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Trust and other NGO Accounting

The terms “Trust” and “NGO” refer to different types of organizations, each with distinct characteristics and legal structures. Here’s an overview of the differences between trusts and NGOs:

Trust: A trust is a legal entity created when one person (the settlor or grantor) transfers assets to another person or entity (the trustee) to hold and manage those assets for the benefit of another person or group of people (the beneficiaries). Trusts are established to ensure the proper management and distribution of assets according to the wishes of the settlor.

Key characteristics of trusts include:

  1. Purpose: Trusts are primarily created to manage and distribute assets for the benefit of beneficiaries.
  2. Legal Structure: Trusts are governed by trust laws and are subject to specific legal requirements and regulations.
  3. Fiduciary Relationship: Trustees have a fiduciary duty to act in the best interests of the beneficiaries and manage the assets according to the terms of the trust.
  4. Asset Management: Trustees are responsible for managing and protecting the assets held in the trust, ensuring they are used for the intended purposes.
  5. Perpetuity: Trusts can be created for a specific period or for an indefinite period, potentially spanning multiple generations.
  6. Private Nature: Trusts are generally established for the benefit of specific individuals or families and are not typically open to public participation or membership.

Refer here for Trust Accounting

NGO (Non-Governmental Organization): An NGO, as mentioned, stands for “Non-Governmental Organization.” It is a broad term used to describe organizations that are independent of government control and operate for purposes such as social welfare, humanitarian aid, environmental protection, advocacy, or community development. NGOs can take various legal forms depending on the jurisdiction in which they operate.

Key characteristics of NGOs include:

  1. Mission and Objectives: NGOs are established with a specific mission and objectives to address social, environmental, or humanitarian issues.
  2. Non-Profit Status: NGOs are typically registered as non-profit organizations, which means their primary focus is on serving their mission rather than generating profits for the benefit of shareholders.
  3. Independence: NGOs operate independently from government control and influence, allowing them to pursue their objectives with autonomy.
  4. Public Participation: NGOs often involve the public in their activities and may have memberships, volunteers, or supporters who contribute to their work.
  5. Advocacy and Activism: Many NGOs engage in advocacy efforts, raising awareness, influencing public policy, and promoting social change related to their mission.
  6. Funding: NGOs rely on various sources of funding, including donations, grants, fundraising, and sometimes government contracts or partnerships.
  7. Legal Structures: NGOs can be registered as charitable organizations, societies, associations, foundations, or other legal entities, depending on the legal framework of the country in which they operate.

While trusts primarily focus on asset management and distribution, NGOs have a broader scope of activities and are dedicated to advancing specific social causes or addressing societal needs.

Refer here for NGO Accounting