What Are NGOs?

A non-governmental organization (NGO) is a non-profit, citizen-based group that functions independently of government, but may be involved in international philanthropic, developmental, or social missions. NGOs are often organized on local, national, and up to the international levels to serve specific social or political purposes.

Key Takeaways

  • NGOs, or non-governmental organizations, play a major role in international development, aid, and philanthropy.
  • NGOs are non-profit by definition, but may run budgets of millions or up to billions of dollars each year.
  • As such, NGOs rely on a variety of funding sources from private donations and membership dues to government contributions.

Types of NGOs

Two broad groups of NGOs are identified by the World Bank: operational NGOs, which focus on development projects; and advocacy NGOs, which are organized to promote particular causes. Certain NGOs may fall under both categories simultaneously. Large NGOs may have budgets in the millions or even billions of dollars.

A number of NGO variations exist, including:

  • BINGO: business-friendly international NGO (e.g. The Red Cross)
  • ENGO: environmental NGO (e.g. Greenpeace and World Wildlife Fund [WW)
  • GONGO: government-organized non-governmental organization (e.g. The International Union for Conservation of Nature)
  • INGO: international NGO (e.g. Oxfam)
  • QUANGO: quasi-autonomous NGO (e.g.the International Organization for Standardization [ISO])

How NGOs Are Funded

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 2006 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 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.

The Bottom Line

As non-profits, NGOs rely on a variety of sources for funding, including:

  • membership dues
  • private donations
  • the sale of goods and services
  • grants from other non-profits
  • government funding

Despite their independence from government, some NGOs rely significantly on government funding.