‘Although we have come a long way, there remain many things to discover about the subject of non-profit associations,’ nonetheless resumes Sybille Mertens. One of the Centre’s recent research studies has precisely looked into the financing of the non-profit sector. A terrain unexplored until then. ‘We have a lot of macro statistics on the non-profit associations, but we have a poor understanding of what goes on internally in their midst: what are the financing modalities, their management problems? There did not exist, in Belgium, studies looking at this angle in an exhaustive manner.’ The study (1), an investigation carried out on a stratified random sample of 2,000 Belgian francophone associations (Wallonia and Brussels) and which received close to 500 responses, enabled completely fresh data to be gathered on the financial management of the associations.

Healthy management

A glance first of all at what goes on within the SME (Small and Medium Enterprises). ‘When one thinks of funding for SME, one thinks of two things: they finance themselves by selling their goods on the market; when they have to invest they use capital resources but above all they resort to the use of a loan.’ The situation changes when we consider non-profit associations, which are often of a small size – less than ten people employed. First of all, the majority of them are funded by public subsidies, ‘certain of them rounding these sums out with diverse forms of funding: member subscription, gifts from individuals, businesses, foundations, sales.’ This hybridisation of resources is explained by the fact that ‘what a non-profit organisation produces interests several publics: the direct beneficiaries of course, but also the public authorities, the members, the local governments, etc.; that justifies multiple forms of funding,’ notes Michel Marée. On the other hand a trend towards self-funding becomes clear in the behaviour of these associations when they have a need for investment or liquid assets. We can leave it there for a preliminary general overview.

What else does this investigation teach us? That the accounts of the associations are doing very well, in general. That the associations borrow only very little from the banks out of principle, through fear of getting into debt to the banking system, and that it is in no way the demands of the banks which prevent them from doing so. ‘Two results which have shaken up our working hypotheses,’ concedes Sybille Mertens. ‘Within the sector mention is often made to problems with the accounts, with liquid assets. Yet we nevertheless note that there are very few. And when there are problems we have observed that these are linked to when the public authorities release the subsidies: the subsidies sometimes arrive with delays of six months, a year, even a year of a half – what SME could allow itself to wait to know its turnover figures a year and a half after being set up?’ And Michel Marée concludes: ‘in addition, the cyclical character of subsidies – they are sometimes paid in every X month – means that the bailing out of the accounts occurs in fits and starts, which can easily be prejudicial to an association whose management has not been correctly planned, for example.’ The intrinsic management of non-profit organisations is in any case not the cause of these cash shortage. A healthy and prudent management (‘ensuring good husbandry’) is moreover confirmed in the cautiousness which generally characterises the relationships with the banks, which are very little called upon. A relationship which will nonetheless need to be clarified in the future. ‘The box most often ticked to the question about the reasons for not using classic banking credit to fund investment was, in effect ‘the non-profit organisation prefers not to be in debt to the banks’. There again our prejudices have taken a knock. To explain not using a bank loan – a general trend in the sector – we thought that the guarantees demanded by the banks were too high, or that the formalities were too taxing for the associations. That is not the case. The question which nonetheless remains to answer is whether it is really the fear of getting into debt which explains this behaviour, ‘risk aversion’ as we say in economics, or if it is ideological obstacles (the wish to not take part in the banking system) which underlies this distancing from banking institutions. This needs to be tested.’

(1)  ‘Comment se finance le secteur associatif?’ (How is the non-profit sector financed?). The results of a fieldwork investigation in francophone Belgium, a project funded in the framework of the START programme, linking the Walloon Region, the University of Liege and CERA, Mertens de Wilmars Sybille, Marée Michel. Available on ORBI.