What is an NGO?
A non-governmental organization (NGO) is a nonprofit citizen group that operates independently of government but may engage in international philanthropic, development, or social missions. NGOs are typically organized at the local, national, or international level to accomplish specific social or political goals. As of June 2024, there were more than 1.8 million nonprofit organizations in the United States.
Key points
- Non-governmental organizations (NGOs) play an important role in international development, aid and philanthropy.
- NGOs are non-profit organizations by definition, but they can have budgets of millions or even billions of dollars each year.
- NGOs rely on a variety of funding sources, from private donations to membership fees and government contributions.
Types of NGOs
The World Bank recognizes two types of NGOs: operational NGOs, which focus on development projects, and advocacy NGOs, which are organized to promote specific causes. Some NGOs may fall into both categories simultaneously. Large NGOs may have budgets in the millions or even billions of dollars.
The World Bank lists a total of 47 types of NGOs, including:
- BINGO — Large international NGO (e.g. Red Cross)
- ENGO — Environmental NGO (e.g. Greenpeace and World Wildlife Fund)
- GONGO — NGO organized by the government (e.g. the International Union for Conservation of Nature)
- INGO: International NGO (e.g. Oxfam)
- QUANGO — Quasi-NGO (e.g. International Organization for Standardization (ISO))
How are NGOs funded?
As nonprofit organizations, NGOs rely on a variety of sources to fund projects, operations, salaries, and other overhead costs. Because an NGO’s annual budget can be in the hundreds of millions (or even billions) of dollars, fundraising efforts are important to the NGO’s existence and success. Funding sources include membership dues; the sale of goods and services; the private sector, for-profit businesses; philanthropic foundations; grants from local, state, and federal agencies, as well as foreign governments; and private donations.
Individual private donors can represent 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, which led to the creation of the United Nations Foundation and the Better World Fund.
Despite their independence from government, a number of NGOs rely heavily on government funding to operate. Some NGOs may be considered controversial because it can undermine their ability to advocate politically or attempt to achieve radical goals.
The 1.8 million nonprofit organizations in the United States manage more than $8 trillion in assets.
Are private donations to NGOs tax deductible?
Private donations to nonprofits are tax-deductible only when the organization has obtained 501(c)(3) status. The IRS lists the following qualifying purposes for an organization: “charitable, religious, educational, scientific, literary, public safety testing, promotion of national or international amateur sports competition, and prevention of cruelty to children or animals.”
It is possible for an NGO to have tax-exempt status but not be designated as a 501(c)(3). According to the IRS, these groups include “social welfare organizations, civic leagues, social clubs, labor organizations, and business leagues.”
Political organizations are generally not tax-exempt, as 501(c)(3) groups “are absolutely prohibited from participating or interfering, directly or indirectly, in any political campaign for (or against) any candidate for elective public office.” However, groups engaged in certain political activities, if conducted on a nonpartisan basis, may qualify, such as voter education initiatives, voter registration drives, and get-out-the-vote campaigns.
Example of funding through grants to NGOs
The Faith-Based and Nonprofit Security Grant Program, established in 2023, provides funding for security equipment, training, and other critical security needs for faith-based and nonprofit organizations that are targeted because of their mission, ideology, or beliefs. In its inaugural year, the program awarded nearly $500,000 to 20 faith-based and nonprofit organizations in Washington state, with individual grants of up to $25,000. Despite receiving 116 applications requesting more than $2.4 million, only a fraction was funded.
In 2024, the Washington State Department of Commerce is expanding this initiative, and the state legislature will increase funding to $1.5 million. This updated program aims to support religious institutions, nonprofit organizations, and nonprofit community centers. Applicants had to demonstrate their vulnerability to physical attack, threats, or harm due to their mission or beliefs. Grants can be used for physical security improvements or preparedness planning, training, or exercises. The application deadline for 2024 grants was July 2, 2024.
NGO fundraising example
The 29th Annual Red Cross Gala, themed “Building Bridges of Hope,” successfully raised $950,000 to support the lifesaving programs and services of the American Red Cross Bay Area. Held on March 21, 2024, at Pier 27 in San Francisco, the event attracted more than 300 notable attendees.
The event featured a cocktail reception, live entertainment, and a live auction. Co-chaired by Elizabeth J. Folger and Patrick “Pat” Hayes, the gala honored the Regional Blood Service Volunteer Committee and Delta Dental for their outstanding humanitarian contributions, highlighting the critical role of blood donation and distribution in saving lives. During the gala, the Red Cross recognized Michael Gregory, Kathryn W. Holmes, Nichole S. Jordan, and Jasper Smith as the 2023 Red Cross Humanitarians of the Year for their dedication to the Regional Blood Service Volunteer Committee. The event was made possible by numerous sponsors (who served as another source of funding for the nonprofit).
What is a non-governmental organization (NGO)?
Non-governmental organizations (NGOs) are nonprofit groups organized independently of government by private citizens. They may pursue a wide variety of social, developmental, or political goals and may operate at the local, national, or even international level.
How do NGOs raise money?
NGOs can accept donations from individuals, for-profit companies, charitable foundations, and governments, whether local, state, federal, or even foreign. As nonprofit entities, they can also charge membership fees and sell goods and services.
Are donations to NGOs tax deductible?
Private donations to any nonprofit are only tax-deductible if the organization has obtained 501(c)(3) status from the Internal Revenue Service (IRS). Not all NGOs have that status, so donations should not automatically be considered deductible. Be sure to check before deducting them from your taxes.
The bottom line
As nonprofit organizations, NGOs rely on a variety of funding sources and can have large budgets totaling billions of dollars. They serve a wide variety of purposes, but the two main types are operational NGOs, which focus on development projects, and advocacy NGOs, which promote individual causes. Not all NGOs qualify for 501(c)(3) status, so even if they are tax-exempt, your donation to them may not be allowed as a tax deduction. Although they are organized independently of the government, they may accept government funding, which in some cases could compromise the integrity of their mission.
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