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The subtle differences between all types of associations

From the NPO – NGO – CBO – SHG – LBG

Explanation of types of associations

Table of Contents

1] NGO or NPO

UNHCR Camp Kakuma >Northern Kenya-Turkana District (TfC) 15 August 2025 – photographed by Barnaba Osman Kwanjeli ©

🌍 1. What is an NGO?

NGO = Non-Governmental Organization 

🔑Features:

    • Independent of the state: NGOs are not controlled by governments.
    • Non-profit: Their goal is to solve social problems (human rights, environment, health, education, development aid).
    • Funding: Donations, membership fees, foundations, sometimes also project funds from states or international organisations (e.g. UN, EU).
    • Legal form: Depending on the country, often registered as an association, foundation, trust or company limited by guarantee (CLG).
    • Examples: Amnesty International, Médecins Sans Frontières, Greenpeace.

👉

In short: An NGO is an organisation of citizens that works for the common good, independently of governments and without a profit motive.

📑 2. What is an NPO?

NPO = Non-Profit Organization (Non-profit organisation / Charitable organisation)

🔑 Features:

    • Very broad term – encompasses all organisations that are not profit-oriented.
    • Can be a sports club, a church, a foundation, a charity or even an NGO.
    • Profits are not distributed to members, but reinvested in the cause (e.g. education, social issues, culture, environment).
    • Examples: Caritas, German Red Cross, small village clubs, universities.

👉 In short: An NPO is any organisation that is not profit-oriented – whether local, national or international.

🔎 3. Difference between NGO and NPO

Criterion:
Meaning:
Focus:
Example:
Reach:
Ratios:

NGO
Non-governmental organisation
Mostly: international/political/development policy
Amnesty, Greenpeace, Doctors Without Borders
Often international
Every NGO is also an NPO

NPO
Non-profit organisation
General: any charitable organisation
Sports clubs, churches, foundations, including NGOs
Can be local, national or international
However, not every NPO is an NGO

.

👉 Simply explained:

NPO = the broad umbrella term → anything that is not profit-oriented.

NGO = a special form of NPO → independent of the state, often international and politically active.

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2] What is a CBO in Africa?

1. What is a CBO?

A CBO is a local, usually non-governmental organisation initiated and run by members of a particular community.

  • Objective: To improve the living conditions of their own community.
  • Structure: Often informal or semi-formal, however it may be registered in order to receive funding.
  • Examples: Women’s groups, village development organisations, youth clubs, health or environmental protection initiatives.

2. Importance of a CBO

CBOs are extremely important in many African countries because:

  1. Locally based: They know the needs of their community inside out.
  2. Access to resources: Funding is often available from NGOs, government programmes or international organisations specifically for CBOs.
  3. Empowerment: They strengthen the participation of the population, e.g. women, young people or disadvantaged groups.
  4. Flexibility: They can respond more quickly to local problems than large government institutions.

3. Why so many CBOs are being established

Many individuals and groups establish CBOs for several reasons:

  • Funding opportunities: Registering as a CBO often opens doors to government or international funding.
  • Community development: People want to actively improve their villages or towns.
  • Reputation: Official CBOs often enjoy greater recognition from authorities and partners.
  • Networks: CBOs can cooperate more easily with NGOs, government projects and international organisations.

3] What is the purpose of a self-help group in Africa?

📌Definition

SHG = Self-Help Group

An SHG is a small, informal group of people (usually 10–30 members) who organise themselves to solve common problems and support each other.

🔑 Characteristics of a self-help group in Africa:

    • Grassroots: Originates directly in the neighbourhood or village community.
    • Members: Often women or young people who have similar living conditions (e.g. smallholder farmers, craftspeople, refugees).
    • Self-organisation: Members set their own rules, contributions and goals.
    • Financing: Often through small savings groups (each person contributes a small amount of money each week → microloans for members).
    • Independent: Work independently, however can network with CBOs or NGOs.

🎯 Functions of a self-help group (also in Africa):

    1. Economic support
      • Joint saving and granting of small loans (microfinance).
      • Financing of small business projects, school fees or emergencies.
    2. Social support
      • Exchange, advice, mutual help with problems.
      • Strengthening women’s rights, health, education.
    3. Collective strength
      • SHGs act as a group in dealings with authorities, markets or NGOs → greater bargaining power.
    4. Bridge to larger organisations
      • Many SHGs later become part of CBOs or NGOs.
      • International development projects often work directly with SHGs because they are directly anchored in people’s everyday lives.

👉 In short:

A self-help group is the smallest, most practical form of organisation – people come together to be stronger collectively, whether economically, socially or politically.

4] What is the function of a learning centre in Africa?

1. What is a Learn Centre (LC)?

In Africa, a Learn Centre is typically an educational or training-oriented institution that aims to teach, train or provide professional development to people.

