Under the general laws of India, NGOs are of three types which include society registration, trust registration, and Section 8 company incorporation. All of them are governed by three individual legislations. Society Act,1860 governs societies, Trust Act,1882 governs trust, and Company Act, 2013 governs Section 8 companies in India. Both trust and NGOs have the same intention or desire which is the welfare of the society. Although the intention and desire of trust and NGOs is the same there are many difference between NGO and trust. In the current write-up a better understanding of both the difference between NGO and trust will be discussed in detail. A detailed comparison between both of them can give a clear picture of their differences.
What is a Non-Government Organization?
A non-profit organization is an NGO that works to improve society and ensure its welfare. Volunteers help to function as an NGO. NGOs are formed for charitable purposes and cannot do things to make a profit. They could work for the upliftment and propagation of various things like environment, science, and research & development, artistic, dramatic, and literary work, women’s empowerment, etc. The government supports their work because they are contributing to society’s well-being. They are helping the government in solving many social concerns either directly or indirectly just like trusts. Hence to know about the difference between NGO and Trust it is essential to learn about them one by one first.
Meaning of a Trust
Under Section 3 of India Trusts Act, 1882 definition of trust has been given with an example. For a better understanding of the difference between NGO and trust it is obvious to know about trusts individually. According to Section 3, trust is a responsibility linked to the possession of assets, whether they are movable or immovable. Trust arises out of a confidence accepted by the owner of the property, or declared and accepted by him, for the benefit of a beneficiary. Trust can be formed with the help of a minimum of three parties. These parties include the author of the trust, the trustee, and the beneficiary.
Difference Between NGO and Trust in India
Given below is the table of comparison between NGO and Trust. Through this table up to a certain extent difference between NGO and Trust will clear out. After reading this table one can easily pick up one of them as per their requirement.
| Particulars | NGO | Trust |
| Governing Law | NGOs are of three types which are governed by three different laws in India. It completely depends on the type of NGO. Three legislations that govern three types of NGOs are the Trust Act, Societies Act, and Company Act | Trusts are governed by the Indian Trusts Act, 1882 |
| Governing Body | It also depends on the type of NGO one is choosing. | For trusts Charity Commissioner or Sub-registration of Registration is responsible |
| Reliability and credibility | As NGOs work on a broader level their reliability and credibility are more than trusts | As Trusts are registered with the local registrar as per the jurisdiction and work on a small level their reliability and credibility is less comparatively |
| Trustworthiness | The trustworthiness of NGOs is more as they are working on a broader level with high reliability and credibility | The trustworthiness of trust is less as they are registered with the local registrar and work on a small level with less reliability and credibility |
| Maximum Members | There is no ward on the maximum number of directors in NGOs | There is no ward on the maximum number of a beneficiary in Trusts |
| Minimum Members | It also depends on the type of NGO. For society minimum of seven members and for section 8 company minimum of two directors | The minimum number of members is three |
| Scope | The level of operation of an NGO is wider in trust’s comparison | The level of operation of a trust is not as broad as NGOs as they work in limited area for particular purpose |
| Time taken in Registration | Timing of registration also depends on the type of NGO. For societies 20-25 days and for section 8 companies 10-15 days are sufficient. | It will take 1-2 months to register a trust in India. |
| Function | They function on all three levels that is state, national, and international level. | They function in limited areas for particular purposes |
| Mode of Registration | For the section 8 company everything is online and for the other two types, it can be online or offline. Depends on the state in which one is taking registration. | In some places the process of trust registration is online and in some places it is offline. |
| Management | NGO’s management is efficient as they are working on a broader level. | Their management is sometimes chaotic as they are small institutions and their functioning is looked after by its trustees. |
| Decision-making | NGOs work on a broad scale, hence they have a proper system of everything, hence their decision-making process is a little slow. | Trusts work on a smaller scale, with less number of people and their procedure of decision-making is not as hectic as NGOs, hence their decision-making process is a little fast. |
| Accountability and Reporting | Registered NGOs are required to keep and maintain proper books of records, undergo regular audits, and submit annual financial reports to the concerned authorities. NGOs are also accountable for the people associated with them. | Registered trusts also need to keep and maintain proper accounting records and undergo audits. They are also expected to file annual returns with the local charity commissioner’s office or the relevant authority responsible for trust registration in a particular area. |
Trust a Type of NGO
The Difference between NGO and trust clearly given in the above table. For more clarity, one can refer to that. Although Trust is a type of NGO, they are somewhat different from NGOs. Trusts and NGOs are working for a good cause which is charitable work, but when we compare both of them NGOs are more effective than trusts. Their participation and contribution are higher than the trusts. NGOs try to help people in every situation like natural disasters, crises, pandemics, etc On the other hand trusts are working for the benefit of beneficiaries and they cannot go beyond that.
Conclusion
While both NGOs and Trusts work towards charitable and social welfare causes in India, there are many difference between NGO and trust. Trusts are a type of NGO but they differ in many ways like the formation process, documentation, etc. NGOs are voluntary organizations registered under the three different legislations depending on the type of NGO one is choosing. Although there are many difference between NGO and trust both are eligible for tax exemptions under the Income Tax Act. Both of them play important roles in addressing social issues and driving positive change in Indian society.
