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Difference Between NGO and Non-Profit Organizations

ngo_bookNGO vs Non-Profit Organizations

Many people do not understand the principles of, and the differences between, NGO and Non-profit organizations, even though they are well-known terms in the 21st century. First of all, to clarify, NGO stands for a non-governmental organization, and a non-profit organization can also be referred to as a NPO.

Non-governmental organizations are created by legal persons who are not part of the government. Although NGO funds are mostly raised by the government, they maintain a non-governmental position, and eliminate the need for a government council. This type of organization is also known as a civil society organization. There are forty thousand international NGOs in the world, with the most organizations found in India.

In 1945, after the establishment of the United Nations Organization, the non-governmental organizations became extremely popular. Although, before this time, there were other organizations, such as the famous Rotary International, that began its operation in 1904. By the end of the year 1914, there were one thousand and eighty three NGOs in existence. International NGOs played a vital role in the anti-slavery movement, as well as in the movement for women’s suffrage. The official definition of international NGOs was defined on February 27, 1950, by the resolution 288 (X) of the ECOSOC.

Various types of Non-governmental organizations include:

BINGO ‘“ Big International NGO
CSO ‘“ Civil Society Organization
DONGO ‘“ Donor Organized NGO
ENGO ‘“ Environmental NGO
GONGO ‘“ Government-operated NGOs
INGO ‘“ International NGO
QUANGO – Quasi-autonomous NGO
TANGO ‘“ Technical Assistance NGO
GSO ‘“ Grassroots Support Organization
MANGO – Market Advocacy Organization

On the other hand, the non-profit organization does not divide its extra funds between its shareholders, or owners, but uses them for the organization’s purposes. Examples of these organizations are public arts organizations, trade unions and charitable organizations. They offer services and programs through federal, local or state entities. Non-profit organizations hire management personnel, and aim to raise substantial funds. These organizations are service organizations or charities that are established for co-operative, trust or purely informal reasons. NPOs are also known as endowments, or foundations that have huge stock funds. A supporting organization is similar to a non-profit organization, and also operates as a foundation, but they have more complicated structures.

Non-profit organizations do have legal responsibilities, and these may include:

Supervision and management provisions
Economic activity
Accountability and Auditing provisions
Provisions for the dissolution of the entity
Tax status of corporate and private donors
Tax status of the foundation
Provision for the amendment of the statutes or articles of incorporation

To summarize, the differences between a non-profit organization and NGOs are:

1.The NGO is a non-governmental organization. Its funds are raised by the government, but it maintains a non-governmental position, with no need for a government council. They are also known as civil society organizations.

2.A non-profit organization uses its extra funds for the purpose of the organization, rather than dividing it between the shareholders and the owners of the organization. Examples of NPOs are public arts organizations, trade unions and charitable organizations.

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  1. I would like to know if one organization can be both an NPO AND an NGO.

    We are already an NPO in Tanzania and would like to become a Tanzanian registered NGO. So far, I am finding no resources on this.

    Any help?

  2. We are two females who have a shared vision in empowering, developing and supporting the youth in their goals to reach their full potential. We’re looking into registering the company but do not know how to go about as we are currently conducting research , and whether we should register it as an NGO or an NPO…

    Please help

  3. Congrats for this great thoughts. This should be an NPO as it is in volunteering nature

  4. I am researching different types of businesses and am wondering what the main difference is between NGO and Social Businesses?
    Any advice would be great.

    • see jennifer, if your are interested in social investment and has a clear intent to establish your separate entity,then you should go for a civil society entity or an ngo.

  5. I’m sorry, Colleen, but more formal distinctions between NGOs and NPOs need to be established here, if in fact they truly are different. Likewise, some of the distinctions listed here are misleading. Just as NGOs are created by “legal persons not a part of the government”, so are NPOs, as NPOs are generally not a product of the government or established as such, just like NGOs. In order to achieve tax-exempt status in the US, NPOs (and I suspect NGOs as well) must be approved as such by the IRS, but government oversight stops there, unless the NPO is specifically created in service to a government function as a mechanism operating independently of governing structures. All of the historic NGOs listed above, such as Rotary International, were initially NPOs, at least here in the United States, where their status had to be legally recognized. So, again, what really is the difference? Most NPOs today are privately established, just like NGOs.

    My understanding of NGOs and NPOs is that they both can generate profits, but that proceeds are reinvested back into the institution’s own growth rather than distributed out to shareholders or investors (which makes them donors). Is it possible the difference lies in the internal structure and governance of how these institutions operate? Then what are the mechanics? This article fails to make these distinctions. NPOs generally DO NOT offer their services through government “federal, local and state” entities as mentioned here — most are private and raise monies through both public and private sources. I would assume that NGOs, like NPOs above, can hire management and raise substantial funding of their own. NPOs are not limited to Foundations, but can include them, as NGOs perhaps may not.

    I am excited by the potential of the NGO concept being a nonprofit “business” structured as a business to conduct business, but is not driven by traditional profit motives to justify its worth — worth now being defined as service to the community instead of wealth to stockholders. And as some nonprofits clearly operate outside this business framework (such as churches), many NPOs appear in fact to be NGOs as well. So, are NGOs a subset of NPOs, or is there a substantial structural and legal difference between the two? Internal distinctions may be where clarity is realized.

  6. I agree that I am just as confused after reading this article as I was before finding it. I still cannot tell someone the difference between and NGO and NPO

  7. i still dont understand the diffrent between NPO and NGO

  8. If then NPO do not distribute its earnings to shareholders, that means no one (shareholder) is making or receiving any form of monetory appreciation?

  9. if a project is supported by the UN is it a non profit or ngo?

  10. At the general level, there really is no difference between NPOs and NGOs that is worth distinguishing between. Think about it…as John Shelton above says, all NPOs are not part of the government, that is, they are non-governmental organizations.

    And all NGOs that I can think of are not in the profit-making business, so that would make all (or most) of them non-profit organizations.

    These are just similar terms that have been developed for different reasons but represent essentially the same thing – orgs that are neither of the government nor of the profit-making spheres. There is a wide variety of organizations that fit into both terms…trade and labor unions, overseas development aid groups, neighborhood associations, advocacy groups, eco groups, foundations, etc etc.

    There might be legal distinctions that are useful if you’re an accountant or if you’re thinking of forming such an organization. For that, you’ll have to check your country’s laws, since each country is different. You won’t find your answer from this website.

  11. Can npo get the exemption in taxes as like ngo?

    • Mr.Naveen ,an ngo and an npo are both implicitly same entities if not exact in personalities.For your query i would like to say that,tax exemptions are for both

  12. please let me know the technical diff. b/w an ngo and an npo.

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