Resources - Glossary of Terms

Word Definition
Accounts payable The amount owed by the organization to outside sources for items and services.
Accounts receivable Unpaid money owed to the organization from outside sources for services rendered.
Annual report A voluntary report issued by a foundation or corporation that provides financial data and descriptions of its grantmaking activities. Annual reports vary in format from simple typewritten documents listing the year's grants to detailed publications that provide substantial information about the grantmaker's grantmaking programs.
Annual fund The Annual Fund is an organized effort to obtain gifts on a yearly basis to support, at least in part, general operations of a nonprofit organization.
Applicant Party requesting a grant.
Application Written form outlining the requirements of the grant.
Assets The amount of capital or principal - money, stocks, bonds, real estate, or other resources - controlled by a foundation or corporate giving program. Generally, assets are invested and the resulting income is used to make grants.
Articles of Incorporation A legal document that creates a specific type of organization, a corporation, under the laws of a particular state.
Audited statements An evaluation by an independent auditing firm of a nonprofit organization's financial position.
Award Funds provided as a result of winning a grant
Beneficiary In philanthropic terms, the donee or grantee receiving funds from a foundation or corporate giving program is the beneficiary, although society benefits as well.
Bylaws A legal document outlining the self-imposed rules that will regulate an organization's own actions.
Capital Campaign A capital campaign is a time-limited effort by a nonprofit organization to raise significant dollars for a specific project.
Capital support Funds provided for endowment purposes, buildings, construction, or equipment.
Challenge grant A grant that is paid only if the donee organization is able to raise additional funds from other sources. Challenge grants are often used to stimulate giving from other donors. See also matching grant.
Common grant application Grant application format that has been adopted by groups of grantmakers to allow grant applicants to produce a single proposal for a specific community of grantmakers.
Community foundation A 501(c)(3) organization that makes grants for charitable purposes in a specific community or region. The funds available to a community foundation are usually derived from many donors and held in an endowment that is independently administered; income earned by the endowment is then used to make grants. Although a community foundation may be classified by the IRS as a private foundation, most are classified as public charities and are thus eligible for maximum tax-deductible contributions from the general public. See also 501(c)(3); public charity.
Community fund An organized community program which makes annual appeals to the general public for funds that are usually not retained in an endowment but are instead used for the ongoing operational support of local agencies. See also federated giving program.
Company-sponsored foundation (also referred to as a corporate foundation) A private foundation whose assets are derived primarily from the contributions of a for-profit business. While a company-sponsored foundation may maintain close ties with its parent company, it is an independent organization with its own endowment and as such is subject to the same rules and regulations as other private foundations. See also private foundation.
Corporate foundation See company-sponsored foundation.
Cooperative venture A joint effort between or among two or more grantmakers. Cooperative venture partners may share in funding responsibilities or contribute information and technical resources.
Corporate giving program A grantmaking program established and administered within a for-profit corporation. Because corporate giving programs do not have separate endowments, their annual grant totals generally are directly related to company profits. Corporate giving programs are not subject to the same reporting requirements as corporate foundations.
Deferred Charitable Gift Annuity A Deferred charitable gift annuity is a way for a donor to receive income at a future date.
Deferred revenue Money that the organization has received, but has not yet earned as of the closing date on the balance sheet. This amount is carried as a liability until the organization provides the goods or services for which the money was received.
Distribution committee The committee responsible for making grant decisions. For community foundations, the distribution committee is intended to be broadly representative of the community served by the foundation.
Donee The recipient of a grant. (Also known as the grantee or the beneficiary.)
Donor or Grantmaker An individual or organization that makes a grant or contribution to a donee. (Also known as the grantor.)
Employee matching grant A contribution to a charitable organization by an employee that is matched by a similar contribution from his or her employer. Many corporations have employee matching-gift programs in higher education that encourage their employees to give to the college or university of their choice.
Employer Identification Number (EIN) A nine-digit number assigned by the Internal Revenue Service. All IRS-designated 501(c)(3) nonprofit organizations have an EIN.
Endowment Funds intended to be invested in perpetuity to provide income for continued support of a not-for-profit organization.
Expenditure responsibility In general, when a private foundation makes a grant to an organization that is not classified by the IRS as a "public charity," the foundation is required by law to provide some assurance that the funds will be used for the intended charitable purposes. Special reports on such grants must be filed with the IRS. Most grantee organizations are public charities and many foundations do not make "expenditure responsibility" grants.
Family foundation An independent private foundation whose funds are derived from members of a single family. Family members often serve as officers or board members of family foundations and have a significant role in their grantmaking decisions. See also operating foundation; private foundation; public charity.
