Difference Between NGO and Non-Profit Organization

Edited by Diffzy | Updated on: June 03, 2023

       

Difference Between NGO and Non-Profit Organization

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Introduction

Many creatures and humans have a habit of stumbling around the world. Every living person bears an ethical and moral obligation to contribute to making the world a better place to live. People often overlook this in their hectic lives. Yet, not all people are alike. Some people have empathy, and these constitute the folks that offer ways to enhance their surroundings for zero personal gain. Non-governmental organizations are those whose sole mission is to help those in need. These institutions have no personal goal, yet they labor relentlessly for the greater good of society and the advancement of humanity. We have two distinct divisions here: one is a non-governmental organization, and the other is a non-profit organization.

NGO vs Non-profit organization

People can get often confused and might have considered them wrongly because of their similar names. But they have distinctions between them. NGOs are purely for the betterment of mankind. Non-profit organizations also work for mankind but they have their other inclined objectives too. Non-profit organizations' objectives are spread among the welfare objectives and the growth of the organization. A non-government organization is formed by the common people who work together without any support from the government. While a non-profit organization in which only members of the organization are supported with the aim of their benefits.  Non-profit organizations lie under the Company Act 2013 under section 8 while nongovernment organizations do not fall under the Companies Act. The fundamental objective of NGOs is to create a better society, whereas non-profit organizations function for more than one purpose.

Difference between NGO and Nonprofit organizations in tabular form

Parameters of comparison Non-government organizationNon-profit organizations
MeaningAn NGO is formed by the joint efforts of people and it works independently without any support from the government.A non-profit organization is formed to provide goods and services to support society. Even the profits are not distributed among the members of the organization.
Company ActThe NGO does not fall under any of the company's acts. It can be registered under the Trust Act but it's not mandatory.A non-profit organization falls under the Companies Act 2013. It follows all the rules and regulations of the Act.
ObjectiveThe objective is to uplift society and to create awareness among them about their rights and powers.The main aim is to promote education, religion, art, culture, or any other objective in society.
Area of operationThe area of operation is very large.The area that non-profit organizations serve is quite large but gets limited to certain points.
Source of fundingThe funds are raised through donations and grants etc. The funds can be raised from members' subscriptions and revenue earned from the selling of goods and servicing activities.
ExampleCRY, Smile India, Care India, etc.It includes museums, published associations, volunteer organizations, etc.

What is a non-government organization?

A non-government organization is an organization that works for the upliftment of society irrespective of government support. An NGO is a volunteer organization formed by people together for a cause. Usually, ngo works independently of the government for promoting the activities determined by the NGO. The NGO works for the aspect of society which is still not developed after so many years of independence such as education. The additional objective might be to raise awareness of societal concerns that are currently plaguing society. NGOs can be found throughout the world, not just in India.

 Some NGOs work at such a grand level that they have their branches all over the world.Ngo can be a volunteer or non-volunteer but the aim is the same to serve the nation and society.

India has some well-known NGOs that work tirelessly for the upliftment of mankind. These are CRY India, Goonj, Nanhi Kali, Smile, Care India, etc.

Some of the famous non-government organizations are stated below

Save the Children

This is a London-based NGO that was established in 1919 and now with a global presence in 120 countries including India. Their main objective is to protect the children and provide them with the necessities of life such as good healthcare, food, education, etc. The NGO even helped rescue children from wars and natural calamities.

Doctors without borders

This non-government organization is France based with the current reach in more than 70 countries. The NGO focuses on diseases like HIV, vaccination, maternal health, mental health, etc. The organization spends 14% of its income on fundraising, while the remaining 1% goes towards managing the organization. It functions well as a result of private sponsorship.

International rescue committee

The main motive of the rescue committee is to save people from natural calamities or any other disaster. Although the reason for the committees back then was the tension between Hitler and the Nazi population. But now the committee has different visions and aims to achieve.

BRAC International

The headquarters of the organization is in Bangladesh. The organization was established in 1978 to eradicate poverty while generating possibilities for advancement in society.

 It has a large workforce.

NGOs can work at any level such as the local level, national level, or international level. There are some responsibilities that a ngo should follow and also encourage its members to do the same

Responsibility of a non-government organization

  • Promoting equality in society for women on matters like gender discrimination or unequal work opportunities etc.
  • Dealing with the issues and challenges faced by society. The issue can be related to health or can be personal issues.
  • Creating awareness in the area such as at the time of COVID-19 many NGOs created awareness among the people about the disease.
  • To act as the middle person between the government and the people.
  • To work for the conservation of the environment including the protection of the natural habitat of plants and animals.
  • Promoting the benefits of hygiene and cleanliness.

For the functioning of an NGO and to carry out its operating and day-to-day activities the organization will need funding. There should be a source of financial resources to carry out activities.

