Glossary

  • 501(c)(3): Section of the Internal Revenue Code ("Code") that designates an organization as charitable, tax-exempt and nonprofit. Organizations qualifying under the Code include religious, educational, charitable, amateur athletic, scientific, or literacy groups; organizations testing for public safety; or organizations involved in prevention of cruelty to children or animals. (Most organizations seeking foundation or corporate contributions have a 501(c)(3) status.)
  • 509(a): Section of the Code that defines public charities (as opposed to private foundations). A 501(c)(3) organization may also have a 509(a) designation to further define the agency as a public charity.
  • IRS Form 990: The return of organizations exempt from tax filed annually with the Internal Revenue Service ("IRS") and often the state Attorney General or Secretary of State offices by tax-exempt organizations.
  • IRS Form 990-PF: The return of Private Foundation filed annually with the IRS by all private foundations. This form provides financial information, names of officers, trustees or directors, and a list of grant recipients and amounts contributed during the year.
  • Annual Report: A voluntary report published by a foundation or corporation describing its grant activities. It may be a simple, typed document listing the year's grants or an elaborately detailed publication. A growing number of foundations and corporations use annual reports to inform the community about their contributions, activities, policies, and guidelines. (This annual contributions report is not to be confused with a corporation's annual report to stockholders.) Nonprofit organizations also publish annual reports describing their activities and financial condition. These reports can be important tools for assessing an organization's effectiveness.
  • Bequest: A sum of money or other property directed by a will.
  • Building Campaign: A drive to raise funds for construction or renovation of buildings.
  • Capital Grant: Grant to provide funding for buildings, construction, or equipment, rather than program or operating expenses.
  • Capital Campaign: An organized drive to raise substantial funds to finance major needs of an organization, including construction, renovations, or endowment.
  • Community Foundation: A type of foundation formed by broad-based community support from multiple sources: trusts, endowments, individual contributions, private foundations or corporate grants. A community foundation generally makes grants only within a specified geographic area and is governed by a board representing the community it serves. Some community foundations offer donor-advised funds to contributors.
  • Contributions Committee: A corporate group organized to make grant decisions usually with the guidance of a corporate foundation or contributions administrator. Typical responsibilities include setting and interpreting policy, approving an annual budget, and reviewing grant requests.
  • Corporate Contributions: A general term referring to charitable contributions made by a corporation. Usually used to describe cash contributions only, but may also include other items, such as value of loaned executives, products, and services.
  • Corporate Foundation (also called a company-sponsored foundation): A foundation that receives its income from a profit-making company but is an independent legal entity. Usually this type of foundation carries the name of the parent company. Corporations may fund these foundations with a donation of permanent assets or with periodic contributions.
  • Corporate Giving Program (also called a corporate contributions program): Funding that is distributed directly by a corporation, rather than through a foundation. Often such a program is handled by the Public Affairs or Public Relations office.
  • Declining Grant: A multi-year grant that becomes smaller each year, in the expectation that the recipient organization will increase its fundraising from other sources.
  • Demonstration Grant: A grant made to establish an innovative project or program that, if successful, will serve as a model and may be duplicated by others.
  • Director: A member who sits on the governing board of a nonprofit, which has the ultimate oversight authority for a charitable organization, including oversight of the charity's operations and its staff.
  • Endowment: A bequest or gift that is intended to be kept permanently and invested to generate income for an organization or foundation.
  • Foundation: A private, nonprofit organization with funds and a program managed by its own trustees and directors, established to further social, educational, religious, or other charitable activities by making grants. A private foundation receives its funds from, and is subject to control of, an individual family, corporation, or other group of limited number.
  • Grant: The award of funds to an organization to undertake charitable or tax-exempt activities.
  • Grantee: Individual or organization that receives a grant. Also called a donee.
  • Grantor: Individual or organization that makes a grant. Also called a donor.
  • In-Kind Contribution: Support in the form of goods or services rather than a cash contribution.
  • Independent Foundation: A private foundation that is no longer controlled by the original donor or donor's family.
  • Internal Revenue Code: The laws governing taxation in the United States, administered by the Internal Revenue Service.
  • Joint Funding: A grant project supported by more than one donor, each of whom may provide monies for a specific component of the overall project or who may contribute to a common pool of funds.
  • Matching Gifts Program: A corporate contributions program that will match contributions made by employees, retirees, and their spouses to qualifying nonprofit organizations. Specific guidelines regarding the type of organizations included, donor eligibility, and the dollar amount which will be matched are established by each corporation.
  • Matching Grant: A grant or gift made with the specification that the amount donated must be matched from other sources on a one-for-one or some other prescribed basis.
  • Nonprofit: A term describing an organization whose income is not used for the benefit or private gain of stockholders, directors, or any other persons with an interest in the company. A nonprofit organization's income must be used solely to support its operations and stated purpose.
  • Operating Support: Contributions toward an organization's day-to-day, ongoing expenses, such as salaries, utilities, office supplies, etc.
  • Payout Requirement: Private foundations are required by law to pay out at least 5% of the fair market value of their assets each year in grants and administrative expenses.
  • Philanthropic Advisor: An individual or firm who provides counseling and evaluative services to donors before and after grant making decisions.
  • Pre-Tax Net Income: A corporation's annual net income before it has paid taxes. The Internal Revenue Service currently allows corporations to deduct charitable contributions of as much as 10% of their pre-tax net income.
  • Private Foundation: A Foundation that receives most of its income from, and is subject to control of, an individual or other single or limited source. (See foundation.) Also the technical IRS term for an organization which is tax-exempt under Internal Revenue Code Section 501(c)(3) and classified as a private foundation under the Internal Revenue Code.
  • Private Operating Foundation: A legal classification for an endowed organization which uses its income to operate a charitable activity, such as a school or camp, rather than to make grants.
  • Public Charity: Public charities are designated under Internal Revenue Code Section 501(c)(3) of the Internal Revenue Code and are defined in Section 509 (identified by the Code as "not a private foundation"). A public charity normally receives a substantial part of its income, directly or indirectly, from the general public or from government sources. The public support must be fairly broad, not limited to a few individuals or families. See the Code section for additional detail.
  • Restricted Funds: Grants which are made for a clearly specified purpose and can be used for none other.
  • Seed Money: A grant or contribution used to start a new project or organization.
  • Tax-Exempt Organization: A nonprofit organization which does not have to pay state or federal taxes. An organization must apply to both the IRS and its state Attorney General's or other state regulator's office to receive tax-exempt status.
  • Trustee: (1) A board member of a charitable or nonprofit organization. Trustees are responsible for setting policy and making fund decisions. (2) An individual or corporation named to administer the terms of a trust document.
  • Unrestricted Funds: Grants which do not specifically stipulate how the money is to be spent by the grantee.

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