Towards the financial sustainability of NGOs: enhancing NGO Fund’s budget

Problem

An active civil society serves as a crucial foundation for a strong country. The stronger the non-governmental organizations (NGOs) are, the more effectively they can amplify the voices of the Lithuanian population and address their concerns. Financial sustainability stands as one of the main pillars for a vibrant NGO sector.

Lithuania’s NGO sector is still heavily dependent on project-based state funding – according to a 2020 survey conducted by Aukok.lt, many organizations admitted that they lack the capacity to attract alternative sources of funding. The fact that project funding is a significant source of income for the NGO sector is also reflected in the financial reports of individual organizations. The lack of alternative sources of funding, relying solely on project-based state funding, makes organizations more vulnerable to various crises and does not contribute to the financial sustainability of the sector. 

In 2020, the Non-Governmental Organisations Fund (NGO Fund) was established within the Ministry of Social Security and Labour with the aim of strengthening the institutional capacity of NGOs, investing in the sector and ensuring the sustainable development of trusted state partners. One of the main areas of the NGO Fund’s financing is the competitive allocation of funds to NGOs for the formulation and implementation of their development policies. Among the activities financed by the NGO Fund, initiatives aimed at improving the financial transparency and sustainability of NGOs are also highlighted.

Recent statistics from the NGO Fund’s call for proposals show that its current budget is insufficient to meet current and future funding needs. In 2023, out of the 278 applications received, only 79 were funded to strengthen the institutional capacity of NGOs (i.e. barely more than a quarter – 28% of the total number of applications received). As many as 50 NGO applications, which met all the requirements and were judged by experts to be of the highest quality, had to be ‘left behind’ on the reserve lists and could not be funded. The current budget of the NGO Fund, which amounted to EUR 2.9 million in 2023, is not commensurate with the need in view of the State’s objectives for strengthening the NGO sector. 

NGO Fund is an effective tool to strengthen the institutional capacity of NGO staff and thus ensure the long-term financial sustainability of NGOs. However, due to insufficient funding, the resources allocated to this purpose are limited and reach only a small proportion of organizations. In order to achieve significant and lasting changes in the financial sustainability of NGOs, the budget of the NGO Fund needs to be increased.

Project’s problem: the NGO Fund’s budget is insufficient to support applications for enhancing institutional capacity, as well as other activities such as research or training aimed at strengthening NGOs.

Goal

The aim of the project is to explore innovative solutions and develop an action plan to boost the number of projects funded by the NGO Fund, while also identifying avenues for financing additional activities of the NGO Fund.

Participants

2023/24

Giedrė Pociūtė

2023/24

Ieva Mikutavičiūtė