Report for mountaineering training organization (MTO)
The cost of supporting community of outdoor leaders has dramatically increased over last two years. The main source of financing used by organization - membership fees – is not enough for further development of the organization. So it is necessary to determine new ways of money-rising, bearing in mind some already existing mechanisms which are effectively used worldwide by sport organizations with the same purposes. The aim of this report is to recommend some actions for MTO to be taken for fund-raising.
The most common sources of funding can be classified as external and internal. If an organization borrows money from the bank, fund or other organization it is externally raised capital. In case of getting money from the own activities of organization it is internal financing. Usually sport organizations are given better credit facilities because of their status of non-profitable institutions. Long-term financing is generally used for assets and projects and short term financing is typically for continuing operations. Within the context of mountaineering associations it is better to use funding on the long term-basis as a source for different projects. After comparing the interest rate of these two types of loans and some other indexes we understood that the benefits for the organization from the borrowings on short term basis are lower. And operational activities costs can be covered from other available sources like membership fees etc. Furthermore short-term borrowings are rather given to other forms of business.
Internal financing includes membership fees, money from training courses. Lots of sport organizations such as ISA (International Surfing Association), BWO (Badminton World Organization), FIFA and others give an opportunity for sportsmen from all over the world to attend different courses and classes hold by well-known champions. The amount of money paid by the participants provides the organizations with an additional source of financing. Such schools or courses are really popular now. The certificates are highly appreciated.
Advertising campaigns of different companies are also efficient as that is quite simple in organizing. For instance, a member of the associations wearing the form with logos of companies is a simplified evidence of that source of funding. It may provide the organization with money given by sponsors.
The association may cooperate with some charitable organizations getting money needless of returning. From the one hand, it is the most beneficial way of funding. But at the same time the amount of money given by charitable organization is quite small. In most cases it varies from 5 to 15% of the sum required for the development of the association.
Another means of money-rising is applying for different grants. The sums are quite large but for small business the procedure to get really significant grant is complex.
Some companies in order to increase their capital organize IPO (Initial Public Offering). Then their assets are sold at the stock market. It is fair to say that this is most beneficial way of raising money in short period of time. Due to this procedure a lot of companies are really successful. But to become public the organization needs to fit some criteria that very often is impossible for small and middle-size companies. Besides, the threat of that source of financing is losing of control.
Small business requires some special ways of money-raising due to its special organizational structure. They are different for different organizations. But the commonly used is crowd-funding. It is based on raising monetary contributions from a large number of people who share the same ideas. It has no restrictions and may be used by every company or organization independently of their size, structure and operational sphere. Donation is commonly used to describe this money-giving action. To start crowd-funding campaign the company needs to register on Kickstarter or another crowd-funding platform. It is really effective money-raising instrument that is actively used in different spheres. I suppose that crowd-funding is also very appropriate for non-profits.
Very often specialized governmental institutions provide small companies with continuous financing that is aimed at significant improvement of the general business environment in the country. There are some standards such as level of capital stated, annual turnover that are obligatory to be followed before participation in governmentally aided programs. The form of that kind of help can be direct and indirect. Direct support means giving money for the organization on special basis. Indirect support means facilitating company activities by tax-cut, subsidies that in fact lead to real increase of the size capital. It also can be used by sport organizations.
There are also some special ways of money-raising for non-profitable organizations. The nonprofit fund drive organizer should make the events fun to encourage mass participation of the community. Organizing different entertainment events with lots of guests from similar communities can help an organization to build strong reputation and start cooperation with organizations that have the same needs. Another way is giving additional benefits for members of the organization like prizes and so on. That will stimulate their feeling as a part of community and enhance their acceptance of the membership fees and so on.
Of course, there are different other types of money-raising mechanisms, but basic of them are mentioned above. The choose of instruments of financing depends on the strategy of the company in general and also on the particular goals to be achieved.
It is important to briefly define the potential funding sources for Mountaineering training organization. Speaking about the most advantageous of them in the frame of particular situation, I think that long-term borrowings, crowd-funding and internal funding will be very efficient. There are lots of people from all over the world who are interested in mountaineering and can donate money for this organization. So the crowd-funding strategy will significantly increase the capital of MTO. Internal sources such as organizing courses will also be beneficial because of the existing demand to learn mountaineering. Of course, other sources besides IPO (due to the structure of MTO) can be used. The currently used way of financing (membership fees) will remain basic and this is quite natural for the sport organizations, but for the further development of MTO usage of sources overviewed in this report is necessary.
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