Definitions

NGO: 

NGO stands for Non-governmental organizations and represents organizations which are independent of government involvement. They are generally formed by citizens in the form of clubs or associations for benefit of its members or others with focus on humanitarian activities or social welfare with activities which span from human rights protection, consumer protection, environmentalism, health, or development etc. In some countries, NGOs are referred to as non-profit organizations in some countries. Worth noting is the fact that Political Parties and Trade Unions are sometimes considered as NGOs

NPO:

A Non-profit Organisation is defined as: a trust, company, or other association of persons: –

(a) established for a public purpose, and

(b) the income and property of which are not distributable to its members or office bearers except as reasonable compensation for services rendered.

Only registered non-profit organisations (NPOs) are eligible for government funding.

Any organisation that is not for profit and is not part of government can apply for an NPO Status. The following can apply:

• Non- Governmental Organisations (NGO)
• Community Based Organisations (CBO) {Crèches, Private Schools, Youth Clubs etc}
• Faith Based Organisations (FBO) {Churches, Ministries etc.}
• Organisations that have registered as Section 21 Companies under the Company Act 61 of 1973. E.g NPC
• Trusts that have registered with Master of the Supreme Court under the Trust Property Control Act 57 of 1988.
• Any other Voluntary Association that is not-for-profit. The Directorate can only register an organisation that has a constitution or any other founding document.

Registration of an NPO is governed by the Department of Social Development . To    register, you would need a constitution or deed of trust, and memorandum and articles of association.

NPC

NPC stands for Non Profit company. A non-profit company is a company incorporated for public benefit or other object relating to one or more cultural or social activities, or communal or group interest.

The income and property of a non-profit company is not distributable to its incorporators, members, directors, officers or persons relating to any of them and must be used to advance the purpose for which it was created, as set out in its MOI. The income may not be distributed to any persons involved, except as reasonable compensation for services rendered. A non-profit company must have at least three incorporators and three directors and may be registered with or without members. A non-profit company is not required to have members. The members of a non-profit company are persons who participate in the activities of the non-profit company, such as members of a church or a pension fund. Non-profit companies registered without members, may be registered with a standard or a customized Memorandum of Incorporation (MOI).

NPC are registered with the Companies and Intellectual property commission. If you wish to receive grants or donor-funding, you are required to register with the Department of Social Development (NPO).  Non-profit companies registered with the Department of Social Development can apply for funding at the National Lottery Board.

Based on the above definition, the following differences or conclusions are worth noting:

1. An NGO is a form of NPO, and it is governed by the NPO Act.
2. When you register any form of non-profit company with the department of social development in terms of the NPO Act, you receive an NPO Certificate. There is no such thing as an NGO certificate in South Africa.
3. An NPO and NPC have similar objectives. The main difference between an NPO and NPC is the manner of formation. An NPO is formed in terms of the NPO Act and requires a constitution. On the other hand, an NPC is formed in terms of the Company Act and requires and MOI (Memorandum of Incorporation)

An NPC can register as an NPO, but an NPO cannot incorporate a company or register as an NPC. Best practice will be to incorporate an NPC and to register it as an NPO to give the charitable organisation the best possible credibility, which will result in more donations.