There are two major types of organizations that with non-profit prospects and the welfare of people. One is NGO which are non-governmental organizations and the other is NPO or non-profit organizations. There exists a considerable number of similarities and differences between these two.
A non-governmental organization and a non-for-profit organization both work not to make a profit but for doing social good. Many of their goals and initiatives are similar to each other as well which is why oftentimes the public gets confused about the differences between these two organizations. The fundamental difference between NGOs and NPO in India correlates with their goals.
To understand these differences, we first need to understand how NGOs and NPO work.
NGO – An non-governmental organization works outside the government body but would sometimes still be funded by government agencies. They operate without oversight or representation from the government. Their work is registered under specific memorandum and guidelines. Moreover, NGOs arrange their funds with the help of mega-level corporations and private individuals. Non-governmental organizations are settled by a voluntary group of people who are ardent to help the people. Furthermore, majorly all the NGOs function in three varied forms – trustee, society, and a company. NGOs focus on larger projects and often go international in the said projects. These projects also include providing aid to the needy and underprivileged communities of underdeveloped and developing countries. NGOs can raise their funds from the government, businesses, or any other foundation or the general public. NGOs work for supporting human rights, women’s rights, children’s rights, and environmental and health issues.
Some of the duties/roles of an NGO include –
- Community health promotion and education
- Managing emerging health crisis
- Environmental issues like sustainable water and energy resources
- Economic empowerment i.e micro-loans, skills training, financial education
- Development projects i.e school and other necessary infrastructure construction
- Women and children empowerment
NPO – NPO as the name indicates, do not gain personal profit from their operations. Their structure may include an elected board of directors who work for the organization but do not benefit or profit from the funds earned by the organization. All funds earned directly go to the projects NPOs have planned out. Funding for non-for-profit organizations usually comes from industries relating to religion, scientific advancements, philanthropic organizations, or even government bodies. NPOs offer services and programs through federal, local, or state entities. NPOs hire management personnel that aims to raise substantial funds and promote cultural, religious, professional, or social objectives. NPOs include charitable organizations or the membership groups like sports clubs, women’s clubs and social or recreational organizations, public hospitals, etc.
Non-profit organizations fulfill the purpose related to-
- Religious
- Charitable
- Scientific
- public safety
- Literary
- Educational
- Fostering national or international amateur sporting etc.
Now since we understand how these two work, we can easily differentiate between them based on certain aspects –
Registration criteria and governing laws –
NGOs can be governed and registered as per the laws and acts that are prevalent in the states under the Public Trust Act or Societies Registration Act, 1860. NGOs mainly register their association in the form of a welfare company, trust, or society.
An NPO is incorporated as a company and is governed under section 8 of the companies act, 2013. They can register themselves as an exclusive organization.
Area of Performance and Objectives –
NGOs in India carry out their work at national, regional, state, and international levels. They conduct their work at tremendous scales and receive huge support from the people. They work to provide aid to people in a crisis like helping women with problems and protecting children from the cruel traps of society. NGOs aim to solve all the economical, social, and financial problems of the people on a wider scale.
NPOs in India are generally restricted to their organization. Moreover, they strive to serve people through their goods and services only. The area of operations in NPOs is quite restricted. For example – a school that is set up in the name of an NPO firm provides aid in schooling and education to a certain section of society only. NPOs generate extra funds and integrate them back into organizational function. They put the profits and revenues earned into the betterment of the organization. NPOs are set up to promote art, science, research, commerce, or any other useful purpose under section 8 of the companies act, 2013.
Who can form?
A non-governmental organization is formed by ordinary citizens that operate autonomously of the government.
A non-profit organization is formed to provide goods and services to the people and also operates on the principle that no members will share the profits or the losses.
Raising Funds –
NGOs rely on donations, processes, programs, projects, and other ways to raise funds.
NPOs raise funds by borrowings, foreign funds, or the funds that are contributed by the members or directors.
Purpose of Formation and Scope –
An NGO works to benefit the society and the economy of the country. Besides they also bring awareness to various issues. NGO is a broader concept as it covers NPO.
The NPOs establish the company with nonprofit objectives such as trade, commerce, arts, environment protection, social welfare, research, etc. NPO is a form or part of an NGO.
Examples –
Examples of NGOs in India include CRY, Care India Foundation, Childline Foundation, etc.
Examples of NPO In India include Tata Educational and Development Trust, Reliance Foundation, Azim Premji Foundation, etc.
Now it would be clear that there exists a certain difference between NGOs and NPOs but their work empowers and protects our society largely. NGOs and NPOs withstand all the complications and issues that hinder the development of any country. They work selflessly for people without any greed and serve some extraordinary humanitarian causes.