Federated giving program A joint fundraising effort usually administered by a nonprofit "umbrella" organization that in turn distributes the contributed funds to several nonprofit agencies. United Way and community chests or funds, the United Jewish Appeal and other religious appeals, the United Negro College Fund, and joint arts councils are examples of federated giving programs. See also community fund.
501(c)(3) The section of the tax code that defines nonprofit, charitable (as broadly defined), tax-exempt organizations; 501(c)(3) organizations are further defined as public charities, private operating foundations, and private non-operating foundations. See also operating foundation; private foundation; public charity.
Fiscal Agent or Fiscal Sponsor Generally, fiscal agent's or fiscal sponsor's are organizations that take responsibility for the fiscal duties of an unrelated party. Fiscal sponsorship is a formal arrangement in which one non-profit sponsors another non-profit or project of the non-profit that may lack tax-exempt status. This alternative allows a non-profit to seek grants and solicit tax-deductible donations under their fiscal agent's or fiscal sponsor's tax-exempt status.
Fixed assets Estimated value of land, buildings, equipment and other tangible items owned by the organization.
Fiscal year A 12-month period for which an organization plans the use of its funds. This period may be a calendar year but can be any 12-month period. A fiscal year accounting period should normally coincide with the natural operating cycle of the organization. If an organization files an IRS Form 990, it is required to define its accounting period on Line A at the top of the form.
Form 990 The public record information return that many United States public foundations are required by law to submit annually to the Internal Revenue Service.
Form 990-PF The public record information return that all United States private foundations are required by law to submit annually to the Internal Revenue Service.
Form T3010 The information return that all Canadian registered charities are required by law to submit annually to the Canadian Revenue Agency. The information a charity provides on the public portion of its annual return is available to the public. Other information a charity provides on or with the return is confidential and for the CRA use only.
General/operating support A grant made to further the general purpose or work of an organization, rather than for a specific purpose or project; also called an unrestricted grant.
General purpose foundation An independent private foundation that awards grants in many different fields of interest. See also special purpose foundation.
Grant Award of financial assistance
Grantee The recipient of a grant. (Also known as the donee or the beneficiary.)
Grantee financial report A report detailing how grant funds were used by an organization. Many corporate grantmakers require this kind of report from grantees. A financial report generally includes a listing of all expenditures from grant funds as well as an overall organizational financial report covering revenue and expenses, assets and liabilities.
Grantor An individual or organization that makes a grant or contribution to a grantee. (Also known as the donee.)
Grants payable Unpaid amount of grants or awards that an organization plans to pay other organizations or individuals.
Applicant See donee.
Grantmaker See donor.
Grantee Recipient of the grant award
Grantor Party issuing the grant
Grassroots fundraising Efforts to raise money from individuals or groups from the local community on a broad basis. Usually an organization's own constituents Ᾱ people who live in the neighborhood served or clients of the agency's services Ᾱ are the sources of these funds. Grassroots fundraising activities include membership drives, raffles, auctions, benefits, and a range of other activities.
Guidelines Procedures set forth by a funder that applicants should follow when approaching a grantmaker.
Income Money that the organization has received from contributions, grants, the performance of services, etc (line 12 on Form 990). These are net figures from which rental expenses, costs, sales expenses, direct expenses, and costs of good sold (lines 6b, 8b, 9b, and 10b on Form 990) have been deducted.
Incorporated To become a registered nonprofit with the IRS, you must first become a corporation.
Independent foundation A grantmaking organization usually classified by the IRS as a private foundation. Independent foundations may also be known as family foundations, general purpose foundations, special purpose foundations, or private non-operating foundations. The Foundation Center places independent foundations and company-sponsored foundations in separate categories; however, federal law normally classifies both as private, non-operating foundations subject to the same rules and requirements. See also private foundation.
In-kind contribution A contribution of equipment, supplies, or other tangible resource, as distinguished from a monetary grant. Some organizations may also donate the use of space or staff time as an in-kind contribution.
Matching grant A grant that is made to match funds provided by another donor. See also challenge grant; employee matching gift.
Matching funds Contributions required by a party other than the grantor.
Nonprofit Nonprofit Organization.
Operating foundation A 501(c)(3) organization classified by the IRS as a private foundation whose primary purpose is to conduct research, social welfare, or other programs determined by its governing body or establishment charter. An operating foundation may make grants, but the sum generally is small relative to the funds used for the foundation's own programs. See also 501(c)(3).
