NGO vs Nonprofit: What’s the Real Difference?

There are countless organizations dedicated to making the world a better place, falling under the broad categories of nonprofits and NGOs. Although these terms are often used interchangeably, their distinctions can reveal crucial details about the organization’s operations and area of impact.

Nonprofits and NGOs share a common goal of aiding and uplifting communities. However, while all NGOs qualify as nonprofits, not all nonprofits are classified as NGOs.

Exploring these differences can help individuals find the right opportunities to contribute to the greater good and support meaningful causes.

What is an NGO?

An NGO, or non-governmental organization, is a type of entity that emerged in 1945 alongside the formation of the United Nations. Unlike government bodies, NGOs work independently to provide humanitarian aid and seek social change, even though they may operate in areas commonly managed by government agencies.

These organizations can be local, national, or international, though many function internationally or are based in the US while extending their services worldwide.

Examples include the Salvation Army and the American Red Cross, which are headquartered in the US but have a global presence. Similarly, globally recognized entities like the United Nations and Amnesty International fall under the category of international NGOs.

NGOs play crucial roles in addressing global issues across diverse regions, helping to bridge gaps often left unaddressed by governmental efforts.

Responsibilities of NGOs

NGOs take on a big role in making society better. Their efforts span various sectors and practices, such as:

Managing Health Crises: Handling outbreaks like HIV/AIDS and coronavirus to protect public health.
Promoting Health Education: Teaching communities about important issues like waste disposal and good hygiene.
Building Social Infrastructure: Developing essential facilities such as schools and roads to improve community living.
Advancing Women’s Equality: Providing resources like literacy programs and counseling to uplift women.
Addressing Community Issues: Tackling problems such as crime and prostitution by offering support and solutions.

Responsibilities of Nonprofits

Nonprofits exist to serve various community needs and causes. They engage in numerous activities such as:

Supporting scientific research
Providing literacy and educational initiatives
Preventing animal cruelty
Stopping child abuse
Promoting sports programs

NGO vs. NPO

NGO and NPO are often used interchangeably but have some notable differences. While many NGOs are nonprofits, only some nonprofits can be classified as NGOs.

Typically, NGOs operate internationally, like Doctors Without Borders, but NPOs usually function within their own country.

NGOs can be divided into Operational NGOs, focusing on project-based tasks, and Campaigning NGOs, which aim to influence policies for broader changes.

Similarities of NGOs and NPOs

NGOs and NPOs share several key characteristics. Both types aim to improve society. They can function on local, national, or even international levels. Additionally, they can obtain funding through government grants and benefit from tax-exempt donations.

Shared Goals: Aim to improve social, environmental, or humanitarian conditions.
Funding: Eligible for government grants and tax-exempt donations.
Operability: Can operate locally, nationally, or internationally.

How NGOs Operate

NGOs fund their operations through various sources similar to NPOs. They rely on private donations, loans, grants, membership dues, and revenue from services.

Although they can receive government aid, governments do not influence their decisions, which aligns with their “non-governmental” status.

NGOs can apply for tax exemptions by registering as a 503(c) organization with the IRS in the United States. This tax exemption, however, is specific to U.S.-based NGOs and doesn’t apply to those internationally-based.