The legislation of many countries has no special legally defined concept of “non-governmental non-profit organization”. This is especially true for the countries of precedent law (USA, UK). At the same time, many countries of civil law also do not have a common legislative definition of a non-governmental non-profit organization (for example, Sweden).
There are the following definitions of such organization:
- Not-for-profit organization (NFPO) – a non-profit organization (this term is used mainly in the United States, as well as in the international community for a general designation of organizations of this kind);
- Non-governmental organization (NGO) – non-governmental organization (this term is most often used as generalizing for various countries in the documents of international organizations);
- Charity – a charitable organization (this term is used in Great Britain);
- Private voluntary organization (PVO);
- Civil social organization (CSO).
Who finance independent non-profit organizations?
In the United States, almost 96% of the population donates. Residents of the UK spend 11.5 billion euros annually for this purpose (almost half of individual donations in all European countries).
However, both in the United States and in Europe, private donates are far from being the main elements in the funding mechanism for non-profit organizations. They account for only 8% of the budget of organizations, the rest is made up of income from the provision of services (52%) and state support funds (40%).
For example, many organizations are financed by microfinance organizations like Payday Loans CT. This company provides funds for to maintain the service these organizations offer. Besides, this referral service has included many US lenders in the network that also take active part in this charity organizations’ fundraising.
State finance of funds into non-profit organizations
State assistance affects non-profit organizations in different ways. In some cases, it stimulates, in others it demotivates. It all depends on its forms highlighting several of the most common:
- tax incentives;
- state lotteries;
- deduction of part of the income tax in favor of charitable organizations;
- government co-financing of donations;
- creation of charitable foundations at the expense of funds from privatization;
- partnership between the state and charitable foundations.
From lotteries to partnerships
Significant amount of funds for non-organization in a number of countries (Great Britain, the Netherlands, Belgium, Germany) is provided by state lotteries. In the Netherlands, six lotteries donate around € 500 million to charities. In the UK, 40% of the income from the national lottery goes to a specially created state fund, which distributes it in the form of grants.
In Germany, Italy, Spain, Sweden, Switzerland, Poland, voluntary deduction by citizens of part of the income tax in favor of charitable organizations is legally enshrined. Usually, this is a small rate: in Poland – 1%, in Italy, Spain – 0.5%.
In the USA, Canada, Singapore, Hong Kong, Great Britain, Australia, New Zealand, Norway, Finland, there are programs of state co-financing of private donations to universities. The amount of co-financing depends, for example, on the university’s experience in fundraising (raising funds). So, in Great Britain, universities with little experience could receive from the state no more than £200,000, experienced ones – up to £2.75 million. In total, the British co-financing program for 135 educational institutions managed to attract about £580 million from individuals and £143 million from the state.
More than 500 charitable foundations operate in 21 countries of the world, created using funds from privatization. In recent years, partnership between foundations and the state has also been developing. In the United States, the country’s first office for developing partnership projects was established 13 years ago under the administration of the Governor of Michigan. In 2010, similar structures appeared in eighteen states.