Operating support grant A grant to cover the regular personnel, administrative, and miscellaneous expenses of an existing program or project. See also general/operating support.
Payout requirement The minimum amount that private foundations are required to expend for charitable purposes (including grants and, within certain limits, the administrative cost of making grants). In general, a private foundation must meet or exceed an annual payout requirement of five percent of the average market value of its total assets.
Planned Giving Planned Giving is a complex program of various financial instruments that can be adapted to each donor's needs.
Pledges and grants receivable Funds promised to an organization from grantmakers, individual donors, etc., but not yet received.
Private foundation A nongovernmental, nonprofit organization with funds (usually from a single source, such as an individual, family, or corporation) and program managed by its own trustees or directors. Private foundations are established to maintain or aid social, educational, religious, or other charitable activities serving the common welfare, primarily through the making of grants. See also 501(c)(3); public charity.
Program amount Funds that are expended to support a particular program administered internally by a foundation or corporate giving program.
Program officer A staff member of a foundation who reviews grant proposals and processes applications for the board of trustees. Only a small percentage of foundations have program officers.
Program Related investment (PRI) A loan or other investment (as distinguished from a grant) made by a foundation to another organization for a project related to the foundation's philanthropic purposes and interests.
Program services Fees and other monies received by an organization for services rendered. These services must relate directly to the primary purpose for which the organization received its tax-exempt status.
Proposal A written application, often accompanied by supporting documents, submitted to a foundation or corporate giving program in requesting a grant. Most foundations and corporations do not use printed application forms but instead require written proposals; others prefer preliminary letters of inquiry prior to a formal proposal. Consult published guidelines.
Public charity A nonprofit organization that qualifies for tax-exempt status under section 501(c)(3) of the IRS code. Public charities are the recipients of most foundation and corporate grants. Some public charities also make grants. See also 501(c)(3); private foundation.
Qualifying distributions Expenditures of a private foundation made to satisfy its annual payout requirement. These can include grants, reasonable administrative expenses, set-asides, loans and program-related investments, and amounts paid to acquire assets used directly in carrying out tax-exempt purposes.
Query letter A brief letter outlining an organization's activities and its request for funding that is sent to a potential grantmaker in order to determine whether it would be appropriate to submit a full grant proposal. Many grantmakers prefer to be contacted in this way before receiving a full proposal.
Restricted vs. Unrestricted funds Donors can choose to designate how a nonprofit can use their gifts.
RFA Request for application
REP An acronym for Request for Proposal. When an organization issues a new contract or grant program, it sends out RFPs to agencies that might be qualified to participate. The RFP lists project specifications and application procedures. While a few foundations occasionally use RFPs in specific fields, most prefer to consider proposals that are initiated by applicants.
Ruling year The year that the IRS granted an organization 501(c)(3) status.
Seed money A grant or contribution used to start a new project or organization. Seed grants may cover salaries and other operating expenses of a new project.
Set-asides Funds set aside by a foundation for a specific purpose or project that are counted as qualifying distributions toward the foundation's annual payout requirement. Amounts for the project must be paid within five years of the first set-aside.
Special purpose foundation A private foundation that focuses its grantmaking activites in one or a few areas of interest. See also general purpose foundation.
Sponsorship Affiliation with an existing nonprofit organization for the purpose of receiving grants. Applicants may either apply for federal tax-exempt status or affiliate with a nonprofit sponsor.
Tax-exempt Refers to organizations that do not have to pay taxes such as federal or state corporate tax or state sales tax. Individuals who make donations to such organizations may be able to deduct these contributions from their income tax.
Tax-exempt bond liabilities The amount of tax-exempt bonds (or other obligations) issued by an organization on behalf of a state or local governmental unit, or by a state or local governmental unit on behalf of an organization, and for which an organization has a direct or indirect liability. Tax-exempt bonds include state or local bonds and any obligations, including direct borrowing from a lender, or certificates of participation.
Technical assistance Operational or management assistance given to nonprofit organizations. It can include fundraising assistance, budgeting and financial planning, program planning, legal advice, marketing, and other aids to management. Assistance may be offered directly by the staff of a foundation or corporation, or it may be provided in the form of a grant to pay for the services of an outside consultant. See also in-kind contributions.
Trustee A foundation board member or officer who helps make decisions about how grant monies are spent. Depending on whether the foundation has paid staff, trustees may take a more or less active role in running its affairs.
Workplace giving Many large employers provide a way for employees to donate to select charities.
Unified Registration Statement Most states have cooperated to produce a uniform reporting mechanism for nonprofits.