Institutional funding is the term used to refer to the funds that are lend or donated to various entities like Start-up Business, charitable organisations, community services trusts, NGOs, health centres, etc.
Funding Start-up business
Institutional funding in Start-up business refers to the funds provided by Bank, finance company, venture capital and government source. Start-up companies find their funds from Venture capital companies for their business expansion and advancement.
Lending by Banks
From the lending point of view, Banks lend a huge amount of money to its customers who are institutions. For example, when Bank lends to a Steel Plant to finance its expansion or modernisation programs, it is termed as institutional funding.
Multi Crore Funding
The amount involved is often in double digit crore figures. The interest rate struture is also different from that of retail funding. At times, Banks lend funds to various Government departments under institutional funding. Generally, Banks earn the maximum of their interest income by way of institutional funding.
If we consider the donation aspect,various organisations working in fields like looking after childen or the elderly, providing basic health care services or promoting priliminary education often take grants or donations from big institutions under their corporate social responsibility wing. The amount thus collected comes under the purview of institutional funding.
Quite often NGOs working in third world countries or developing countries receive huge amount of money across the border from developed countries to improve the health and education condition of the people concerned.
