Once a funder has decided which organisation to support, the information in this article can assist them in determining the best way to provide that support.
Financial support
Grants are non-repayable funds distributed by one party to a recipient. Although the money does not have to be repaid, recipients are usually required to commit to specific outputs or outcomes, including reporting on how the money is spent and how the project is progressing.
Bequests are planned gifts of personal property through the provisions of a will or testamentary trust. A bequest can be specific; for example, an amount of money or property, or a percentage thereof, or the residual of a deceased’s estate. It can also be conditional. NPOs can also be named as the beneficiaries of insurance policies or retirement funds.
Loans are a high-risk, short-term means of supporting an NPO, and must be entered into with careful consideration of its viability for both parties. When lending money to an NPO, it is important to ensure that the NPO has a solid track record of income and operations that position it to be able to repay its debt.
Equity capital is financing provided by external investors through the purchase of the shares of a company. This option is not available for charities and similar organisations, but only for registered companies. The finance is nonrepayable (it is distinct from debt-financing) but external investors are granted a share in any rewards gained. This form of support is popular for social enterprises.
Purchasing products or services from an NPO can help to support it financially, as well as strengthen its entrepreneurial determination. It is, however, important that the products or services are aligned with the primary aims of the NPO. For example, purchasing items made by beneficiaries of an NPO, with a mission to empower people living in poverty, directly supports that NPO and its beneficiaries. It is important to note that payments for such commercial transactions are not tax exempt for either party.
Non-financial support
Donations of goods or products are a popular form of support. When donating goods, it is important to establish whether the NPO can make use of and/or afford to maintain or repair them if they are not in good working condition. Alternatively, companies and individuals can offer discounted rates on products to NPOs.
Donations of services/pro bono work is professional work – such as bookkeeping or legal work – undertaken without payment, or at a reduced fee. Supporting an NPO to transition into a social enterprise helps to ensure sustainability. A social enterprise seeks to address its social issues using a sustainable business model, with profits reinvested into the enterprise.
Bartering is the exchange of goods or services without the transfer of any money; for example, providing a gardenorientated NPO with accounting services in exchange for the produce it provides.
Volunteering time or expertise to an NPO can be a rewarding and educational experience for both volunteers and beneficiaries. Strong alignment between volunteers’ passions and NPOs’ needs increases the impact and sustainability of volunteer projects. It is important, however, that volunteers are able to meet the time and skill requirements of the NPOs that they intend to support.
Training and mentorships can help NPO employees or beneficiaries to develop new skills and confidence.
