We often hear – I am not sure whether my money will reach the beneficiary. To simplify, we explain here, the different ways in which NGOs use donations to further their work with the communities they serve. The next time you make a donation, you’ll know where your money is going!
1. Corpus Donations: Probably the least common, but among the most fiscally prudent options you could fund. A donor has to direct the NGO (Trust, Foundation, Society, Section 8 Company) that his/her donation is towards the entity’s corpus. The NGO is not allowed to use the money for operating expenses. The corpus is liquidated only in case the organisation is shutting down.
Ideal for: Long-term donors. A donation to the corpus is an investment in an NGO’s future. If you like an NGO and feel they are doing good work, consider a corpus donation. It helps the NGO to sustain itself financially. Many NGOs with large corpuses use the interest earned by investing the corpus funds to finance programmes. Dependence on donors reduces considerably and the NGOs can run their projects without an interruption.
2. Donations for purchase of Capital Assets: When you choose to purchase equipment like a computer, a car, an ambulance or medical equipment. Corporate donors tend to fund capital assets as they feel comfortable seeing a tangible asset being created.
Ideal for: Corporate donors, family foundations, institutional donors. It provides a win-win to NGOs and to donors. Many bigger donors are uncomfortable making large donations for programme expenses (see point 3), and prefer to purchase assets that have a long life and are used when implementing a programme.
3. Donations for Programme Expenses: This is the most common form of donation requests. An NGO requests a specific amount (often small-ticket) to support a programme that directly impacts one or more beneficiaries. You may have seen NGOs asking for Rs500 to provide feed a child or Rs1,000 for a scholarship.
The amount may represent a bundled cost in delivering the service. Example: an NGO requesting funds for ‘treatment of a child’ could use the amount towards paying the doctor’s fees, purchasing medicines, the NGO’s costs to bring the child to the hospital or any other activity related to that programme. Your donation could function as gap-funding for the amount the NGO lacks, or it may even sponsor the entire expense.
Ideal for: Anyone looking to make an immediate impact. Funding requirements here are often urgent, and a lack of funding means that that beneficiary could be left out of a programme. It’s a great way to prop up an organisation’s work.
4. Donations for specific resource requirements: NGOs also turn to donors to help them source the materials they need to provide services to their beneficiaries. This could include buying rice for mid-day meals, medicines for patients under treatment or books for students from underprivileged backgrounds. They could put up the cost of the item itself, and donors can give in multiples of that amount. This does not cover the NGO’s own operational expenses in bringing that service to the people who need it.
Ideal for: Anyone who has an affinity for a cause. If you like animals, and feeding animals is particularly close to your heart, buying dog food or pet food will make you feel most connected to the cause.
There you have it! When you look at an NGO request next, you will know what kind of donation they are asking for. It also shows you how far a few hundred rupees that we take for granted in our lives can go in helping someone in need.