Page 31 - FREN-C2021 PROCEEDINGS

A REVIEW OF CHALLENGES TO MALAYSIAN NON-
GOVERNMENT ORGANISATIONS’ FUNDING

*
Nurliana Zahira Binti Zaharrudin , Azzarina Binti Zakaria

Faculty of Business and Management
Universiti Teknologi MARA (UiTM), Selangor Branch, Shah Alam Campus, UiTM Shah Alam, 40450 Selangor, Malaysia

* Corresponding author: nurlianazahirazaharrudin@gmail.com

Abstract
Non-government organisation (NGO) is the third-largest sector globally. They promote sustainable
societies’ development and exert an influence over the agenda of government and corporations. Funding
is the principal income for NGOs. It permits the existence and provision of operation sustenance as
donors the primary funders. However, for the past few years, new movements have transformed the
funding landscape. As a result, NGOs are under pressure to work out their relevance while making
difficult decisions about their programmes. This paper provides a review of trends that are challenging
the NGO funding landscape. The trends’ insights will pave the way for NGOs to withstand the
complexity and navigate new strategic approaches to build the reserves.

Keywords: Non-Government Organisation (NGO), Donor Funding, NGOs Challenges

Introduction

Non-Government Organisations
The third sector is an institution that separates from the government agency and corporation, established
by people voluntarily to promote sustainable societies’ development (Etzioni, 1973; Ridley-Duff &
Seanor 2008). There are five common characteristics of the third sector (World Bank, 1995; Vakil,
1997; Sohel, Uddin & Kulsum, 2007): (1) formal (it is institutionalised in that it has meetings, office
conveyors and some organisational stability), (2) private (it is separated from the government agency,
though they may receive some support from them), (3) non-profit distributing (the income does not
return to the directors or their affairs), (4) self-governing (it is equipped to control and manage their
affairs) and (5) voluntary (the third sector is involved in meaningful voluntary participation in the
conduct or management of the organisation) (Salamon & Anheier 1997; Lewis & Kanji, 2009; Tumin
& Nurhadi, 2017). The third sector is commercially known as a non-government organisation (NGOs).
When the United Nations (UN) Charter was drawn up in 1945, the term ‘NGO’ was widely used across
countries, including Malaysia (Willetts, 2002; Lewis, 2010). Therefore, considering its wide usage
globally, the term ‘NGO’ is preferred within this paper.

The World Economic Situation and Prospects (WESP) (2014) classified all countries into three broad
categories, which are (1) developed, (2) developing and (3) under-developed countries (Dang, 2009;
Gooding, 2017). Developed countries have high economic progress and excellent technological
infrastructure, such as the European countries (Felipe, Kumar & Abdon, 2014). On the other hand,
developing countries have slow industrialisation, and the citizens are commonly in the upper-middle-
income level, such as the Asian countries. In contrast, under-developed countries refer to states with the
highest poverty rates, such as South Asia countries (Mishra, 1987; Skarstein, 2007). Regardless of the
categories, NGOs are essential for community development such as poverty alleviation, humanitarian
aid for a natural disaster, sustainable food system, social movements, equal education, employment
and infrastructure (Schrader, 2007; Holder & Reidy, 2013).

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