Comparison between NPO and NGO

Ashish M. Shaji

19 Nov, 2020

The commonly used abbreviation for Non-Governmental Organization is NGO and Non-Profit Organization for is NPO. Both NPO as well as NGO work for the advancement of society however they also differ in some aspects. Here we will discuss the comparison between NPO and NGO.

Introduction of NPO and NGO

NGO is created by a legal person who is not part of the government bodies. NGO works for the improvement of the needy people. While NPO is anybody, public or private from which the owner of the NPO can’t draw any profits/dividend. NPO’s can generate revenues, ample of surplus profit but cannot use a single rupee, the amount /money has to be with the organization only.

NGOs would have more on the field support for these while non-profits organization could promote welfare through financial support. NGO is a category of NPO.

There is a thin line between NPO and NGO. So let’s understand.

Non-Governmental Organization (NGO) is a non-profit making entity that works in the regional, national or international level as per its connectivity. In India there are close to 40 lakhs NGOs that work in different fields. There are NGOs working for some particular social issues like human rights, women’s rights, environmental issues or health issues. In case of Non-Profit Organization (NPOs) a group of persons or individuals can form it for promoting cultural, religious or social objectives. It may be noted that the initial funds are raised by trustees or its members.  

Benefits/Advantages of NPO and NGO

The benefits of NGO are as under:

1. Implementation is cheaper
2. Innovative approaches
3. Better communication with people etc.
4. Exempted from paying income tax.
5. There is no minimum capital requirement for establishing a NGO according to section 8 company.

The benefits of NPO are as under:

1. Most of the income of NPO are exempted from taxes^[1]
2. NPO can receive grants and help in contrast to business entities which have to use different means to raise loans
3. It contributes to the social development at the highest level etc.
4. While working for NPO, it makes people feel that they are contributing for the society.
5. NPO limits personal liability which means the members receive protection from personal liability.

The Difference between NPO and NGO

The basic difference between a Non-Profit Organization and Non-Governmental Organization are laid down in the table made below.

Conclusion

NPO and NGO have similarities as well as certain differences. What makes them similar is that both work for the greater welfare of the society. Their work is critical for the country and its people and many have been benefitted by its functioning. Consider reading our blogs for more information on Non-Governmental Organization and Non-Profit Organization.

Read our article: Union Budget 2020: Changes for Charitable Trusts and Institutions