Am I an NGO or an NPO? Unpacking the alphabet soup (2024)

You are both. And neither. The charitable sector is peppered with acronyms whose correct usage is not always fully appreciated. This naturally leads to confusion.

The common acronyms are:

NPO: non-profit organisation/not-for-profit organisation

NGO: non-governmental organisation

PBO: public benefit organisation

NPC: non-profit company

When a not-for-profit entity asks ‘What am I?’ the answer can only be one of three options: a not-for-profit company (under the Companies Act 2008), a charitable trust (under the Trust Property Control Act 1988) or a voluntary association of persons (under the common law). These are the only three legal structures available through which to operate a not-for-profit entity.

The two most common statuses for which a not-for-profit entity can apply are: non-profit organisation status (in terms of the Non-profit Organisations Act 1997) and public benefit organisation status (in terms of the Income Tax Act 1962). Entities that are awarded such status often then refer to themselves as an NPO or a PBO. However, remember, that is not their legal nature. It is a description of their legal structure, a declaration that they have an NPO number and/or a PBO number. Commonly a not-for-profit entity will have both an NPO and a PBO number.

The term NPO is also used as a general descriptor to indicate that the entity concerned is not-for-profit, that is, the opposite of a for-profit entity. In these circ*mstances, it is not a statement that the entity has an NPO status under the Non-profit Organisations Act.

NGO is another descriptor used to refer to not-for-profit entities.

The word ‘charity’ has fallen out of favour. In its place the terms NGO and NPO are used. Given that NPO has at least two distinct meanings, it seems preferable to use the term NGO to describe any not-for-profit entity (whatever legal form it takes). Regrettably, in practice you will see not-for-profit entities, corporations and government departments using the terms NGO and NPO as though they were referring to distinctly different concepts. This has led to situations such as a not-for-profit entity missing out on a funding opportunity because it has assumed one label (NPO) and the funding body has used another label (NGO) as an essential qualification criterion. In this situation, the parties have missed the obvious: NPO and NGO can be used interchangeably. They both refer to a not-for-profit entity as the body entitled to apply for the funding.

The bottom line: be careful when you use acronyms and ensure people understand exactly what you mean.