Thanks for a great question!! Your question addresses much of the confusion in the popular press. To a geneticist, genetic modification means exactly what the words say: there is modification in the genetic material. This heritable form of variation of course is caused by mutation. Mutation can be natural or induced. Classic agents that induce mutation are some chemicals and some forms of radiation. For years, plant breeders have used induced mutation breeding to create favorable traits in plants as well as other organisms. These investigators treat seed with a powerful mutagenic agent and then screen progeny arising from these seeds for the trait of interest. The breeders also select against detrimental traits caused by the mutagen. These detrimental mutations are much more common than advantageous changes.
Transgenic refers to the movement or insertion of a gene into an organism that normally does not have a copy of that gene. It also can be natural or it can be induced. A recent paper (Kyndt et al 2015 Proceeding of the National Academy of Sciences 112: 5844) documents the natural transfer of some bacterial genes into sweet potato using exactly the same transferring system that is used by scientists to make some of the transgenic crops now on the market. On top of this, some organisms have the ability to make new genes by combining pieces of older existing genes (reviewed in Lal and Hannah, 2005 Proc. Natl Acad Sciences 102:9993).
With this background, it should be clear that the use of the term “GMO” to describe transgenic organisms is simply wrong. But the misuse of the term is now so popularized that it is virtually impossible to change. It should also be clear that transgenic approaches are no more “unnatural” than mutation breeding, yet mutation breeding does not receive the negative press that transgenic research does. This distinction makes no scientific sense.
What does make infinite sense though is that some groups wish to increase their market share by demonizing transgenic plants. I find their position indefensible given how this gene technology can help feed people in developing countries, keep our food costs as low as possible and aid the environment by reducing our carbon footprint and reducing soil erosion.