There is no denying that Australians have big hearts. In 2015-2016, individuals gave $12.5 billion dollars to charities and not-for-profits. However, as the landscape of nonprofits is shifting, the general public is becoming more confused about the difference between an NGO, a social enterprise, a charity, and a not-for-profit. And as more and more NFPs are moving into the “for profit” realm to help support their organisations, the definitions are becoming even more unclear.

Let us break it down for you.

What is a Non-Government Organisation (NGO)?

An NGO is a voluntary group of businesses or individuals created to offer a service to the community. They have a specific expertise or aim and are set up to support a particular issue. They are not affiliated with the government and often advocate for the general public. For NGOs to be eligible for funding under the Australian NGO Cooperation Program (ANCP), they must be accredited by the Department of Foreign Affairs and Trade (DFAT). An example of NGOs in Australia includes Habitat for Humanity Australia and WWF Australia.

What is a social enterprise?

A social enterprise is a business which was created to improve an aspect of the community or society. They operate under a commercial framework and run on a for-profit basis rather than with the assistance of government grants or private donations. There are not as many legal structures surrounding a social enterprise, so there is more flexibility for the organisation as a whole. Social enterprises donate a percentage of their profits to further their social cause. There are thought to be over 20,000 social enterprise businesses within Australia and the number is growing each year.

What is a charity?

If a business is labelled a charity, then there are very strict rules and regulations for it to follow. A charity comes under the umbrella of a not-for-profit, but the confusion lies in the fact that not every not-for-profit is a charity. A charity organisation must operate as a not-for-profit with a charitable end aim. They must not be a political party, an individual or a government entity. Charities receive additional tax benefits that are not granted to other not-for-profits, and donors who give to charities, can claim their donations on their personal tax return. Charities in Australia include Arthritis Victoria and Guide Dogs Australia.

What is a not-for-profit (NFP)?

Lastly, a not-for-profit runs purely to focus on the organisation’s mission and it must not be managed for profit or personal gain. Of course, an NFP can make a profit as long as the funds are put back in the business to grow the infrastructure or aid sustainability. Types of NFPs vary and may include co-operatives, companies, associations and indigenous corporations. Keep Australia Beautiful, YHA Australia and Kids Helpline operate as not-for-profit organisations.

Naturally, there will be some overlap between the definitions, particularly when it comes to charities and not-for-profits. Rather than be focused on what they are, look at what they do. In the long-term, their contributions to our community as a whole are the most important aspect of any of these businesses.