Non-Governmental/Non-Profit Organisations At A Glance

 What is a Non-Governmental or Non-Profit Organisation?

A non-governmental or non-profit organisation (NGO/NPO) is an entity set up with the aim of advancing social objectives that result in developmental changes in a society. The term “non-governmental organization” was coined in Article 71 of the Charter of the newly formed United Nations in 1945. As the name implies, they are not set up for commercial or profit-making purposes.

They are usually independent and have no partisan affiliation with governments. These organisations include charities, foundations, civil society organisations, think-tanks, trade unions, pressure and interest groups, co-operative societies, religious organisations, community and cultural groups, etc. In a nutshell, these organisations are voluntarily formed by individuals who are passionate about social, communal, charitable or philanthropic causes.

In Nigeria, the freedom of association guaranteed under section 40 of the Constitution of the Federal Republic of Nigeria, 1999 means that an association can exist without incorporation. However, organisations can be registered at the Corporate Affairs Commission (CAC), a body empowered to oversee the incorporation, activities and winding up of organisations in Nigeria.

The foremost legislation guiding the incorporation of organisations is the Companies and Allied Matters Act (CAMA), 2020. Although the Constitution does not mandate Incorporation, persons who have come together for business, social or other purposes opt for incorporation because it offers several benefits for their operations.

How are NGOs/NPOs funded?

• Donor organisations: These include bi-lateral and multi-lateral organisations which provide grants, usually to non-profits and in some cases, to governments of developing countries.
• Government institutions: Some governments around the world set aside funds dedicated to fostering development in specific focus areas. These funds are often made accessible to domestic non-profit groups and in some instances, foreign non-profits organisations as well.
• Commercial entities: Some companies set aside a portion of their profit to support charitable causes as part of their social corporate responsibility. While some of these companies establish subsidiary foundations as an arm of the company to implement these social objectives, others make these funds available to external non-profit groups to administer on their behalf.
• Individual donors, donations and gifts: These sources of funding are more common with charitable groups working in areas such as healthcare, poverty alleviation, education, wildlife conservation, etc.

Costs, Reporting and Accountability

NGOs/NPOs just like any organisation, have operational costs, such as personnel costs, rents, transportation costs, project costs and other day-to-day expenditure. NGOs have to create and maintain records of their financial transactions and activities. Depending on the source of funding, they may also need to provide periodic reports of their activities and transactions to donors.

DID YOU KNOW?

NGOs/NPOs are sometimes referred to as the ‘third sector’, as they are neither part of the public sector nor the private sector, and work on issues that are largely unaddressed by the other two sectors. For example, civil society organisations serve as an intermediary between the people and the government; think-tanks carry out research and provide relevant data; charities and foundations offer services free of charge to their beneficiaries.

Image Credit: Phuket Times