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Know the Differences & Comparisons

Difference Between NGO and NPO

NGO vs NPOThere are certain organizations, which are set up by the group of individuals for serving the entire society, which can be NGO or NPO. An NGO, a non-governmental organisation, established to work for public and social welfare. Such organisation is not affiliated with any government.

On the other end, NPO, as its name suggests, is a non-profit organisation, that works for any purpose other than making profits but such organizations are incorporated under the Companies Act. As the rules and regulations and purpose of establishing the two types of organization are different, there exist a fine line of differences between NGO and NPO, which we have explained in this article.

Content: NGO Vs NPO

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Conclusion

Comparison Chart

Basis For ComparisonNGONPO
MeaningAn NGO refers to a non-governmental organization formed by ordinary citizens, that operates autonomously of government. An organization set up to provide goods and services to people, and operates on the principle that no member will receive share profits or losses of the entity is known as NPO.
RegistrationCan be registered as a Trust under Public Trust Act, or as a Society as a Socities Registration Act, 1860 or as a non-profit company under the Companies Act, 1956.Under section 8 of the Companies Act, 1956.
Area of operationLargeLimited
ObjectiveTo work for the betterment of society and economy as well, bring awareness of human rights, women empowerment etc.To promote art, science, research, commerce or any other useful purpose.

Definition of NGO

NGO is an abbreviation for Non-Government Organization, where refers to an association formed by the citizens, that functions completely autonomous from the government to perform a broad spectrum of services and humanitarian functions. It is a non-profit making entity; that operates at a regional, national or international level depending on its reach and connectivity. It can be incorporated as a trust, society or a company. These organisations raise its funds from government, foundations, businesses and private people.

It performs a number of activities, to draw the attention of the government towards the citizen’s grievances, advocating public policies, promoting political participation by providing information.

There are many NGOs which work for specific issues like supporting human rights, women and children’s rights, environmental or health issues.  International Committee Of The Red Cross, Rotary International, International Air Transport Association (IATA), International Chamber Of Commerce (ICC), International Organization For Standardization (ISO) are some well known NGO’s operating  worldwide.

Definition of NPO

Non-Profit Organization or NPO is a legal entity formed by a group of persons to promote cultural, religious, professional, or social objectives.

The initial funds are raised by the members or trustees of the NPO. As the organisation is a non-profit making entity, it applies its surplus funds on the promotion of the objectives of the organization rather than distributing it among the members of the organisation. It is registered under section 8 (old section 25) of the Companies Act. Such organisation enjoys several privileges like tax exemption, not required to use the term ‘Ltd’ or ‘Pvt Ltd’ at the end of its name.

An NPO may include a charitable organisation, membership groups like a sports club or women’s club, social or recreational organisation, public educational institutions, public hospitals,  etc.

Difference Between NGO and NPO

The difference between NGO and NPO can be drawn clearly on the following grounds:

  1. An NGO refers to a non-governmental organisation formed by ordinary citizens, that operates autonomously of government. On the contrary, an NPO is an organisation set up to provide goods and services to people and operates on the principle that no member will receive share profits or losses by the entity.
  2. An NGO can be registered by the following methods, i.e. as a Trust under Public Trust Act, or as a Society as a Societies Registration Act, 1860 or as a non-profit company under the Companies Act, 1956. On the other hand, an NPO is incorporated as a company under section 8 of the Companies Act, 1956.
  3. The area of operation of an NGO is comparatively wider than NPO.
  4. An NGO works for the betterment, upliftment and development of society and economy as well, bring awareness of human rights, women empowerment, etc. In contrast to NPO, is set up to promote art, science, research, commerce or any other useful purpose.

Conclusion

An NGO is an association of person; that works for promoting humanitarian or cooperative objective instead of a commercial one. On the other hand, the NPO is an organisation which is set up to promote art, science, education or any other social or cultural purpose; that intends to use its profit in the promotion of its objectives instead of dividing it among the members.

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Comments

  1. Gerald Nussbaumer says

    December 5, 2016 at 11:11 pm

    Thanks for your answer …

    Reply
  2. Ofentse says

    January 10, 2017 at 6:23 pm

    Waaaao this is great, a very useful and convincing information.
    Thank you very much, now I know difference between NGO and NPO

    Reply
  3. Tebello says

    July 25, 2017 at 7:35 pm

    Thank you very much for the response.