Following are some of the funding facilities in which a non-government organization can get funding:

Donation

One method for generating money is through NGOs. To raise awareness while promoting a high number of monetary contributions, NGOs can print flyers or run fundraising campaigns.

Member's subscription

Typically, a little fee is charged in addition to the application form when someone desires to join an NGO. The revenue generated from the subscriptions is donated to a worthwhile cause. Members occasionally pay a subscription fee as part of their annual dues, which is a good source of funding for the NGO.

Grants from government or private institutions

When an NGO works on a large scale or other cases, the NGO may be working on a big case for society, and the government may issue grants for such organizations. Not only the government but many times NGOs have received grants from private or non-government institutions.

Loans

Non-government organizations avoid taking loans as the repayment of loans can be difficult for them. But when in a situation of crisis they resort to le lending institutions for the similar.

What is a non-profit organization?

While the two phrases may have a similar meaning concerning one another, we cannot proclaim them to be the same thing. A non-profit organization is an element of a Ngo but is not the same thing entirely. An organization that qualifies as non-profit aims to make money from both those who participate and themselves. It has a legal status and it receives tax exemptions granted by the Internal revenue service ( IRS). The reason for such an exemption is the cause for which it works. But they have to meet the requirements set by the IRS for getting an exemption from taxes. Only those organizations can be identified as non-profit organizations which work for the causes like education, religious purposes, charity, or animal welfare. The purpose is to work for the social cause cooperatively. For example, hospitals, schools, colleges, churches, and temples can be non-profit organizations.

Working in a non-profit organization

  • The NPO can use volunteer labor for the proper functioning of employees and professional people for the job.
  • To gain the status of an exempted tax organization it needs 501(c)(3) status from the IRS.
  • It can be started by any individual or a community with a good cause.
  • The organization may offer products or services at reasonable prices to make the organization work.
  • The revenue or the profit they make is not redistributed between the members rather it is reinvented in the organization.

Now we will be discussing the types of non-profit organizations. They can be of many different kinds such as following

Types of non-profit organizations

Religious organization

These are the organizations that promote the beliefs of a certain religion. They can be followers of that particular religion or volunteer members from any other religion. One of the greatest examples of a religious organization can be the "International Society for Krishna Consciousness", popularly known as "ISKON" or the Hare Krishna Movement. It was founded by A.C Bhaktivedanta Swami Prabhupada more than 50 years ago. It spreads the teachings and beliefs of the Hindu god lord Krishna through bhakti yoga.

Charitable organizations

The aim is to serve the needy and the homeless people. When natural calamities occur and damage is uncontrollable the charitable organizations help in large numbers to overcome the tragedy. The organization does not have to pay any income tax.

Health organization

Awareness regarding the disease is promoted by these health organizations.  The World Health Organization is the best suitable example of a health organization. Health is such an important thing that an organization is made at such a global level. When COVID hit the organization was working hard to make people aware and was helping those who were suffering. The notification issued by WHO is taken as a serious matter all over the world and cannot be ignored. Other than WHO we have the global health council, public health institute, FHI 360, etc.

Educational organization

These groups strive for the right to an education. By leading them in the right direction, they assist. A non-profit organization titled Stand for Children actively campaigns for the cause. Even parents are an essential component of it in supporting their children to thrive.

Anybody can start a non-profit organization if they have a strong will for it. Following are some of the steps that one might follow for operating an organization.

  1.  One should have a clear-cut idea about the cause
  2. The mission and vision of the organization should be clear.
  3. The organization should be registered.
  4. To gain the tax benefit it should meet the criteria set by the IRS.
  5. Other than the volunteer members it should also recruit staff for the upper level of jobs.

Differences between NGO and non-profit organizations in points

  • The non-government organization works for the upliftment and welfare of society and is independent of the government. Whereas the non-profit organization is formed for the selling of goods and services and profits are not distributed among the members.
  • The non-profit organization lies under the companies act while ngo does not come under any Company Act.
  • The area of operation is very large for non-government organizations while the operating area is not that large for non-profit organizations.
  • Professional people are recruited to carry out the activities in the non-profit organization. Whereas only volunteer members work in NGOs.
  • They use grants to do charitable work while non-profit organizations do make use of grants for the purpose.

Conclusion

Taking into account everything that has been addressed above, it is apparent that NGOs and charitable organizations resemble one another in some respects and are different in other ways. They both work towards the same objective. They both endeavor to make things better and serve humanity. The International Reserve Service IRS

 has declared organizations with charitable purposes to have been exempt from paying taxes.

The participants join intending to benefit society.NPO aims to promote its organization's purposes and utilizes its profits for the growth of its organization rather than distributing them among the members of the organization.


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"Difference Between NGO and Non-Profit Organization." Diffzy.com, 2024. Fri. 19 Jul. 2024. <https://www.diffzy.com/article/difference-between-ngo-and-non-profit-organization>.



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