A company limited by guarantee (CLG) is a type of non-profit organization, commonly found in sectors such as education, charity, and social enterprises. Since CLGs do not have share capital and thus no shareholders, they rely on alternative methods for raising funds. Here are the primary ways a CLG can raise money:

1. Grants

  • Government Grants: Many governments offer funding programs for non-profits and social enterprises.
  • Foundation Grants: Private foundations and charitable trusts offer grants to support specific causes.
  • International Grants: Organizations like the United Nations or the World Bank may provide funding to CLGs that meet their mission criteria.

2. Donations

  • Public Donations: CLGs often rely on donations from the general public or philanthropic individuals.
  • Corporate Donations: Businesses may contribute funds as part of their corporate social responsibility (CSR) programs.
  • Online Crowdfunding: Platforms like GoFundMe or JustGiving allow CLGs to raise funds through small donations from a large number of people.

3. Fundraising Events

  • Hosting events such as charity dinners, auctions, concerts, or marathons to raise money for the organization.
  • Sponsored Activities: Individuals or groups can participate in challenges or events, raising sponsorship money for the CLG.
  • Please note that this may need the CLG to have charity status before they can host fundraising events where monies are raised from the general public.

4. Membership Fees

  • Some CLGs operate on a membership basis, where individuals or organizations pay annual fees to become members and support the cause.
  • Membership fees may also be collected in instances where members are part of an association where they hold a certain certification. For example, the CLG may be an association issuing certification. Such certification are premised on the applicant holding a membership (and possibly going through some course). You may be part of an association like the Singapore Home Renovators’ Association (this is a made-up association to help with the example) which issues a certification to members upon completing a course and putting in place certain practices. They can then put up that certification or display a certain mark at their premise or website. Such display may inspire confidence from the general public when engaging in their services.

5. Service Fees

  • If the CLG provides certain services, it may charge a fee for them (e.g., training, consultancy, education programs) to generate revenue.
  • This is often in line with membership fees as stated above.

6. Partnerships and Collaborations

  • Collaborating with other organizations, including government bodies, private companies, or NGOs, can lead to financial support for specific projects or initiatives.

7. Social Enterprises

  • Some CLGs run social enterprises, selling products or services with the profits going toward their mission. For example, a CLG might run a café or a retail shop, where proceeds are reinvested into the organization.
  • Do note that social enterprises can refer to a separate profit-generating entity. Social enterprises in Singapore are commonly private companies limited by shares. In this instance, the CLG is part of the running of the social enterprise. It may also own the social enterprise (i.e., a shareholder of the social enterprise).

8. Sponsorships

  • Partnering with businesses to sponsor certain activities or events in exchange for brand exposure and recognition.

9. Loans

  • Although less common, CLGs can apply for loans, particularly from social lenders who offer finance for organizations with a social or environmental mission. However, this method involves the obligation to repay, which may not suit all CLGs.

10. Investments

  • Some CLGs can earn money through ethical or impact investments, where they invest in socially responsible ventures and use the returns to fund their activities.

By employing a combination of these methods, a company limited by guarantee can secure the necessary funds to operate and achieve its mission without relying on traditional equity financing.

If you have any queries regarding CLGs and the running or setting up of one, do contact the Raffles Corporate Services corporate secretarial team at [email protected].

 

Yours sincerely,

The editorial team at Raffles Corporate Services