The most common type of support NGOs look for, grants are monetary contributions to an individual organization for charitable purposes with no expectation of the money being returned. Grants are sometimes synonymous with gifts, awards, and donations. However, grants are a specific type of award which often come with strings attached. Some grants have specific uses or purposes. Below are some specific types of grant funding.
Project funding is given to an NGO for the purpose of competing a specific project. Most grants are given in the form of project funding, which typically include an agreement to carry out a set number of activities within a set time frame and budget. There are often limits on what money may be spent outside the particular project, and funding for indirect project costs like staff time and supplies often has to be negotiated.
Unrestricted funding is a grant given to an organization with no specific purpose; the organization may use the funding as they see fit. It is typically difficult to receive unrestricted funding from institutional donors, but most individual contributions can be counted as unrestricted funding.
Core funding is used to sustain the NGO itself for necessities such as rent, salaries, utilities, equipment, transportation, communications, etc. Core funding is typically more difficult to acquire than project funding.
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Endowments are funds put into long-term investments to grow the overall size of the endowment and generate annual income for the institution. Endowments are meant to last the lifetime of the institution, so there are usually limits on how much may be withdrawn from the endowment per year. Endowments are most typically available to large institutions with many individual donors, such as universities, museums, hospitals, and religious institutions. It is very difficult for NGOs to get funding for an endowment, especially from institutional donors.
Capital funding is for capital investments such has the purchase of land, construction of an office, improvements to facilities, etc. Most institutional donors will have rules against funding capital projects.
Seed funding or start-up funding is the initial capital a new NGO needs to start functioning. Seed funding is very risky for donors to award and so typically very hard to obtain.
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The next article will discuss other ways to receive support beyond grants.