In order to fund their operational and program costs reach their objectives, most NGOs raise
funds from outside their organization, via seeking voluntary financial support from foundations, corporations, individual donors, and government agencies. However, such financial support is not simply the movement of money from these sources to the NGO. It is a
two-way street, involving value for and obligations to the donor. As a recipient of such funds, it is important that the NGO be open and transparent, be accountable to the donor, use the funds responsibly and according to the intent of the donor, and allow the funding agency to be able to have insight into the project at all times. It is important that the fundraising activity also be consistent with the mission of the NGO.

A. General Fundraising Principles

1. Governing body. The governing body should be very active in the fundraising effort, including being active in solicitations and in giving a substantial portion of the individual contributions.

2. Consistency with mission. An NGO should only accept funding that is consistent with its mission, does not compromise its core principles, and does not restrict its ability to address relevant issues freely, thoroughly, and objectively.

3 . Truthful. An NGO should be truthful in all matters relating to the raising of funds and their use.

4. Mission priority. Programs should be designed to meet the mission of the NGO and never designed simply to meet the needs of a funding source.

5. Unethical actions. An NGO should not tolerate any unethical activities such as double
funding for one project, diversion of dedicated funds to uses other than the project for which funds were approved, or overstatement of achievements.

B. Solicitations

1. Solicitation materials. An NGO should be careful to ensure that all solicitation and promotional materials are accurate, and that they clearly and truthful present the NGO,
its mission, and its programs. All solicitations should correctly reflect the NGO’s planned use of the solicited funds. Fundraising solicitations should only make claims which the NGO can fulfill. There should not be any exaggerations of fact or material omissions, nor any communication or images that would create a false or misleading impression.

2. Tax benefits. An NGO should ensure that donors receive informed, accurate, and ethical
information regarding the tax implications of potential gifts.

3. Fundraising principles. Fundraising should be mission-led, institutionally based, and volunteer driven, and free of improper motive, inappropriate conduct, unreasonable
reward, or personal inurement.

4. Excess funds. When funding for a particular purpose is invited from the public, there should be a plan for handling any excess funds, and the appeal should include information on how any excess funds will be used.

5. Compensation to fundraisers. An NGO should not provide compensation to fundraisers that is based on a percentage of charitable contributions raised or expected to be raised, nor should it provide a finder’s fee. Percentage-based compensation can be an impediment to keeping the donor’s and NGO’s best interests primary, and may foster unethical behavior or inappropriate conduct on the part of the fundraiser. It likewise can be a hindrance toward maintaining a volunteer spirit and keeping the mission of the NGO at the forefront, and may offer reward without merit in the case of a large donation that may be the product of many
individuals. An NGO may provide compensation based on skill, effort and time expended, and performance-based compensation, such as bonuses, provided such bonuses are in according with prevailing practices of the NGO and not based on a percentage of charitable contributions raised.

6 . Sales promotions. Fundraising promotions involving the sale of products or services should indicate the duration of the campaign, and the actual or anticipated portion of the purchase price that will benefit the NGO or program.

7. Percentage of fundraising costs. The costs involved in fundraising should be reasonable
relative to the revenue generated. Over the course of a number of years, an NGO’s average expenditure on fundraising activities should be one-third or less of the amount of revenue generated from these activities, and ideally fundraising costs should be less than 25% of fundraising income. An organization that does not meet this ceiling of 33 1/3% (fundraising costs/fundraising re venue) over a five-year period should demonstrate that it is progressing toward this goal or explain why its fundraising costs a re reasonable (such as the higher fundraising costs of a newly-created organization, or unique donor, social or political factors).
8. Information on solicitors. The NGO should have policies in place to protect the donor’ s right to be informed whether the solicitors are paid staff, volunteers, or agents of the NGO.

C. Use of Funds

1. Use of contributions. An NGO should ensure that contributions are used as promised or implied in fundraising appeals or for the purposes intended by the donors.

2. Grant commitment. When an NGO accepts a grant, they are entering into a contract to
carry out the program activities in an agreed-upon manner, and have an ethical and legal responsibility to honor that commitment.

3. Donor consent for changes. An NGO may alter the conditions of a gift or grant only by obtaining explicit consent by the donor.

4. Efficient and effective use. An NGO should ensure efficient and effective use of grants
and charitable contributions.

D. Accountability

1. Tracking expenditures. An NGO should set up an organized system to track grant
expenditures.

2. Timely reports. An NGO should produce timely reports on the use and management of funds.

3. Financial statements. Financial statements regarding donations should be available
upon request by the donor and interested parties.

E. Relationship with Donor

1. Donor relationship. The directors, management, staff and volunteers of an NGO should not exploit any relationship with a donor or prospective donor for personal benefit or the benefit of any relative, friends, associates, colleagues, and so forth.

2. Confidentiality. Privileged or confidential information regarding the donor or donation should not be disclosed to unauthorized parties.

3. Donor privacy. A donor’s privacy should be respected and an NGO should safeguard any confidential information regarding the donor or the gift. Donors should have the opportunity to remain anonymous, and to not have their names added to any lists that are sold, rented or given to others, unless the donor has had an opportunity to approve such lists or have their names removed.

4. Privacy policy. An NGO should have a clear and easily accessible privacy policy that informs the public what information is being collected on individuals and donors and how that information will be used, how to contact the organization to review personal information collected and to request corrections, how to inform the NGO that the individual does not wish his or her personal information to be shared outside the NGO, and what security measures are in place to protect personal information.

5. Unethical solicitations. An NGO or its agents should not use excessive pressure, coercion, undue influence or other unethical means in their solicitations.