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For some people, the idea of a nonprofit organization vs. non-governmental organization is a no-brainer, but they're in for a surprise.
These two types of organizations are not quite the same; there are subtle differences between them, including scope, size of budget, and where they operate. To learn more about why these two terms aren’t interchangeable, read on.
What is a Nonprofit Organization?
A nonprofit organization is an organization formed to promote a charitable cause. Rather than distributing any profit back to shareholders or members, the nonprofit invests in itself and its programs and services.
Nonprofits operate for a variety of charitable reasons ranging from health care to education, from religion to advocacy, and from human services to animal rescue or care.
Some nonprofits are membership organizations. A nonprofit may be connected to a church, an alumni association, or clubs for children like Big Brothers Big Sisters or the Boys & Girls Club of America. Or a nonprofit may be championing a cause, like feeding the hungry, helping the homeless, providing affordable housing, fighting a particular disease, or any other good causes.
Nonprofits raise money from individual donations, monthly giving programs, special events, and from grants awarded by government entities, foundations, and corporations.
According to the National Council of Nonprofits, 1.3 million nonprofits operate in America. Many have received their 501(c)(3) tax-exempt status from the Internal Revenue Service, but there are nonprofits with a different status from the IRS, including 501(c)(4) (social welfare organizations like volunteer firefighters or a homeowner’s association), and 501(k) (child care organizations). Organizations with a 501(c)(3) status are considered charitable nonprofits.
What is a Non-Governmental Organization?
The term Non-governmental Organization (NGO) was coined during the formation of the United Nations in 1945 to describe large organizations that work abroad and are not influenced by any government. That means that while the NGO may receive some funding from a government, that government doesn’t mandate how they operate, or what they do.
There are also nuances in how NGOs are regulated that can vary from country to country. For instance, in Great Britain, there are five legal formations for an NGO–a company limited by guarantee, an unincorporated association (what we in the U.S. would call a membership organization), a trust, a registered society, and a charitable incorporated organization. All must register with the Charity Commission for England and Wales.
Key Differences Between NPOs and NGOs
Pitting nonprofit organizations vs. non-governmental organizations head to head brings to light their subtle differences. These include:
Scope
An NGO tends to be a multinational organization, usually quite large, with thousands of employees and even more volunteers. Their missions are usually focused on both size and impact and are often humanitarian in nature.
In contrast, many NPOs are local and have a much smaller footprint. Keep in mind that even some of the largest NPOs–Habitat for Humanity comes to mind–started out small and kept growing.
Politics
NGOs are often involved in political lobbying and partnerships with foreign governments to enhance cooperation and facilitation of their services. They also often offer technical assistance at the national, regional, and local governmental levels.
While some NPOs do have lobbyists, many do not. Their governmental partnerships are usually on the local (municipal, county, and/or state) levels.
Budget
While there are some very large nonprofit organizations with huge budgets, most are smaller and more locally focused. Fundraising is important to both types of organizations, but NPOs usually get donations from individual supporters and from foundations and corporations, as well as special events.
An NGO, on the other hand, because of the scope and scale of its operations, must aggressively seek funding, whether from individuals, monthly donors, or even government grants.
Location
NGOs usually operate internationally and often have a centralized main office with satellite organizations registered as different subsidiary companies. The satellite offices serve the country or areas of a country where they are located.
Advocacy
NGOs are often involved in advocacy efforts regarding particular issues. For instance, UNICEF advocates on behalf of children and young mothers, as well as providing tangible services and care in a wide array of countries. Some NPOs may also be involved in advocacy, but usually at a smaller scale due to their smaller footprint and budget.
Similarities Between NPOs and NGOs
When looking at a nonprofit organization vs. a non-governmental organization, we find the single largest similarity is that both types of organizations operate for the greater good. Other similarities include:
Funding Sources
Just like their big international brothers, NPOs have to scramble to raise funds for their general operations and program services, not to mention the occasional capital or comprehensive campaign.
These efforts include major individual donors, middle and lower-tier donors, foundation grants, corporate sponsorships and grants, membership or monthly giving, and special events. The only difference is the scale.
