Difference Between SHG and NGO

By : Neha Dhyani

Updated : May 12, 2022, 10:49

A country like India has large sections of society vulnerable to poverty, unemployment, financial distress, domestic abuse, and other issues. SHGs or Self-Help Groups and NGOs or Non-Governmental Organizations majorly address these issues through life-changing humanitarian aid and interventions. Though both types of organizations aim to help the vulnerable sections of society, their approaches, structure, and activities are very different. Let's explore the Difference Between SHG and NGO and how they impact society.

What are SHGs?

SHG is an acronym for a Self-Help Group, an informal, self-governed collection of individuals from a village or district from similar socio-economic backgrounds. The aim is to raise their socio-economic status through collaborative activities planned and executed by the members.

  • Activities can include starting a self-created banking system, hosting financial literacy workshops, skills training, etc.
  • SHGs have emerged as one of the most powerful tools in India for women to upskill, build financial savvy, develop a healthcare ecosystem, and drive a change in their communities.
  • The impact of SHGs in India includes reducing poverty, improving food security, and economic empowerment of women.

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What are NGOs?

NGO is an acronym for Non-Governmental Organizations. This is a society created by individuals to serve a specific cause or set of causes. The presence of NGOs has had a transformative impact on society, especially in supporting the vulnerable sections of society and addressing issues that impact the world on a global scale.

  • Unlike businesses, NGOs do not have business models that make profits. They raise funds through donors and leverage them to support their flagship causes.
  • NGOs are run through core teams of employees and armies of volunteers who feel passionate about the cause of the NGO.
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Difference Between SHG and NGO

SHG is an independent entity that is legally accountable to be answerable to any official body. They are formed on the principle of Article 19 (1), according to which citizens are free to form a group without registering it.An NGO is more organized and must be legally registered under the Societies Registration Act of 1860.
SHGs in India are mobilized mainly by women with similar socio-economic backgrounds to support each other socially, economically, socially, and with mutual collaboration.While some NGOs aim to support women, they span many issues and areas - from child welfare and animal rights to disaster relief and sustainability.

Members of SHGs raise funding by pooling their personal resources to fund various projects that support members and their families.

NGOs raise funding from individuals, corporate and independent donors, and via crowdfunding initiatives to fund various initiatives.

SHGs do not have any specific act under which they file income tax. Members are taxed as individuals.

NGOs file income tax under Section 12A, and they may have access to some tax exemptions based on their tax bracket.
The scope of SHGs is to transform the lives of its members and their communities.NGOs can create an impact at a regional, national or global level based on their scale.


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FAQs on the Difference Between SHG and NGO

Q 1. What is the Difference Between SHG and NGO in terms of execution of work?

A Significant Difference Between SHG and NGO is that the work at SHGs is executed by members, while paid employees supported by volunteers execute the initiatives of NGOs.

Q2. What is the Difference Between SHG and NGO in terms of their number in India?

According to Government data, there are over 6.6 million SHGs with 72 million members in India. Today, India has around 3.2 million registered NGOs. As mentioned, there is a vast numerical Difference Between SHG and NGO.

Q 3. What is the Difference Between SHG and NGO in terms of their role?

The Difference Between SHG and NGO is that SHGs offer members financial, social, and emotional support. The spectrum of issues and problems addressed by NGOs is vast - from serving children and survivors of domestic abuse to animal welfare, poverty, livelihoods, and education.

Q 4. What is the Difference Between SHG and NGO in terms of funding?

The Difference Between SHG and NGO funding is - members of SHGs raise funds by pooling their personal resources to support projects that assist their members and families. NGOs raise funds from individuals, corporate and individual donors, and via crowdfunding drives to fund various initiatives.