NGO Vs. Nonprofit: What’s The Difference?

There are many types of nonprofit organizations that exist for the main purpose of making the world a better place. The designation between an NGO vs nonprofit tells a lot about where the organization is based or provides aid. While an NGO is likely to also be classified as a nonprofit, the reverse is not always the case.

If you’re looking for opportunities to help benefit the greater good, then opportunities at NGOs or nonprofit organizations would be a great place to start. Here, we will outline what makes the two types of selfless businesses different.

What is an NGO?

NGO stands for non-governmental organization.

The term and business type was created in 1945, with the inception of the United Nations.

As the name implies, the organization is not part of the government, but they do still help provide humanitarian aid and advocate for social change. They may also operate in the same areas that government agencies do, but they are not part of the government.

NGOs can exist at the local, national, or international level. In most cases, they either operate internationally or are based in the US, but provide services across borders.

For example, the Salvation Army and American Red Cross are NGOs that are headquartered in the US, but can be found providing services across the world.

There are also NGOs that are international, like the United Nations and Amnesty International, for example.

NGO Duties

NGOs are geared towards helping benefit society at large and may do so across sectors and practices, such as:

• Managing emerging health crises (i.e. coronavirus, HIV/AIDS, etc.)
• Promoting health education (i.e. waste disposal and good hygiene)
• Developing social institutions (i.e. schools and roads)
• Securing women’s equality (i.e. boosting literacy and offering counseling)
• Dealing with community issues (i.e. crime, prostitution, etc.)

What is an NPO?

A nonprofit organization refers to a business that does not distribute its profits to owners or shareholders. Instead, the profits get reinvested into the business to manage expenses, meet its social goals, and pay staff.

Nonprofit organizations have the mission to help a specific cause or community.

Nonprofits may operate on a small-scale, like within a community, or on a broader scale, like nationwide.

For example, there are nonprofit organizations that are very big in scale, such as hospitals and universities. In fact, the University of the People (UoPeople) is a nonprofit organization that provides quality and affordable, tuition-free, online education to students around the world.

Nonprofit Duties

NPOs exist to serve a variety of causes and issues. For example, they may:

• Support scientific research
• Provide literacy and educational programs
• Prevent animal cruelty
• Aid in stopping child abuse
• Promote sports programs

NGO vs. NPO

When comparing an NGO vs NPO, it’s useful to know that most NGOs are also nonprofits. However, only some nonprofits are NGOs. A nonprofit can be an NGO when it operates across borders. An example of this case is Doctors Without Borders.

NGOs tend to be classified within two groups:

• Operational NGO: Geared towards making small changes through specific projects
• Campaigning NGO: Aimed at influencing political systems to usher in large changes

Similarities of NGOs and NPOs

There are many similarities between NGOs and NPOs.

Both have the goal to better society.

Additionally, both can operate at whatever scale they so wish, whether it be locally or nationally (or in the cases of NGOs, often internationally).

NGOs and NPOs both have the opportunity to receive aid from the government through grants and receive tax-exempt donations.

How NGOs Operate

NGOs receive funding much like NPOs. They may call on private donations, loans, grants, membership dues, and the sale of services to stay in business.

While it’s possible to receive government aid and funding, governments do not get to influence NGOs’ decision-making, hence the term “non-governmental” organization.

Like NPOs, NGOs can receive tax exemptions by applying as a 503(c) type of business with the Internal Revenue Service (IRS). This is true for US-based NGOs, not internationally-based NGOs.

How NPOs Operate

NPOs receive their funding from different sources, which tend to include:

• Donors
• Membership duties and fees
• Corporate contributions
• Investments
• Grants from foundations
• Government contracts or grants
• Loans
• Tax revenue

The Bottom Line

When comparing NGO vs nonprofit, you can see that they have a lot in common. While both organizations aim to serve the public and promote positive social change, the main differentiator is that non-governmental organizations operate internationally.

Through the support of volunteers and donations, these entities exist and are able to meet their goals and help change the world for the better.