Non-governmental organizations, or NGOs, and nonprofit organizations (NPOs) have many more similarities than differences. Both of these organization types generally work toward benefiting society and human welfare, or improving the world. In general terms, however, the difference between an NGO and NPO is usually a question of scope.
NGO vs. NPO
While most NGOs are nonprofits, few nonprofits are NGOs. This is because NGOs usually take on large – even international – projects, often focusing on regions of the world in need. Nonprofit organizations, or NPOs, are usually associated with churches, clubs and local associations. Doctors Without Borders, for example, is a nonprofit that is also a non-government organization. On the other hand, a local group registered as a charity raising money for a new Little League stadium is a nonprofit organization, but wouldn't be called an NGO.
Non-Government Organizations
An NGO can refer to any organization that works independently from the government to promote change, but usually in areas where a government may also be involved. No government oversees what the NGO does, and nobody from the government is directly involved in its decisions or actions. For example, an NGO may promote nutrition awareness within state schools and may receive funding from a government organization like the Centers for Disease Control, but neither the state governments nor the CDC are directly involved with its activities.
NGOs can be classified into two types: An operational NGO works on small changes through specific projects, while campaigning NGOs aim for large changes by influencing the political system. Some NGOs, like research institutes, operate solely to increase knowledge and public understanding of an issue. Professional organizations, trade unions and recreational groups may also operate as NGOs to promote the interests of their members while affecting change in society based on their memberships' principles.
Examples of NGO programs typically include:
- community health
- education
- responding to health crises
- educating or working on environmental issues, such as clean water or green energy
- economic programs like micro-loans, skills development or educating people on finances
- local development, such as new schools
- social issues like child poverty or women's rights.
Nonprofit Organizations
NPOs include any organization that works on any issue other than generating profit. Members, including its directors and officers, receive no income from the organization. The organization may offer services or programs through government bodies. Some NPOs, like foundations or endowments, may have substantial financial resources, including investments in stocks.
The scope of NPOs is often based on religion, scientific work, charity or education. Others may be involved in promoting public safety, preventing cruelty to animals or promoting sports programs.
Registering and Gaining Charitable Status
Any group of individuals can start an NGO or an NPO. Both types of organizations can apply for charitable status with the Internal Revenue Service and their home states, provided they are registered with that state government. If they are registered as charitable organizations, donations can be tax-deductible for the donors.
Registering is basically the same as registering any for-profit corporation. That is, you have to choose a name for your organization, appoint a board of directors and select a legal structure – either a corporation, association or trust. Then you can file your paperwork with the state government. Once your organization has successfully registered with the state, you can apply for federal tax-exempt status with the IRS. Depending on the nature of your organization and state law, you may have to apply for licenses and permits before you can begin your work.
Funding an NGO or NPO
Once a nonprofit organization has been successfully registered, it can begin raising money for its projects and appealing for volunteers. Even a new nonprofit may be eligible for grants from foundations and endowment organizations. While most nonprofits get the majority of their contributions from individual donors, the federal government, as well as state and local governments, do offer grants and loans to many of these organizations. The majority of government funding programs are available from the grants.gov website.
FAQs
The biggest difference with an NGO is the scope of work that most non-profits assume. Many non-profits are affiliated with churches, boys and girls clubs, and alumni associations. An NGO, on the other hand, has broader and internationally driven footprint.
What is the number one reason nonprofits fail? ›
The most common reason why nonprofits fail is a lack of funding. Nonprofit organizations cannot fulfill their missions without adequate funding.
How do you answer why do you want to work for a nonprofit? ›
I simply want to make the world a better place, even through small acts of kindness. I am interested in working for a nonprofit like yours because I see the value you add to people's lives.By changing just one person's situation, we can help them develop a better life for themselves and their family.
Why are NGOs very important? ›
NGO activities include, but are not limited to, environmental, social, advocacy and human rights work. They can work to promote social or political change on a broad scale or very locally. NGOs play a critical part in developing society, improving communities, and promoting citizen participation.
Why are NGOs classified as nonprofits? ›
Many NGOs in the United States are qualified as exempt from state and federal taxes. This legal status makes it easier for NGOs to operate as nonprofit organizations, because they do not have to pay tax on the income (funding) they receive.
Are NGOs always nonprofit? ›
While most NGOs are nonprofits, few nonprofits are NGOs. This is because NGOs usually take on large – even international – projects, often focusing on regions of the world in need. Nonprofit organizations, or NPOs, are usually associated with churches, clubs and local associations.
Why nonprofits don t work? ›
Lacking a Clear Focus. Many nonprofits begin with a good statement of purpose but don't always come up with an actionable way to bring about their mission in the world. That's why it is critical that nonprofits make long-term planning a priority.
What are 2 disadvantages of a nonprofit organization? ›
Disadvantages of forming a nonprofit corporation
- Expenses. Forming a statutory nonprofit company requires filing documents with the state business entity filing office - which means filing fees. ...
- Ongoing compliance obligations. ...
- Management oversight. ...
- No lobbying or political campaigning.
You might have heard that nonprofits typically don't pay huge salaries. While this is often the case, it's also true that nonprofits usually offer more flexibility than for-profit corporations and great benefits. Working remotely much of the time and strong healthcare and childcare benefits are common at nonprofits.
How do non profits make money? ›
For any business, net earnings (sometimes called net income) are calculated by subtracting operating expenses from revenue. Non-profit charities get revenue from donations, grants, and memberships. They may also get revenue from selling branded products.
Working at a nonprofit can be a fantastic experience if you know what to expect. Leadership teams know how to staff their nonprofit organizations. So, if you are a person who likes a fast-paced environment, you will be at the top of their recruitment list. Nonprofit work is truly a unique experience.
What is the controversy with NGO? ›
NGOs have been accused of weakening people by allowing their funders to prioritize stability over social justice. Workers from an NGO participating in local community work - some critics allege that NGOs prioritize their special interests over community wellbeing.
What is the value of having NGOs? ›
5. Supports Sustainable Development: NGOs work towards long-term solutions to issues by addressing the root causes of problems rather than just treating their symptoms. They promote sustainable development by supporting initiatives that focus on economic growth, social equity, and environmental protection.
What are the criticisms of NGO? ›
During the course of the 1990s and early 2000s, a clearly defined set of critiques of NGOs have appeared focusing on: (1) their performance and actual effectiveness, (2) accountability issues, (3) issues of autonomy, (4) commercialization, and (5) ideological and/or political interpretations of their rising influence.
Who is considered an NGO? ›
NGO stands for non-governmental organization. While there is no universally agreed-upon definition of an NGO, typically it is a voluntary group or institution with a social mission, which operates independently from the government.
What is an example of a NGO? ›
Non-Governmental Organizations (NGOs)
They include international charities such as OXFAM and Save the Children, research institutes, churches, community-based organizations, lobby groups and professional associations.
Is the Red Cross an NGO or IGO? ›
The ICRC and International Humanitarian Law
The International Committee for the Red Cross (ICRC) is a unique institution (neither an IGO nor an NGO) based in Switzerland, which has a mandate to protect the victims of international and internal armed conflicts under the Geneva Conventions and their Additional Protocols.
Is a church considered an NGO? ›
Even in the occasional example where a church may have some commerce, like a bookstore, the exercise and promotion of religion is the primary activity. By definition, that is a non-commercial, hence nonprofit, nature of operations. So, yes—a church is a nonprofit.
