When we think about sustainability, we immediately imagine environmental issues. But, in the universe of finances, the term goes much further. This is the case of financial sustainability, O conscious use of money in the present to achieve results in the future. This does not just mean “saving money”, but using it safely, avoiding unnecessary expenses and investing it, thinking about long term.
This term is very important when we talk about personal finances, but it also needs to be considered in plans for causes and projects. social organizations (NGOs), for example, it is very important to have efficient management of resources, so that the action of the cause is long-lasting and with satisfactory results. This longevity can be achieved through a Equity Fund (Endowment). Check out how this is possible throughout the text.
Financial sustainability for the third sector
Our study, “The importance of the Third Sector for GDP in Brazil”, shows that the Third sector, that is, the non-profit organizations, are responsible for more than 4% of the country's GDP. In addition to all the impact on health, education and culture, for example, the sector makes an important contribution to Brazil's economy, with job creation and in generation of economic value.
And the performance of NGOs in the country continues to grow, today there are more than 800 thousand, covering several areas. To maintain growth and strengthen its operations, it is very important to consider the financial sustainability of each project. With a efficient management, expense control and planning, to the NGOs can go even further.
Despite the economic relevance of NGOs, some institutions still face difficulties in maintaining themselves: more than a third of organizations cease to operate after 5 years of operation, second IPEA data. This is due to several factors, but mainly to financial instability.
To implement the financial sustainability in your organization, it is important to understand what stage of financial maturity you are and what is the ideal financial reserve. An interesting mechanism for mature organizations that aim to long term is a Equity Fund.
How a Heritage Fund Works
The Equity Fund works as a financial reserve in which the resources (donations) initially provided are invested, and only the income generated by these investments is used to finance the organization's activities or projects. The principal, or initial equity, is preserved, allowing the fund to exist indefinitely. This model offers financial stability, given that, Even in times of economic hardship and lack of donations, the organization can continue to operate with the income from the fund..
Opening a Wealth Fund
One Equity Fund Is this what your organization needs, but you don't know where to start? We do it for you! To guarantee the continuity of its cause, the Sitawi, in partnership with the Endowments of Brazil, Equity Fund Management Organization (OGFP), developed a innovative approach of common infrastructure in the country, which allows the establishment of Funds that benefit multiple causes or organizations. This approach can support your NGO to have perpetuity in a way fast and affordable, with considerably lower costs, since, as in a coworking space, OGFP houses different Funds in a shared infrastructure.
With our credibility and transparency recognized, OGFP manages the contribution of resources from your organization in search of solid long-term financial returns. The disbursements of this return go to support the organization in implementing its projects with positive socio-environmental impact.
Want to know more about Endowment Funds and how to implement it in your cause? Know the financial mechanism.
