A number of avenues areopen to public and other not-for-profit organizations to finance borrowing needs, typically for long-lived assets or capital projects. The financing option pursued will be influenced by a number of factors, among them the financial strength of the governmental unit or organization, the nature and scope of the project being financed, and the predictability of the cash financing flow. Among the general options that may be available are;
Set aside cash reserve for the prospective acquisition, and
Before selecting a financing option, a thorough analysis of the costs and
benefits of each should be made. Generally, a sound approach will involve a combination of the three approaches.
The payment of cash or the pay-as-you-go approach is essentially self-
financing but allows interest payments to be avoided; it enhances the borrowing capacity of the organizational unit or other not-for-profit agency.
Though very popular, it has distinct shortcomings. This approach assumes that a community or organization will have sufficient revenues to meet current operations plus an excess to meet capital facilities requirements. "Pay as you use” is a related concept, suggesting that the payment of the borrowed funds will be returned as people pay user charges for the services rendered.