SLOVAKIA
Profits for Non-Profits: Developing Financial Stability in NGOs
Over the past decade, NGOs have been a significant force in the
democratization and revitalization of Central and Eastern Europe,
spearheading grassroots community development initiatives, educating
the public about their rights under new leadership, and serving
as a constructive outlet for citizen activism.
However, countless NGOs do not survive due to a lack of financial
support. The international funding community awards grants for specific
projects, but donors are unlikely to cover the core operational
and administrative costs of an organization. And because NGOs are
often prevented by law from organizing their own profitable ventures,
many do not have sufficient resources to continue beyond the term
of a particular project grant. The Non-Profit Enterprise and
Self-Sustainability Team (NESsT), an NGO based in Santiago, Chile,
set out to address this issue by exploring models for the financial
sustainability of NGOs in Central and Eastern Europe. NESsT enlisted
Partners-Slovakia to conduct an extensive research project on the
financial independence of NGOs in Slovakia and to recommend solutions
to the challenge of long-term sustainability.
Partners-Slovakia prepared five case studies showcasing different
NGO financial models. In Slovakia, NGOs cited competition for scarce
resources as a primary reason that worthy organizations failed.
They also noted the withdrawal of many international donors from
the region and the lack of clear laws safeguarding the tax-exempt
status of NGOs as reasons for their financial woes. In response,
Partners-Slovakia, along with other NESsT researchers, came up with
several ways for NGOs to generate income to reinvest into mission-related
activities. Among these are charging fees for consultative services,
producing and selling products such as newsletters and books, and
developing a membership base which would pay dues in exchange for
discounted services or products. The case studies are outlined in
a book compiled by NESsT, Profits for Nonprofits: an Assessment
of the Challenges in NGO Self-Financing, which has been disseminated
worldwide.
To follow up, Partners-Slovakia designed an initiative called "Effective
Functioning and Organizational Development of the Third Sector."
This formed the basis of the next phase of the NESsT project, in
which Partners-Slovakia designed and implemented intensive trainings
and consultations for NGOs on diversifying their financial resources.
The Center has trained numerous NGOs to organize income-generating
activities, delivered several lectures on NGO business planning,
and published a handbook on developing on-line fundraising, enhancing
relations with the market sector and strengthening overall financial
sustainability.
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