A Non-Governmental Organisation and a Non-Profit Organisation are two types of organisations that works not for the purpose of making profit but for social well being. Many of such organisation’s major goals and initiatives are similar to each other as well and that is the reason why we often would get confused on the difference between these two organisations.
To begin with, an NGO works outside the government body but will sometimes be funded by the government agencies. They also focuses on the large projects and would often aim for working globally. These projects would also include aiding the needy and underprivileged communities in developing countries. Whereas, NPOs are normally connected with the churches, local entities and other places whose objective will be to improve the areas locally.
Government agencies are never a part of running an NGO but often at times allocate some portion of their funds to the various projects that an NGO undertake. Generally NGOs focus on areas such as: health, Education, Social Protection, environmental issues, etc. that are alarming to the inhabitants in the developing countries.
NPOs as the name itself tells, do not gain personal profit in their organisation. Their structure might have an elected board of directors who work for the organisations but they are not benefitted or do not get any profit from the funds that are raised by the organisation. All the funds that are earned will directly go to the projects that the NPOs have in line for the future. Funding for the NPO projects usually come from industries relating to religion, scientific advancements, skill development related organisations, philanthropic organisations etc.
When we talk about the NPOs, after they have got themselves registered as an NPOs, they should be in a position to begin raising funds for their various projects. Similarly, they will also be able to start applying for the allocation of grants from various different such grant-funding agencies. On the other hand, the case with NGOs are quite different. Since NGOs are working on cases and issues that are far more bigger and greater when compared with the NPOs given that they work on international issues mostly focusing on the development of the underdeveloped countries. The NGO funding agencies are quite difficult to get in touch with.
Roughly there are about forty thousand NGOs that are functioning globally and most of them are based out of India. The issues that NGOs focuses on are those relating to the better of the society and the economy. Cases such as the human rights, education, and empowerment related to all categories etc are all focused on and this tends to happen world wide. Other categories like the art, culture, research and other related topics are all being handled by the NPOs.
Bigger organisations that we will more often come across are the NGOs. They cover a wider scope when compared to the NPOs. NPOs usually cover the area that are a little smaller when compared with the NGOs but very relevant issues like the art and culture. However, the leaders of both the organisations do not have the option of making the profit from the amount gained. Still, both the organisations still look to make profit not for personal use but for the betterment, to help many parts of society, locally or internationally. Both the organisations still seek for grants from various agencies to help get the life to their proposals.
Although they have their differences between the both, the grant funding agencies sometimes accept applications from both NGOs and NPOs as the many similarities that they share cannot be separated for the grants to be offered. In seeking for grants, NGOs would more often look into an NPO funding directory and vice versa. This is the main reason why many directories have already combined the grants that are allocated to be offered will call for both the NGO and NPO participation.
Differences between NGOs and NPOs
An NGO can get its registrations with the following methods: i.e., as a Trust under the Public Trust Act, as a Society under the Society Registration Act 1860, as a Non-profit company under the Companies Act, 1956. Whereas the NPOs can be incorporated as a Company under the Section 8 of the Companies Act, 1956.
The ares of operations of an NGOs is comparatively bigger and wider when compared with the NPOs.
NGO usually work for the betterment, to uplift and develop the society and the economy as well. It also aims at brining the awareness of the human rights, women empowerment, etc. This is in contrast with the NPO, which is set up to promote art, science, research and commerce etc.
An NGO is formed a group of volunteers i.e., these are considered to be a non-governmental organisations. NPO’s is not for profit as the name itself tells.
Any kind of government regulations does not really effect the operations of NGOs and the NPOs.
NPO qualifies for a tax-exempt status as per the guidelines set by the Income Tax. It also helps the NPO to continue the ongoing programs and initiatives.
Although, the NGOs and the NPOs are let free to work in a liberal environment, they often come under the scrutiny of the concerned authorities due to certain unethical practices.
Conclusion:
Both NPOs and the NGOs are the two different entities that may or may not serve identical purposes. There might be slight differences on various grounds such as the operation mode, ways of raising funds, the legal compliances etc. Both the entities could be incorporated voluntarily by a group of individuals by meeting the prescribed rules set by the laws. Also, the NPO and the NGO do not require to pay any tax penalties, payments that are subject to the cash inflows as this will stay within the organisation and are used only for the specified organisational purposes.