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You are here: Home / imp / What is a Corpus Fund and why it is important for an NGO to maintain Corpus Fund?

What is a Corpus Fund and why it is important for an NGO to maintain Corpus Fund?

Corpus Fund is a fund that an NGO can use when its survival is at threat or during a phase/period where project funds are very limited. 

It can simply be also called as “Emergency Fund”, as it is also used to help sustain the difficult times of an NGO. Given its nature, this is also called subsistence fund.

An important aspect of the Corpus fund is that, with general body meeting approval,  it can also be used to keep continuity in an organisation activity, say, when the grant is still not received from the donor organisation. In such cases, there are two options for an NGO- either make some temporary arrangement or delay the activity. If an NGO has just limited fund, as it depends only on the foreign grant, any delay in the grant will lead to a pause or delay in the project activity. Corpus, in such cases, works as a temporary grant arrangement to keep the activity continued. 

There are two ways of getting corpus funds: 

  1. Income or surplus- There may be different rules in the different country towards this. For example, in India; as per the Income Tax act, only 15% of the organisation income or surplus can be transferred to the corpus fund. Rest 85% has to be used to fund program activities. 
  2. Donations- Corpus can be received as a donation. But, any donation that is received this way, must be clearly stated by the donor that she/ he is contributing towards the corpus. Without any written consent from the donor, the additional funds cannot be transferred to the corpus. 

In case of donation, if there are no such written briefs, NGO can go back to get such written consent. For example, In India, the financial year closing is on 31st March. Sometimes, NGOs receive a huge grant in February, as March is the last month of the financial year and the donors need to give away the sanctioned/pledged money for the respective development cause. Now, the NGO may be unable to utilise the grant within that financial year (practically only 1-2 months remaining). One of the alternatives for the NGO would be to go back to Grant donor requesting to mark their donation as Corpus.  It can only be considered corpus after receiving the consent, in writing. 

NGOs receive limited funds to run the program activities as the approved budget. There are certain regular expenses, which do not get funded through this. In such cases, these expenses can be covered from the corpus funds. For example- Rent for a building. And thus, the corpus helps to keep an organisation financially secured. 

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