Sources of capital Assignment Example | Topics and Well Written Essays - 500 words

Sources of capital - Assignment ExampleAnother way through which NFPs raise funds is Grant monetary support which includes the funds that be awarded to NFPs by the government sector or by organizations that are charitable in nature (Landskroner, 2002). For example World Health formation may provide a local NGO located in Pakistan with funds for the eradication of poverty in deserving areas of Pakistan. Both For Profit and NFPs commode even use Loan financing and equity capital to raise funds for business. Loan financing refers to the money that is borrowed by an organization from another financial organization such as the banks (Zelman, 2009). Equity finance is the capital that is raised by both the organizations by the sale of certain amount of shares of the organization to foreign investors. Trading or sale of assets is even means through which both kinds of organizations raise capital. Trading is the sale of goods and services in return for money and immovable assets are th e assets such as land and furniture that may be sold by organizations to raise capital.All these sources have finance have sundry(a) pros as well as cons associated with them. The main advantage of raising funds through fundraising activities is that the money that is raised does not need to be returned and the organization does not need to provide an account of where and how it was spend. But the downside of this method is that holding fundraising programs is quite expensive. In case of grants, the money does not need to be returned but the not for profit organization has to provide an account of where and how the money was spent. The upside of loan financing is that ample amount of money can be raised at a very small period of time but the loan repayment makes the method expensive. In case of equity, there is an increase in league due to which the not for profit organization may lose its sight of working for the wellbeing of others. The problem with trading and sale of fixed ass ets is that there are certain tax