Mission
You want to change the world for the better? Yes, please. Both nonprofits and NGOs are agents for the public good, and world-changing is the name of their game. Both NGOs and NPOs are passionate about their particular cause.
Constituents
Those who are served and the needs they have can be similar between nonprofits and NGOs. Some examples include:
- Health care access
- Clean water and sanitation
- Poverty and homelessness alleviation
- Disaster aid
- Community social issues
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Examples of Nonprofit Organizations
Here are some examples of well-known nonprofits:
National Public Radio
NPR is a nonprofit media organization that syndicates news reporting, a variety of programs, and podcasts across the nation to more than 1,000 public radio affiliate stations.
NPR is known for its relatively unbiased news coverage, as well as a myriad of quirky and informative programs including “Science Friday,” “Wait, Wait, Don’t Tell Me”, “All Things Considered”, “The Hidden Brain”, and “Morning Edition”.
NPR and its affiliates are well-known for their fundraising drives, as well as their membership programs that form the bulk of their revenue. They do receive a small amount of funding from the U.S. government.
Feeding America
Originally known as Second Harvest, Feeding America is the largest hunger-relief organization in the U.S. and provides services to a network of 200 food banks across the nation, as well as 60,000 food pantries and meal programs.
Feeding America also advocates for hunger awareness and conducts robust hunger research studies about specific demographics. Feeding America relies on individual gifts, in-kind gifts, and foundation and corporate giving to meet its mission. In 2021, they raised more than $4.3 million and re-granted more than $1.8 million to partner food banks across the country.
The Los Angeles Mission
One of the largest rescue missions in the country, the Los Angeles Mission, is on the frontlines of serving the thousands of Angelenos who have become homeless. L.A.’s Skid Row has become infamous throughout the country because of the tent and box communities lining its streets.
The Mission has a robust direct mail program, enjoys the support of celebrities, and attracts many major gifts, as well as grant opportunities.
Examples of Non-Governmental Organizations
Most of these NGOs are household names.
Médecins Sans Frontières
Médecins Sans Frontières, or Doctors Without Borders, is an NGO headquartered in Geneva, Switzerland. The organization describes itself as an “independent, medical, humanitarian organization.”
They operate via an association model, meaning that in each country where they work they also have an independent association with its own board of directors. The 25 different associations report to the organization’s International team in Geneva. In the U.S. the association is known as Doctors Without Borders USA.
Last year, MSF served more than 9.9 million outpatients in 88 countries, as well as admitting 877,000 patients to a hospital. In 2021, the organization reported raising €1.94 billion ($2,021,295.700), 97.4 percent of which came from individuals.
Amnesty International
Amnesty International is a human rights NGO run by an International Secretariat, which has offices around the world.
More than 70 sections report back to the Secretariat. Each section is responsible for its own lobbying and local strategy. Fundraising is done internationally. Most of Amnesty’s funding comes from individual donors, as well as members.
Operating since 1961, Amnesty is a 1977 recipient of the Nobel Peace Prize for its advocacy and research. Eight years ago, Amnesty launched the Amnesty Media Awards, which awards investigative journalists who expose human rights abuse.
Habitat for Humanity
While most Americans would term Habitat a nonprofit, it’s a good example of an NGO which is also a nonprofit. Habitat actually builds affordable housing globally, not just in America.
Originally founded in 1976, Habitat meets a felt need–a safe, affordable home for people who ordinarily wouldn’t have the means to be homeowners. By putting “skin in the game”—participating in construction and finishing—the future owner invests sweat equity in their new home.
Habitat raises money via individual donations, receives grant funding, and generates revenue from its Re-Stores which recycle gently used or excess appliances, tools, homebuilding equipment, hardware, plumbing, flooring, furniture, and more.
Wrapping Up: What is The Difference Between a Non-Governmental Organization and a Nonprofit Organization
We looked at why nonprofits and non-governmental organizations are different, and we’ve also compared the similarities between them.
NGOs usually operate internationally and often have a centralized main office with satellite organizations reporting back to it. Nonprofits can be local, regional, or national in scope and are governed by a board of directors and headed by a CEO or Executive Director.
The one thing NGOs and NPOs have in common is their common aspiration: to make the world a better place.
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