  • Form: Usually organised as a CBO, sometimes also as an NGO partner or association.
  • Target group: Children, young people, adults, women, migrants – depending on the focus.
  • Services: Literacy, vocational training, computer training, language courses, awareness-raising on health, the environment or human rights.

2. Comparison with an SHG

SHG (Self Help Group):

  • Smaller group of usually 10–25 members.
  • Focus on self-help, saving, microfinance, mutual support.
  • Strongly community-oriented, often limited to a local area.

Learn Centre comparison:

  • Larger in scale, often with infrastructure such as classrooms or computer rooms.
  • Focus on education, knowledge transfer and capacity building, not primarily on savings or financial assistance.
  • However, it can integrate elements of an SHG, e.g. self-help projects, group learning or microfinance for training participants.

In short: An LC is more of an educational centre than a savings or financial group, however it can have the same social and community-building effect as an SHG.

3. Purpose of a learning centre in Africa

An LC fulfils various functions:

  1. Closing the education gap: Many communities do not have sufficient access to schools or vocational training.
  2. Capacity building: Adults and young people can acquire skills that improve their job opportunities or self-employment prospects.
  3. Empowerment: Particularly important for women, migrants or disadvantaged groups – promotes self-confidence and initiative.
  4. Community development: LCs can serve as meeting places for organising community projects, workshops or awareness campaigns.
  5. Sustainability: Through courses, training or small fees, LCs can become self-sustaining in the long term.

4. Structure

    • Management: A committee or board, often elected by the local community.
    • Members: Students, adults, trainers, volunteers.
    • Partnerships: Local NGOs, CBOs, government education authorities.
    • Funding: Donations, fees, grants, collaborations.

Conclusion:

A Learn Centre (LC) in Africa is a CBO-like educational institution that focuses on learning, training and empowerment. It is larger and more education-oriented than a traditional self-help group; however, it can achieve similar community-building effects.

5] What is the function of an LGB in Africa?

1. What is an LBG?

An LBG – Company Limited by Guarantee is a company with limited liability through guarantee.

  • No shareholders: Unlike a public limited company, there are no owners who receive dividends.
  • Members as guarantors: The members merely undertake to pay a fixed amount (guarantee) in the event of financial problems – usually symbolic, e.g. £1, £10 or a small sum.
  • Purpose: The company is not established for profit, but for non-profit, social, educational or charitable purposes.

2. Purpose and function of an LBG

Key features:

  1. Non-profit status: Profits may not be distributed to members; they must be reinvested in the association’s purpose.
  2. Limited liability: Members are only liable for the guaranteed amount. This protects their personal assets.
  3. Legal structure: Offers formal legal personality, can enter into contracts, own property and receive donations.
  4. Transparency: Annual reports, accounting and general meetings are often required.

Typical functions:

  • Supporting projects in education, health, sport, the environment or social work.
  • Managing donations or subsidies.
  • Providing a legally secure framework for NGOs, CBOs or other non-profit activities.

3. NGOs as LBG – how should this be understood?

Many NGOs in countries such as the United Kingdom, Kenya and Ireland opt for the LBG structure. Why?

  • Security aspect: Members are not personally liable.
  • Formal structure: As an LBG, the NGO can enter into contracts, receive donations and maintain its own bank accounts.
  • Tax advantages: In some countries, LBGs enjoy tax benefits for charitable purposes.
  • Legal status: This makes the NGO a legal entity, independent of its founders.

Important: Not every NGO is automatically an LBG – establishing an LBG is a legal choice that defines the structure, liability and governance.

4. Summary for NADEUM members in Vienna or elsewhere

An LBG is a type of company for non-profit organisations. Unlike a public limited company, there are no owners who receive profits. Instead, the members only commit to a small guarantee in the event of financial problems. The LBG can carry out projects, manage donations, conclude contracts – all for the purpose of supporting the community, education, health or social development. NGOs often use this form to operate in a legally secure and transparent manner.”

6] The subtle differences between all types of associations

Abbreviation: in German

NPO:
Non-profit organisation

NGO:
Non-governmental organisation

CBO:
Community-based organisation

SHG:
Self-help group

LC
Learn Centre

LBG
Limited liability company

NPO = umbrella term
Generic term: not-for-profit, reinvests surpluses

NGO = international NPO, independent of the state
Special form of NPO: independent of governments, mostly active internationally, focus on human rights, the environment, development

CBO = local grassroots organisation
Founded locally, by the community itself, focus on specific local problems

SHG = smallest, informal group
Smallest unit (10–30 people), mutual assistance,

LC = Learn Centre

LBG = legal form for implementing projects in a reputable manner

NPO
Sports club, church, university

NGO
Amnesty International, Doctors Without Borders

CBO
Women’s group in the village, youth club, water initiative

SHG
Women’s savings group, youth self-help group

LCenter
Members: Schoolchildren, adults, trainers, volunteers.

LBG
Microloans, savings groups

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