Establishing a non-profit organization is a straightforward process, but the primary hurdle lies in its ongoing operation and financial sustainability. Many non-profit entities struggle to support themselves using their own resources, which is often insufficient..
Frequently, such organizations must seek alternative funding sources to guarantee their long-term viability. Consequently, it is valuable to have knowledge of these funding avenues and grasp their dynamics.
These sources can be split into four main categories:
- Financing from members and third parties;
- Financing from public subsidies;
- Financing from the activities of the associations themselves;
- Financing through credit.
Financing from members and third parties
A contribution is a monetary request made by an association to its members to fund its daily expenses.
We may define a donation as a benefit (financial, material, etc.) that the association receives without having done anything to obtain it. Nothing is given in return for a donation, but the donor may benefit from tax exemption, provided that at least €40 is donated in that calendar year and the association has been approved by the Service Public Fédéral des Finances (Federal Public Service for Finance). The association must issue a tax certificate ("receipt") for the donation it has received.
Sponsorship is the granting of financial support to an organisation or event in return for special visibility for the sponsor's name or logo. The sponsor always intends to gain something, for example, an increase in awareness or a strengthening of its internal or external brand image. The general idea behind this approach is that the more the company is known and appreciated by the public, the more sympathy it will receive from potential customers...
Patronage is when an organisation or activity is supported without the name of the company or patron being visibly associated with it. In short, the patron receives no direct or measurable reward in terms of publicity or image. Patrons therefore have somewhat philanthropic intentions, arising from selfless, personal callings (idealism, support of a cause).
Crowdfunding is where individuals or associations present their projects, most often online, and several people can invest an amount of their choice in the projects they consider useful. This can be done with or without something in return.
Calls for project bids from foundations
Calls for projects (for specific audiences, geographical areas or fields of action) offer real opportunities for associations. There are many foundations recognised as being of public utility, corporate foundations and endowment funds, which are involved in a number of causes. Some fund projects directly, others operate indirectly. Their fields of intervention vary according to their sensitivity or the orientations they adopt.
The King Baudouin Foundation is one of the most active foundations in Belgium, supporting hundreds of projects every year.
A public contract may concern works to be carried out, services to be rendered or supplies to be delivered on behalf of the federal State, the federated entities and all levels of power in the Kingdom, as well as parastatals. They are awarded following a call for tenders (or "public procurement procedure"). For Belgium, the e-Procurement portal contains announcements of public contracts.
These are certainly not avenues to be ignored, despite being more local. The members of service clubs pool their skills and commitment to help the community, and primarily those who need it the most, such as people living in poverty, disabled people, and people with illnesses. Cultural enrichment and the protection of young people are regularly part of their programmes. Examples of Service Clubs include the Lions Club, the Rotary Club, the Kiwanis Club and the Fifty-One Club.
Financing from public subsidies
Subsidies or grants
This is financial assistance granted by a public authority (an authority of the state, community, region, province or commune) to a legal entity, with the aim of promoting the public-interest activity to which this entity is dedicated.
Communes, the French Community Commission (COCOF), the Wallonia-Brussels Federation, the federal State, and the European Union may provide contributions to support associations.
The Brussels Region, via its Brussels Economy and Employment administration, can also subsidise associations, provided they meet the eligibility criteria (carrying out an economic activity, belonging to one of the supported sectors, etc.).
Financing from the activities of the associations themselves
Since the entry into force of the new Code of Companies and Associations (CSA) on 1 May 2019, non-for-profit organisations may carry out commercial activities without restriction, whereas in the past this had to remain incidental. However, profits must be allocated to the association's social purpose and may not be redistributed to members, administrators or employees.
Any non-for profit organisation can organise support events such as shows or dinners. This type of event allows associations to raise funds but also to publicise their activities and attract new members.
As explained above, an association can also carry out purely profit-making activities on an unlimited basis, such as selling goods or services. The association can therefore generate a turnover and thus cover its costs, in whole or in part. It should be noted that if the association carries out profit-making activities, it will be subject to corporation tax.
Financing through credit
In order to finance their larger investments, associations can also take out a loan with a bank or other financial institution. For example, a loan may be considered for the purchase of equipment, the renovation of premises, a property purchase, etc.
If the association receives subsidies, it will often have to find a way to pre-finance them. Indeed, it may take several months for the funds to be paid out and the association generally already has to incur costs to carry out the actions for which it has received the subsidies. If the association does not have sufficient own funds for this pre-financing, it can, for example, use a cash credit.
Pre-financing can also be used for future income. For example, income from an event which will take place in several months' time but which requires costs to be incurred from the outset (room hire, advance payment for catering, etc.).
These two Brussels-based organisations offer loans to non-profit organisations:
- Finance&Invest.brussels via their CITIZ US loan (intended for companies and associations serving a social cause). FIB can also offer guarantees and subordinated loans provided that the association :
- is regularly involved in an economic activity;
- is not owned for more than 25% of the voting rights by one or more public bodies;
- is not owned for more than 50% by a public holding/venture capital company, universities, small local authorities.
- Crédal (FR) via their loans to associations and collective projects