A non-governmental organization (NGO) is a non-profit, citizen-based group that functions independently of government. NGOs are organized on local, national and international levels to serve specific social or political purposes.
As non-profit organizations, NGOs rely on a variety of sources for funding projects, operations, salaries and other overhead costs. Because the annual budget of an NGO can be in the hundreds of millions (or even billions) of dollars, fundraising efforts are important for the NGO's existence and success. Funding sources include membership dues, the sale of goods and services, private sector for-profit companies, philanthropic foundations, grants from local, state and federal agencies, and private donations.

Individual private donors comprise a significant portion of NGO funding. Some of these donations come from wealthy individuals - such as Ted Turner's $1 billion donation to the United Nations, or Warren Buffett's pledge to give 10 million Berkshire-Hathaway class B shares to the Bill and Melinda Gates Foundation (valued at more than $31 billion in June 2006). Many NGOs, however, rely on a large number of small donations (rather than a small number of large donations).

Despite their independence from government, many NGOs rely heavily on government funding in order to function. Some governmental NGO funding may be viewed as controversial because the funding may support certain political goals rather than a nation's development goals.

  1. How does revenue recognition differ between profit and non-profit companies?

    Under the generally accepted accounting principles, or GAAP, for-profit companies recognize revenue as it is earned through ... Read Full Answer >>
  2. Does the federal government fund any NGOs? Which ones?

    A non-governmental organization (NGO) is a non-profit, citizen-based group that functions independently of government. NGOs ... Read Full Answer >>
  3. Do nonprofit organizations pay taxes?

    Section 501 of the Internal Revenue Service (IRS) tax code exempts qualified nonprofit organizations from federal taxes. ... Read Full Answer >>
  4. What does "pro bono" mean?

    The term pro bono is short for the Latin "pro bono publico," which means "for the public good." The term generally refers ... Read Full Answer >>
Related Articles
  1. Investing

    Baby Boomer Philanthropy Shifts Wealth Adviser Focus

    Wealth advisers who integrate philanthropy and finance planning can stand out with baby boomer clients.
  2. Investing

    Hybrid Business: Rise of Nonprofits in Private Sector

    Businesses are embracing a mutually beneficial partnership wherein the ideals of the nonprofit sector are coupled with profit motive and capacity to scale.
  3. Home & Auto

    Before you Buy That Home: Find a Great Realtor

    Most people think of a good realtor as a successful salesperson, but we should not assume than that's what makes a great or even a good realtor.
  4. Economics

    Explaining Endowment Funds

    An endowment fund is money set aside to earn revenue to fund some type of charitable activity.
  5. Forex

    Trans-Pacific Partnership Agreement: Pros & Cons

    With President Obama securing fast track authority on the Trans-Pacific Partnership, the benefits for labor and capital can be examined.
  6. Taxes

    Tips on Charitable Contributions: Limits and Taxes

    An overview of the limits and tax deductions of charitable donations.
  7. Investing

    Internet.org: What It Is and How It Works

    Basic Internet access remains out of reach for many in developing nations. Internet.org aims to bring basic Internet access to these countries.
  8. Investing

    What's a Multinational Corporation?

    A multinational corporation is just that – a corporation that operates in multiple nations, with a home office that coordinates global management. Being a multinational corporation is a complicated ...
  9. Taxes

    Top Fund-Raising Strategies For Nonprofits

    Top fund-raising strategies for nonprofit organizations
  10. Investing

    What is Globalization?

    As a business term, globalization refers to the tendency of international trade, investments, information technology and outsourced manufacturing to weave the economies of diverse countries together.
  1. Endowment

    A financial asset donation made to a non-profit group or institution ...
  2. European Economic and Monetary Union (EMU)

    The successor to the European Monetary System (EMS), the combination ...
  3. National Motor Freight Traffic Association (NMFTA)

    A nonprofit organization representing interstate, intrastate, ...
  4. Guarantee Company

    A form of corporation designed to protect members from liability, ...
  5. Economist Intelligence Unit - EIU

    An organization that provides forecasting and advisory services ...
  6. Investment Counsel Association Of America - ICAA

    A non-profit organization whose members work in the investment ...

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!