Funding is essential for the easy running or startup of a business. Funding covers incorporation (which confers legal status), equipment, supplies, labor bills, insurance, rent or other facility fees, and hiring essential or experienced employees (to name a few). In addition, the funds are used to develop, market, and distribute products and services to attract new customers and keep current ones. There are two main types of funding methods for a company; private funding and public funding.
Private Funding Sources
Private funding means acquiring startup capital from private sources, mainly non-banking lending associations. Private funding sources may include personal savings, family members, angel investors, venture capitalists, or private lending institutions (Mason & Botelho, 2018). Private funds include grants and gifts, meaning they can come as loans or in exchange for equity. Private funding allows a business owner to access cash faster without going through many legal processes.
Public Funding Sources
On the other hand, public funding involves acquitting business capital through public funds. Public funding sources mainly come from federal, state, or other publicly funded agencies (Staniewski et al., 2016). These funding channels differ depending on the level they are applied in the government. Public funding is a more reliable means of funding and is more long-term with a promise of a large amount of money. Public funds primarily come from taxes but can also be acquired through fines and fees.
How Funding Sources Support an Agency
Funding agencies play an essential role in supporting agencies they have invested in. Once they have financed an institution, private funders use their business experience to support and promote the organization’s success (Patti, 2008). They do this by exposing the firm to other people who may invest. They also help market the agency by discussing their work and the quality of their goods and services. Funding agencies also make up an organization’s board of leaders and help with running the business. They are also involved in significant decision-making in the business, which may affect its course. Funding agencies also help businesses and organizations to acquire assets either by donating or purchasing them.
The Funding Sources Used for the College Dreams Agency
College Dreams is a non-profit organization that will help low-income communities with grant writing for tuition. This, therefore, means that it will require a large amount of money to be able to help the students. I will, therefore, go for both private and public funding to maximize the amount of funds I get. To begin with, I will use my savings to cover some of the expenses I will incur and buy some assets for the company. Thereafter, I will ask for grants and gifts from family members and friends. I will also apply for small loans from non-banking services. College Dreams organization is a public service program making it possible to apply for public funds from state funding agencies. This means that I can apply for public funds to boost my capital when starting the program.
Crowdfunding is the method through which a firm gets funds from many small investors, often online. Crowdfunding is an entrepreneurial act that seeks to close the funding gap without standard financial intermediaries (Böckel et al., 2021). Since my organization is nonprofit and seeking to help the community, I will also take advantage of the internet and social networking and appeal for funds from the public (crowdfunding). I will also create fundraisers that charge an entrance fee to request funds from well-wishers. I will also impose membership fees and dues to attract extra funds.
Böckel, A., Hörisch, J., & Tenner, I. (2021). A systematic literature review of crowdfunding and sustainability: highlighting what really matters. Management review quarterly, 71(2), 433-453. Web.
Mason, C., & Botelho, T. (2018). Early sources of funding (2): Business angels. In Entrepreneurial finance: The art and science of growing ventures (pp. 60-96). Cambridge University Press.
Patti, R. J. (Ed.). (2008). The handbook of human services management. Sage Publications.
Staniewski, M. W., Szopiński, T., & Awruk, K. (2016). Setting up a business and funding sources. Journal of Business Research, 69(6), 2108-2112. Web.