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Thursday, March 22, 2018

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501(c)(3): Section of the Internal Revenue Code that designates organizations, most of which are seeking foundation or corporate contributions, as charitable, tax-exempt, and nonprofit.  Examples of these organizations are religious, educational, charitable, amateur athletic, scientific or literacy advocates, and organizations concerned about public safety or involved in children or animal abuse or domestic violence issues.

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.

990: The form filed annually with IRS and the state's Attorney General's office by all tax-exempt organizations which provides tax information.

990 PF:   The form filed by all private foundations with IRS every year. It provides financial information, names of officers, trustees or directors, and a list of grant recipients and amounts contributed during the year.


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 report published voluntarily by a foundation or corporation that describes its grant activities. A growing number of foundations and corporations use annual reports to inform the community about their contributions activities, policies, and guidelines.

Assets: The amount of capital, or principle funds, controlled by a foundation or corporate giving program. Assets are typically reinvested, and grants are made from the earned income.

Audited statements: An evaluation, made by an independent auditing firm, of a nonprofit organization's financial position.
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Beneficiary:  The organization or individual who is granted funds from a donor (either an organization or an individual).

Bequest: A gift, either monetary or other, that is designated to be made upon the donor's death.

Building campaign: An organized fundraising drive to create funds for construction or renovation of buildings.  See also Capital Campaign
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Capital grant or capital support: Funds provided for buildings, construction, or equipment; they are not used for programs or operating expenses.

Capital campaign:  See Building Campaign.

CD-ROM: Acronym for Compact Disk-Read Only Memory. CD-ROMs are high-capacity computer disks that allow for the storage and distribution of large amounts of data in a searchable format.

Challenge grant: A grant that is made conditionally, typically that the gift is either matched or exceeded by another funding source within a specified time period.  The objective of this approach is to encourage funding from other sources.

Committed funds: The part of a donor's budgeted fund allocation that has already been pledged for future gifts.

Community foundation: A type of foundation formed by a variety of community-based sources of support.  This kind of foundation typically specifies the community it serves within a geographic area, and a board from that specific community often governs it. 

Community fund:  A fund raised by the public to support the day-to-day operations of community agencies.

Contributions committee: A group organized, usually under the guidance of a corporate foundation or contributions administrator, to review grants.  Responsibilities also can include policymaking and budget determinations.

Cooperative venture: A cooperative endeavor by two or more grant makers, combining funding responsibilities and/or contributing information and technical resources.

Corporate contributions:  Charitable contributions, cash or in-kind, by a corporation.

Corporate foundation: A foundation funded, either by permanent assets or with periodic donations, by a profit-making company.  However, the foundation is not legally dependent on that company, even though the foundation may carry the name of the parent company.

Corporate giving program: A program where funds are given directly by a corporation, typically through its Public Affairs or Public Relations department, instead of being distributed through a foundation.
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Deferredrevenue:  Money that’s already been received by an organization and carried as a liability until the organization can fulfill the goods or services promised for that money.  

Declining grant: A grant that is structured over multiple years and declines each year in the anticipation that the receiving organization will increase funding from other sources.  

Demonstration grant: Funds given to begin a pilot program in anticipation of its becoming the standard   to which others aspire.  

Discretionary funds:   Funds that are distributed according to the donor’s case-by-case discretion, as opposed to predetermined purposes.  

Distribution committee: The committee, made up of a broad representation of the community served by the foundation, which decides on which grant requests to approve.

Donee:   The recipient, either an individual or an organization, which receives a grant.   Also known as a grantee.

Donor: Individual or organization that makes a gift or grant. Also known as a grantor.  
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Employee matching grant:   A contribution made by an employee to a charitable organization that is matched by a similar contribution from his or her employer.  

Employer Identification Number (EIN): A nine-digit number assigned and required of all IRS-designated 501(c)(3) nonprofit organizations by the Internal Revenue Service.

Endowment: A bequest or gift that is intended to be kept intact to generate income from its investment for an organization or foundation.

Expenditure responsibility:   The assurance required by law that funds donated for a charitable reason but not to an organization that is classified by the IRS as a “public charity.”  
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Family foundation:   A foundation intended to implement the philanthropic endeavors of a particular family, and whose board is likely made up of members of that family.  

Federated fund drive: A fund-raising campaign whereby one organization, such as The United Way, raises money for the member agencies that come under it.

Fiscal year:   Any pre-determined 12-month accounting period, which may or may not coincide with the calendar year, which an organization uses its funds within.   The fiscal year should normally coincide with the organization’s operating cycle.    This accounting period is defined on the IRS Form 990.  

Fixed assets:   The estimated value of equipment, buildings, land and other tangible items owned by an organization.

Flow-through funds:   Gifts to a foundation used mainly for direct grant making, rather than for endowing the foundation permanently.

Foundation: A private nonprofit organization, established to further religious, educational, social, or other charitable programs.   It is usually managed by its own directors and trustees, and may receive its funds from, and is subject to control of, an individual family, corporation or other group of limited number.
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General/operating support: A grant made for an organization’s operating expenses instead of a specific intent.

General purpose foundation: An independent private foundation that awards grants in a variety of areas or interests.  

Grant: The monetary or in-kind gift to an individual or organization to further its charitable pursuits.

Grantee: Individual or organization that receives a grant. Also called a donee.

