulate some relationships and
analyze some data about three NGDOs, we present Table 7 that brings together all these elements.
Table 7. Discussion

Results
Research Questions Interviews Literature Document analysis Interviews
(i) Funds diversity Which way do you consider to be Guimarães, (2010): > internal funds < ONGD A þ (external funds more ONGD A þ
and its impact the most stable one for gaining access dependence than 95%)
on organizational to fund resources? Sargeant, West and Ford (2004): > ONGD B þ (internal funds 60% ONGD B þ
performance external funds, < predictability and and external 40%)
regularity of revenue ONGD C þ (partners 20%, tutors ONGD C þ 
Carmona (2013): > regularity of internal 50%, volunteering 30%)
funds, > organizational stability
Hughes, Luksetich and Rooney (2014): >
external funds, > prestige and credibility
Is there a greater gaining access Sargeant, West and Ford (2004): > ONGD A þ ONGD A þ
to fund resources when a set of external funds, < autonomy, < planning of ONGD B þ ONGD B þ
results are available for stakeholders, organizations ONGD C þ  ONGD C þ 
in particular, about economic and Jung e Moon (2007): > external funds, >
financial results? recognition of organizational quality
Do you consider that performance
evaluation is important for
stakeholders? Why?
(ii) the amount of What types of funds (internal or LeRoux and Wright (2010): > internal ONGD A—mainly external funds ONGD A þ
funds and its impact external) have greater representation funds, < risk of compromising their ONGD B—internal funds ONGD B þ
in organizational in the organization? Why? activities, > autonomy ONGD C—internal funds ONGD C þ 
performance Consider that is necessary to invest Guimarães (2010): < funds diversity, > Document analysis was not ONGD A þ
in funds diversification? Why? activity conditioned conclusive ONGD B þ
LeRoux and Wright (2010): > funds ONGD C þ 
diversity, > autonomy, <independence to
take some risks
(iii) Organization How do you consider organization Wals (2007): > dimension, > performance ONGD A: total actives of ONGD A ý
dimension and dimension (small, medium or big)? Guimarães (2010): > dimension does not €33.674.529,18 in 2013
its impact in fund Why? mean > funds ONGD B: total actives of ONGD B ý
performance Which factors do you consider more €17.43767 in 2013
important for funds gaining? ONGD C: without information ONGD C ý
(iv) NPO time of Which factors do you consider Sargeant, West and Ford (2004): > ONGD A: founded in 1951, has 30 ONGD A ý / þ
existence and funding important for obtaining funds? longevity, > positive impacts in credibility, active projects ONGD B þ
performance > funds ONGD B: founded in 2006, has 8 ONGD C ý
active projects
ONGD C: founded in 2006, has 3
active projects
Source: Authors’ own.
Ferreira et al. 13

Considering our first research question, (i) funding diversity and its impact in organizational perfor-
mance, we can affirm that regularly used internal and/or external sources have a positive impact on organ-
izational performance. Such evidence is found through document analysis and interviews, in all the three
organizations that are part of this research. At the same time, a greater regularity in the use of internal and/
or external sources also have a positive impact on organizational performance. Nevertheless, the capabil-
ity of organizations adjust to cuts in government grants relies seriously on an increase in private support,
predominantly in recessionary periods, decreases in government support may need to be complemented
(Hughes et al., 2014). Although there are different opinions on what form of funds is considered more
stable and reliable, all organizations indicate that a greater harmony using external sources provides a
significant increase in organizational performance. But, document analysis shows that all the three
NGDOs have very different forms of obtaining funds. The second research question is related with (ii) the
amount of funds and its impact in organizational performance, although is not obvious that budget size is
the main influence for a high performance (Petrescu & Tongel, 2006), all our NGDOs agree that there
exists a positive relationship between financing (level and type) and organizational performance.
The third research question is linked with (iii) NPO dimension and its impact on funding performance.
NGDO A, according to document analysis and the interview, is considered a big organization, however
they consider that organization size is not a supporting factor for obtaining funds. NGDO B is considered
a small organization, although the interviewer of this organization has the same opinion as NGDO A, that
is, he claims that the size may be an important factor for obtaining funds, nevertheless it is not the most
important factor, being the most important factor having substantial and meaningful project. NGDO C
also shares these opinions. Analyzing organizations’ dimension and sources of funding, we can do some
associations, while all organizations defend that size is not a supporting factor for obtaining resources,
argument that is corroborated by the literature (Guimarães, 2010), what is happening is that large organi-
zations, such as NGDO A, have greater external funds, rather than small organizations like NGDO B and
C, that have less power to obtain external funds, and mainly obtain their funding through internal sources,
like contributions, donations, among others. Thus, it is understood that the size does not affect the overall
funding, but may have an influence on the profile/type of obtained funds (Guimarães, 2010).
Considering research question (iv) we can mention that the time of existence of an organization is not
of general consensus. According to NGDO A, the lifetime of an organization may be or not an important
factor. Although NGDO C does not consider the time of existence as an obstacle, as many quite old
organizations cannot evolve and generate development in terms of attracting funding and funded pro-
jects. On the opposite side, we have the opinion of NGDO B, since our interviewer claims that the life-
time of organizations is one of the most important elements, as well as the partnerships that these
organizations have, since certain international fundraisers may ask for organizations that are active for at
least three years and give basic credibility and sustainability to their partners. Some authors mention the
importance of informal relations among government and NPOs, since getting and preserving govern-
ment funding are more like an ongoing relationship-building process, so organizations leaders must use
multiple strategies to cultivate their partnerships (Lu, 2015), this argument emphasizes the importance
of the time of existence of an organization and its relation with governments. As can be seen, there is no
unanimity about organizations time of existence, although there is unanimity about funds diversification,
since it avoids the dependence on a single source of funding, and increases the power of autonomy.

Conclusion
The third sector has gained an overwhelming prominence in recent times, consequence of economic and
social changes and also because of the importance of its activities in society. The idea that this sector
appears has a bridge between the state and the market is presented in the literature.
14 Journal of Human Values 23(3)

In our research, we particularly study organizations devoted to the development or NGDOs engaged
in international activities among which we include development assistance associations, international
emergency aid and promoting organizations human rights and peace. We conclude that there is a rela-
tionship between fund sources and organizational performance NGDOs, and that additional funding or
greater diversity of it, positively influence organizational performance. Focusing on diversification of
funding sources reduces the dependence of organizations and consecutively improves their performance.
The proliferation of the number of organizations and the scarce funding sources for them is an increas-
ingly troubling scenario, requiring organizations to differentiate from each other, many times forcing
them of breaking the criterion of cooperation. Through our data analysis and discussion, we accomplish
that our results, obtained through document analysis and interviews, are similar to the ideals portrayed
in the literature.
Of course our research has some limitations, first it is organized around a small number of questions
and at the same time has also a small number of organizations. Recognizing these limitations, we
consider that it would be interesting that future research on this subject would expand the scope of the
analysis to a larger number of organizations and using a greater number of questions.

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