Difference Between NPO and NGO (Key Points)

Both non-profit organizations (NPOs) and non-governmental organizations (NGOs) work to advance society and human welfare. These establishments or groups are not connected to the government. Discerning the differences between NGOs and NPO might be challenging because of their similar actions and objectives. An NGO and NPO are established under different rules and regulations and with other goals.

What is NPO?

A group can form a non-profit organization, often called an NPO, to advance social, professional, religious, or cultural goals. Although such organizations are constituted following the Companies Act of 2013, they serve purposes other than producing profits. 

An NPO can be a charitable organization, a membership group like a women’s or sports club, a social or recreational organization, a public hospital, etc. The trustees or members of the NPO raise the initial funds.

What is NGO?

An NGO, or non-governmental organization, promotes the general population, social welfare, and animal welfare. It describes a group that banded together to perform various services and humanitarian tasks wholly independently of the government. These groups receive funding from the government, foundations, businesses, and private individuals without being associated with any particular government.

For the objectives, duties, regulations, and purposes they were formed and are now operating, NGOs support, monitor, and check the state of government organizations, ministries, departments, agencies, and authorities. To advance shared interests, this is done in a legitimate, democratic manner with public engagement.

Objectives to register a npo or ngo 

• Social advancement through development – The NGO’s assets and annual income shall be used for charity endeavours to further any particular religion, caste, creed, or community.
• Protection or Management of Assets – The main goal of creating a trust is to manage the assets and protect them from creditors, divorce, or others who might impact your beneficiaries if they cannot do so on their own.
• To promote initiatives covered by Section 8 of the 2013 Companies Act – Section 8 of the Companies Act of 2013 is intended to use their profits to advance social welfare, science, education, sports, religion, the arts, charity, environmental protection, and any other endeavours as may from time to time be announced by the federal government.

Difference between npo and ngo 

Criteria	NPO	NGO
Formation	An NPO was established to help people and runs under the tenet that no member would partake in the entity’s gains or losses.	Ordinary persons who act independently of the government form an NGO.
Definition	An NPO is a non-profit company founded to offer customers products or services in support of goals outlined in the Companies Act of 2013.	An NGO is a non-governmental organization founded by local citizens and run by the government for the good of the community.
Area of Operation	The operational area of NPO is limited.	NGOs are active all over the world. Its active region is enormous.
Governing Laws	Section 8 of the 2013 Companies Act governs an NPO incorporated as a company.	Depending on the nature of the organization, an NGO may be registered as a Society under the Societies Registration Act of 1860 or as a Trust under the Public Trust Act.
Purpose	The main goal of an NPO setting up a business is to further non-profit objectives like trade, commerce, the arts, charity, education, religion, environment protection, social welfare, sports, and research.	NGOs operate for the good of society and the nation’s economy. It also raises awareness of various concerns, such as the environment, health, etc.
Raising of Funds	An NPO does not divide its surplus funds among its shareholders and owners but uses them for the organization’s purposes. NPOs have various funding options, including contributions from members and directors, external commercial borrowing, and overseas financing.	NGOs rely on donations and several different techniques, procedures, programmes, initiatives, and activities for funding.

Procedure to register npo or ngo

Steps for society registration

Step 1: Choosing a distinctive name

Before registering a society, you must choose a suitable name. Because the Societies Registration Act of 1860 forbids using words identical to or similar to those already used, you must be careful when choosing a name.

Step 2: Drafting Memorandum of Association, Rules and Regulations

A Society Memorandum is necessary to register. Rules, regulations, and bylaws are all covered in the memorandum. Each of the society’s founding members must sign the Memorandum of Association and Rules & Regulations, which must be witnessed by a Notary Public, Gazette Officer, Lawyer, Oath Commissioner, Chartered Accountant, or First Class Magistrate with their official seals and complete addresses.

Step 3: Submit the required documents

The applicant must deliver the paperwork in two copies to the state’s registrar of societies.

Step 4: Certification that makes the society appear to be registered

After the application is received, the registrar signs the first copy and gives it back to the applicant as an acknowledgement of the application, keeping the second copy for approval. The registrar will assign a unique registration number to the incorporation certificate after the documents have been appropriately verified.

Steps for trust registration

Step 1: Choose a trust’s apt name

The name of the prospective trust must be chosen as the first and most crucial stage in the Trust registration procedure.

Step 2: Trust Deed Drafting

Because the Trust Deed is the only document that makes the trust legally binding, drafting it is crucial.

Step 3: Submit the deed before the registrar

The deed must be presented to the registrar once it has been drafted. The beneficiary, trustee, and author will participate in the deed’s drafting process. In the trust deed, the terms and conditions of the deed are all listed.

Step 4: Get a Trust Registration Certificate

The trust will be registered if the registrar is satisfied after reviewing all the paperwork. The registrar will give the trust registration certificate. The trustee and the trustor must maintain a copy of this trust registration certificate.

Steps for section 8 company registration

Step 1 – Arrange all documents for Section 8 company registration

First, you must gather all relevant paperwork before starting the section 8 company incorporation process.

Step 2 – Choose a company name

Section 8 firms must have unique names that reflect their identity and primary business objectives.

Step 3 – Reserve Company name

You can apply to the Central Registration Center to reserve the firm name using either the RUN (Reserve Unique Name) application or PART A of the SPICe+ application.

Step 4 – filling out the SPICe+ form to register a Section 8 business 

Two sections comprise the SPICe+ form. Reserve your company’s name using the first component. The section 8 company registration application and ten other connected services are included in the second half of the form.

Step 5 – Issue of Section 8 Company Registration Certificate

After verifying the accuracy of the data included in the application for company registration, the ROC will register the section 8 company and issue it a certificate of incorporation as definitive evidence of its registration.

Conclusion

An NGO is a group of people who work together to advance cooperative or humanitarian goals rather than profit-oriented ones. On the other hand, the NPO is a group established to promote art, science, education, or any other social or cultural goal; it wants to use its profits to reach its objectives rather than distribute them among its constituents.