    Reply
  4. Amrik Singh Sohal says

    November 21, 2017 at 11:38 am

    Thanks for knowledge about deference between N G O and N P O

    Reply
  5. miss jay says

    March 10, 2018 at 9:04 pm

    thanks for your explanation, it really help in my assignment. Thank you

    Reply
  6. Senele says

    June 4, 2018 at 1:06 pm

    Thank you for this information; it is quite useful. Can you please explain the difference in the funding models of the two.

    Reply
  7. Lerato says

    June 14, 2018 at 6:31 pm

    I want to start a home for neglected kids in my village…to take care of them and expose them to a better environment….where would this sort of thing fall under?

    Reply
    • Ma Xuan Dai says

      June 10, 2019 at 10:18 am

      NGOs of course ! NGOs are made for these sorts of things. Hope it helps !

      Reply
  8. Tash says

    July 31, 2018 at 7:28 pm

    Hi
    Does anyone know if there is a formal application difference between an NGO’s reach / operation area?
    Ie can you still operate internationally if you have just registered as a local NGO?
    What are the restrictions?
    Can you change during operation from a local NGO to a International NGO?
    Please advice a website for more information as I can’t seem to find answers to this.

    Thank you

    Reply
  9. Tracey says

    November 18, 2018 at 12:37 pm

    O would like to start a charity where I will provide the orphans or children whose parents are unemployed with school uniforms, stationery and sanitary pads and food parcel as well..so where will this one fall under? I’m confused

    Reply
    • Mohit Verma says

      June 14, 2020 at 3:50 am

      Hi Tracey,

      This should fall under NGO and not NPO as you are not expecting to get money in return.

      Reply
  10. Selepe says

    December 3, 2018 at 1:53 pm

    what is the minimum number of office bearers required on NPO

    Reply
  11. Lisa sodiya says

    February 14, 2019 at 7:07 pm

    thank you so much, u have made it clear

    Reply
  12. Sarah Beukes says

    December 12, 2019 at 9:04 am

    Thank you so much for explaining the difference between NGO n NPO…. I have a soupkitchen of +-100 children, also gi e out out clothes and food parcel under what so under what will it fall…

    Serah

    Reply
  13. Uzma says

    January 4, 2020 at 10:22 pm

    I found this very useful. Thanks!

    Reply
  14. THABO MOKONE says

    February 24, 2020 at 2:34 pm

    WHERE CAN I REGISTER NGO?

    Reply
  15. Mavis Dlamini says

    February 29, 2020 at 12:08 pm

    Thank you. The information is a great eye opener as I have a registered NPO and did not know that there is a difference.

    Reply
  16. Simon says

    April 22, 2020 at 7:54 pm

    Thanks very much for the information it was helpful, and very important.

    Reply
  17. Simon Bekeer says

    April 22, 2020 at 7:57 pm

    I think many people formed an NPO’s instead of NGO’s. Keep providing these helpful information.

    Reply
  18. Karabo says

    May 4, 2020 at 5:07 pm

    I have registered an npo thinking it functions like an ngo or should I say I made a mistake. How or can I change my npo to be an ngo?

    Reply
  19. Christy Chew says

    May 27, 2020 at 8:53 am

    Can a NGO & NPO registration Association set up an Investment Company?

    Reply
  20. Mohit Verma says

    June 14, 2020 at 3:48 am

    indeed helpful.. Explained very well by giving appropriate examples for comparing NGOs and NPOs.

    Reply
  21. Elizabeth Djuulume says

    November 29, 2020 at 9:20 pm

    Hi, Thanks for the information it helped at a lot.

    Reply
  22. Saint Moleme says

    December 29, 2020 at 11:26 pm

    Very well explained and indeed helpful….The information will assist in the establishment of an NGO

    Reply
  23. Bismark Osei says

    February 3, 2021 at 1:16 am

    The information was very useful.

    Reply
  24. Mithil Sharma says

    February 4, 2022 at 1:02 pm

    Crisp and to the point explanation. commendable work guys. cheers to the writer. you have a good sense of summarising the crux of the matter.

    Thanks

    Reply

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