Grantee financial report: A detailed annotation, often required by grantors, of how their funds were used by a grantee.   This financial accounting generally includes expenditures from grant funds and an organization’s overall financial chronicle of revenue and expenses, assets and liabilities.

Grantor: Individual or organization that makes a gift or grant. Also called a donor.

Grants payable:   Grants or awards that have been pledged by an organization to another organization or individual.  

Grassroots fundraising: Efforts to raise money from individuals or groups from the local community on a broad basis. Usually an organization's own constituents — people who live in the neighborhood served or clients of the agency's services — are the sources of these funds. Grassroots fundraising activities include membership drives, raffles, auctions, benefits, and a range of other activities.

Guidelines: Procedures that should be followed when requesting funds from a grantor.  
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In-kind contribution:   A contribution of goods or services instead of a cash contribution.

Income:   Contributions, whether cash or in-kind, an organization has received.  

Independent foundation: A private foundation over which the original donor’s family no longer has control.

Internal Revenue Code: The U.S. taxation laws that are governed by the Internal Revenue Service.

Inventories for sale or use: Estimated worth of materials, goods, and supplies an organization has made or procured for future sale or use.

Internal Revenue Service (IRS): The agency of the U. S. government that has, as part of its duty under the Internal Revenue Code, the authority of regulating public charities and foundations.
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Joint funding: A coordinated funding project, supported by multiple grantors for a particular aspect of the project or contributing to a common fund for use in that project.  
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Matching grant: A grant or gift made under the condition that a matched amount from other sources is made on a prescribed basis, i.e., one-for-one, etc.
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Nonprofit: An organization, as designated by the IRS, whose income is used solely for its operations and stated purpose, not for the benefit or private gain of stockholders, directors, or any other persons with an interest in the company.  
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Operating foundation: An organization given a 501(c)(3) classification by the IRS as a private foundation with its primary chartered mission of conducting research, social welfare, or other activities.  

Operating support: Gifts made to an organization for its day-to-day expenses, such as salaries, utilities, office supplies, etc. 
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Payout requirement:   The legally required 5% minimum payout of asset worth foundations must make in grants and administrative expenses.

Philanthropic advisor: A person or firm that evaluates and guides donors in their grant making decisions.

Pre-tax net income:   A corporation’s yearly net income, after any charitable contributions are deducted and before taxes are paid.  

Pledges / grants receivable:   Grants that have been assured by an organization but have not yet been sent.  

Private foundation: A tax-exempt organization, as determined by the IRS under Internal Revenue Code Section 501(c)(3), that receives most of its income from an individual, family, or other specific source.  

Private operating foundation: An endowed organization which uses its funding to conduct a charitable service activity instead of making grants.

Processed or received date: The posting date that a contribution is credited to the receiver’s account.  

Program officer: A member of a foundation’s staff who reviews grant proposals, processes the applications, and arranges them for determination by the decision-making board.  

Program-related investment (PRI): A loan or other investment (as opposed to a grant) between a foundation and another organization for the purpose of furthering the foundation’s mission through a related project.  

Program services:   Monetary payments made to an organization for services, directly relative to its mission, for services provided.  

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.

Public charity: Qualified 501(c)(3) organizations that receive much of their income from public or government sources.

Public foundation: A nonprofit organization that gets at least one-third of its yearly funds income from the general public (including government agencies and foundations). 
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Qualifying distributions: Costs made by a private foundation to satisfy its yearly payout requirement, which can include administrative expenses, grants, loans, set-asides, program-related investments, as well as costs paid for assets used in pursuing its mission.  

Query letter:   A short outline of an organization’s purpose and activities and its request for funding used by the grant maker to decide whether the request falls within the parameters set forth by the funding organization.   This will determine whether a full proposal is appropriate.
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Restricted funds: Grants that are made for a clearly specified purpose and cannot be used for any other purpose.

Ruling year: The year that the IRS approved 501(c)(3) status for an organization.

RFP (Request for Proposal):   An invitation by an organization, typically accompanied by an outline of its specifications and procedures, to contractors for submitting their proposals to provide goods or services.
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Seed Money:   Start-up funds contributed for a new project or organization.

Set-asides:  Money that has been designated in a foundation’s yearly payout requirement but is set aside for a specific project or purpose.   It must be paid out within the first five years of the first set-aside

Special purpose foundation: A private foundation that centers its funding specific special interests. 

Successor election:  The written designation by a donor of an individual who will serve as a successor following the deaths of all donors named on the account at the Charitable Gift Fund, and who will be given the rights and duties of that donor’s account.  The donor may also suggest that one or more charitable organizations be given the balance of the account.  
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Tax exempt organization: An organization, designated as nonprofit, that is excused from paying state or federal taxes because of its charitable activities.  In order to be considered tax-exempt, an organization must apply to both the IRS and the state Attorney General’s office. 

Technical assistance: Assistance of an operational or a management nature provided to nonprofits, either in the form of a gift to cover the costs of an outside help or directly by way of the services of a foundation’s or corporation’s staff.   Examples of such assistance include legal, marketing, fundraising, financial, or program advice. 

Trustee: A board member of a foundation responsible for taking part in the establishment of foundation policy and making fund decisions.  A trustee can also be the individual or corporation who administers the terms of a trust document.


Unrestricted funds: Gifts that do not stipulate specifically how gift funds are to be used by the recipient.  
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