Financial management in libraries and information centers is the process of acquiring, distributing, and effectively utilizing funds to achieve organizational goals. A crucial component of this is resource mobilization, which involves identifying and securing adequate and continuous funding from various sources to support the library's functions, activities, and programs.
As libraries are generally service-oriented and not-for-profit (NFP) organizations, they are not revenue-earning institutions and depend heavily on external funding. Effective financial management is therefore essential for their survival, stability, and growth.
Major Sources of Finance and Mobilization Methods
The sources of finance and the methods to mobilize them vary significantly depending on the type of library.
Public Libraries
Public libraries are primarily funded by public money, and their financial mobilization strategies often rely on a combination of government support and statutory provisions.
- Government Grants: The main source of finance is regular grants from national or state governments. UNESCO's Public Library Manifesto emphasizes that public libraries are the responsibility of local and national authorities and must be financed by them. In states without a library cess, the entire expenditure is often met from the state's consolidated fund.
- Library Cess: A key method for ensuring a permanent and steady source of income is through a library cess, which is a surcharge levied on various taxes. Library legislation is crucial for enabling this.
- States with "pure form" statutory systems, such as Karnataka, Andhra Pradesh, Tamil Nadu, and Kerala, have provisions for a library cess.
- The cess can be a surcharge on property tax, house tax, vehicle tax, entertainment tax, and land revenue. The Karnataka Act, for instance, provides for a cess on property tax, motor vehicle tax, and entertainment tax, along with a government grant equivalent to a percentage of the total land revenue collection.
- Grants from other Bodies: Public libraries in India receive significant support from organizations like the Raja Rammohun Roy Library Foundation (RRRLF), which is the nodal agency of the Government of India for supporting public libraries. They also receive funds from local bodies like Panchayats and other government programs.
- Gifts, Donations, and Endowments: These are supplementary sources of funding. Fundraising activities, sometimes organized by "Friends of the library groups," can mobilize resources for special projects like new buildings.
Academic Libraries
Academic libraries primarily mobilize resources from their parent institutions and government educational bodies.
- University Libraries: Their main funding source is the regular budget from the parent university. They also receive substantial plan grants from the University Grants Commission (UGC) and non-plan grants from State Governments for acquiring books, journals, and for infrastructural development like buildings and equipment.
- College Libraries: The principal source of finance is an allocation from the college's current operating funds. They also receive grants from the UGC and state governments.
- School and College Libraries: A common method of resource mobilization is charging a library fee to students, which is then used for the library's upkeep and collection development.
Special Libraries
Special libraries, being attached to specific organizations, have a more direct funding channel.
- Parent Organization: The primary source of finance is appropriations made by their respective parent organizations. When the parent body takes on a new project that needs information support, it is expected to provide adequate funds to the library.
- Ad-hoc Grants: They may also obtain grants from governmental agencies for specific projects or purposes.
- Self-Generated Funds: Special libraries have been seriously considering ways to generate their own resources, often through fee-based services.
Modern Strategies for Resource Mobilization
In addition to traditional grants and appropriations, libraries are increasingly adopting modern strategies to mobilize resources, driven by financial pressures and technological changes.
- Fee-Based Services: Charging fees for value-added services is a recent phenomenon for libraries. While basic services often remain free, new and specialized services can be priced to generate supplementary funds. These can include:
- Online searching of international databases
- Document Delivery Services (DDS)
- Translation and other documentation services The primary motive is not profit, but to gain intangible benefits like enhanced public relations and a better library image.
- Consortia for E-Resources: The rise of costly electronic resources has led to the formation of library consortia for joint purchasing. This is a form of collaborative resource mobilization where libraries pool their funds to negotiate better prices and gain access to a wider range of resources than they could afford individually. This has significant financial implications, as it involves complex payment models and lease agreements instead of outright purchases.
- E-procurement and E-commerce: The use of ICT has changed procurement processes. Libraries can use e-procurement to order documents and make payments online, which can save time and costs, though it requires new financial procedures like the use of credit cards or e-cash, which can be challenging to implement in some institutions.
🎯 IMPORTANT MCQs: FINANCIAL MANAGEMENT & RESOURCE MOBILIZATION
Q1. Why is financial management critical for libraries?
