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What Is the Difference Between SHG and NGO

By Mayashree Acharya


Updated on: Nov 24th, 2021


6 min read

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Self-Help Groups (SHGs) and Non-Governmental Organisations (NGOs) are support groups that work to bring about social and economic empowerment for a large section of the population. Both these organisations are dedicated to reducing inequality prevailing in society and making it a better place to live. They stand up for the rights and needs of the people.

Though the work done by SHGs and NGOs and their nature is similar, there are certain differences between the two. NGOs carry out social work on a large level, while SHGs work on a small level. Compassionate individuals form NGOs to help others in need. A small group of people create SHGs and contribute money to a fund which they can use for the needs of its members. 

What is a Self Help Group (SHG)?

A Self-Help Group (SHG) refers to a self-governed and informal community of individuals with the same socio-economic background who collectively carry out shared purposes. The community of individuals who form an SHG save money from their earnings, collectively contribute to a common fund and lend it to its members to meet their needs. 

An SHG is a beneficiary organisation that works to promote the economic and other interests of its members. It is like a self-created banking system where the members of the same socio-economic background get together and pool in money to create a safe monetary space for each other. In India, SHGs are very common, especially amongst women belonging to the same communities. 

What is a Non-Governmental Organization (NGO)?

A Non-Governmental Organisation (NGO) is created by like-minded people who work for the needs of others like underprivileged children, animals, older people, orphans, victims of abuse, etc. NGOs work for improving the socio-economic condition of society. It is a voluntary organisation or entity with a social mission.

NGOs are organisations created by private individuals or groups to help out those in need. They accept donations for the general public in the form of cash payments and supplies. They also welcome volunteers to help them out in their various missions, such as donation drives, shelters, food supply, etc. 

In India, many NGOs are working towards assisting the people who do not have the means to support themselves. They work to improve the lives of people across India.

SHG and NGO Differences

RoleSHGs provide aid and assistance for a problem that exists in a small/specific group of individuals. NGOs address issues and provide aid to the population at large at the state and national levels. 
Organisation StructureA specific law/act does not govern the SHGs in India. They are formed based on the principle under Article 19(1) of the Indian Constitution, which provides that citizens are at liberty to form any association or group with mutual consent.The Companies Act, 2013 or Indian Trust Act or Societies Act govern the NGO’s in India. They must be legally registered as a trust, society or a Section 8 company and comply with the provisions of the respective act under which they are registered.
OperationSHGs usually have about 20 to 30 members. They work to assist their group members, often in rural or underdeveloped areas.NGOs operate on a large scale and work to better the large population with their actions on a city, state, national and international basis.
FundingSHGs are funded only by the members who form them. The members of an SHG deposit a particular amount in their committee’s fund. The general public, corporations and volunteering individuals fund NGOs. Certain NGOs also get funds from foreign countries. The Foreign Exchange Management Act, 1999, regulate foreign funds of an NGO. 
Scope of WorkSHGs function in a narrow spectrum, usually within their association itself. The SHG takes care of the needs of its members and assists each other by pooling funds together. NGOs work on a bigger level for the good of the population. They operate welfare activities within states or throughout the entire nation, such as providing monetary help, medical, educational, occupational facilities to the people in need. 
MembersSHG members are mostly women or people living in the same community with similar socio-economic needs and backgrounds. NGOs are composed of volunteers and members from all sections of society.

Though there exist several functional and structural differences between SHGs and NGOs, their motive is the same. They both work towards helping people combat and revive social crises in an effective way. They thrive on making society better without seeking any administrative help from governmental bodies.  

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

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I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more


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