What are the different sources of financing for an association?
Creating an association is relatively simple; the biggest challenge is keeping it going and covering its expenses. Many nonprofit making associations try to operate using their own resources. Unfortunately, that's not always enough.
Very often, an association needs to draw on other sources of financing to ensure its sustainability. It's therefore worth being familiar with these sources and understanding them.
These sources can be split into three main categories:
- Financing from members and third parties;
- Financing from public subsidies;
- Financing from the activities of the associations themselves.
1. Financing from members and third parties
A contribution is financial input which an association may request from all or some of its members with the aim of covering the costs of running the association.
A donation may be defined 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 ASBL has been approved by the Service Public Fédéral des Finances (Federal Public Service for Finance).
Sponsoring is when a sponsor financially supports an organisation or event in return for its name or logo being given special visibility. A sponsor is always looking to gain something, for example more renown or a strengthened internal or external brand image. The general underlying idea of sponsoring is that the more famous and popular the company, the more potential customers it can attract.
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 ASBLs 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 project bids (for groups of people, geographical areas or well-defined fields of action) offer real opportunities for associations. There are many recognised public-interest foundations, corporate foundations and endowment funds that are dedicated to a large number of causes. Some of them finance projects directly, while others provide indirect support. Their areas of focus vary depending on their persuasions and the directions they set themselves.
In Wallonia and Belgium as a whole, public contracts concern works to be done, services to be provided or supplies to be delivered on behalf of the federal State, federated entities and all the levels of the country’s government as well as parastatals. They are awarded following a call for tenders (or a “public procurement procedure”).
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.
2. 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.
3. Financing from the activities of the associations themselves
Resources from the association's activities
This is financial support from anyone who participates in the activities, whether or not they are members of the association.
Any nonprofit making association can organise fundraisers in the form of events, shows or dinners. This type of occasion allows associations to raise funds. So long as the proceeds go towards the objective for which the association was created, and organising this type of gathering remains a secondary activity, you don't need to declare anything.
An association may also carry out for-profit activities, such as the sale of goods or services. In this case, it may sometimes have to pay taxes.