A) Libraries earn high profits
B) Libraries are not-for-profit and depend on external funding
C) Libraries operate without budgets
D) Libraries generate income from fines only
✅ Answer: B) Libraries are not-for-profit and depend on external funding
Explanation: As NFP organizations, libraries rely on grants, cess, donations, and parent bodies — making sound financial management essential for survival and growth.
Q2. Which of the following is a PRIMARY source of funding for public libraries in India?
A) Student library fees
B) Sale of old books
C) Government grants and library cess
D) Advertising revenue
✅ Answer: C) Government grants and library cess
Explanation: Public libraries mainly depend on state/national government funding and statutory cess as per library legislation.
Q3. What is “library cess”?
A) A fine for overdue books
B) A surcharge on taxes to fund public libraries
C) A membership fee for library users
D) A penalty for damaging library property
✅ Answer: B) A surcharge on taxes to fund public libraries
Explanation: Library cess is a statutory surcharge on taxes like property, vehicle, or entertainment tax — key in states like Karnataka, Kerala, Tamil Nadu.
Q4. Which Indian states have “pure form” statutory systems with library cess?
A) Maharashtra and Gujarat
B) Karnataka, Andhra Pradesh, Tamil Nadu, Kerala
C) Punjab and Haryana
D) West Bengal and Odisha
✅ Answer: B) Karnataka, Andhra Pradesh, Tamil Nadu, Kerala
Explanation: These states have strong library legislation enabling cess collection for sustainable public library funding.
Q5. Which organization is the nodal agency of GoI for supporting public libraries?
A) UGC
B) NISCAIR
C) RRRLF
D) INFLIBNET
✅ Answer: C) RRRLF
Explanation: Raja Rammohun Roy Library Foundation is the central agency for financial and developmental support to public libraries in India.
Q6. Academic libraries in universities primarily receive funding from:
A) Student donations
B) Parent university budget and UGC grants
C) Private publishers
D) International NGOs only
✅ Answer: B) Parent university budget and UGC grants
Explanation: University libraries are funded through institutional budgets and UGC plan/non-plan grants for books, journals, and infrastructure.
Q7. How do school and college libraries often mobilize funds?
A) By selling user data
B) Through library fees charged to students
C) By renting library space for events
D) Through corporate sponsorships only
✅ Answer: B) Through library fees charged to students
Explanation: Charging a nominal library fee from students is a common practice to support collection development and maintenance.
Q8. Special libraries primarily get their funding from:
A) Public donations
B) Their parent organization
C) UGC only
D) International grants exclusively
✅ Answer: B) Their parent organization
Explanation: Special libraries are funded through appropriations from their host organizations (e.g., corporations, research institutes, government departments).
Q9. Which of the following is a modern strategy for resource mobilization?
A) Reducing staff salaries
B) Forming consortia for e-resource purchasing
C) Closing branches to save costs
D) Eliminating digital services
✅ Answer: B) Forming consortia for e-resource purchasing
Explanation: Consortia allow libraries to pool funds, negotiate better prices, and access expensive e-resources collectively — a key modern financial strategy.
Q10. Fee-based services in libraries are introduced mainly to:
A) Replace all free services
B) Generate profit for shareholders
C) Enhance public relations and library image (not for profit)
D) Reduce government dependence permanently
✅ Answer: C) Enhance public relations and library image (not for profit)
Explanation: Fee-based services (e.g., DDS, online searching) aim for sustainability and improved perception — not commercial profit.
Q11. E-procurement in libraries refers to:
A) Buying books only in physical stores
B) Ordering and paying for resources online
C) Donating e-books to users
D) Outsourcing cataloging to vendors
✅ Answer: B) Ordering and paying for resources online
Explanation: E-procurement uses ICT for efficient, cost-saving acquisition via online orders and digital payments (credit cards, e-cash).
Q12. According to UNESCO’s Public Library Manifesto, public libraries must be financed by:
A) Private entrepreneurs
B) User membership fees
C) Local and national authorities
D) International banks
✅ Answer: C) Local and national authorities
Explanation: UNESCO clearly states that public libraries are a public responsibility and must be funded by government authorities.