English Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Administrative Endowment

A fund that generates income used to help cover a foundation's operating costs.

Advised Fund (see Donor-Advised Fund)

Affinity Group

A coalition of grantmaker organizations or individuals with a shared interest in a particular subject or funding area that meets to exchange information, provide networking or professional development opportunities, or facilitate collaborative programs (e.g., Africa Grantmakers Affinity Group, Grantmakers for Education).

Agency Endowment

A fund managed by a community foundation on behalf of another voluntary organization. The community foundation invests the fund and periodically returns investment income to the organization or reinvests the proceeds. The community foundation receives a fee for its management and investment services.

Annual Report

A report published voluntarily 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 an annual report as an effective means of informing the community about their contributions, activities, policies, and guidelines.

Articles of Incorporation

A document filed with the appropriate governmental agency by persons establishing a corporation. This is usually the first legal step in forming a nonprofit corporation.

Assets

Cash, stocks, bonds, real estate, or other holdings of a foundation. Generally, the resulting income from the investment of assets provides the funds used to make grants.

Association of Grantmakers

A nonprofit membership organization that provides services such as information, training, and technical assistance to build the capacity of one or more emerging or established foundations and/or corporate giving programs.

Audit

A detailed examination of an organization's financial statements and records for the purpose of determining that they are sufficiently accurate and properly representative.

B

Beneficiary (also referred to as Donee or Grantee or Recipient)

An individual or organization that receives a grant.

Bequest (also referred to as Legacy)

Transfer of cash, securities, or other tangible property after the owner's death, usually by will.

Board of Directors

The governing body of a corporation or foundation which, by the authority of its articles of incorporation and bylaws, controls and governs the affairs of that organization.

Bricks and Mortar

An informal term indicating grants for buildings or construction projects.

Building Campaign

A drive to raise funds for the construction or renovation of buildings.

Business-Community Partnerships

Australia: The term preferred by Prime Minister John Howard for corporate community involvement, encompassing corporate philanthropy and corporate citizenship.

Bylaws

Rules governing the internal operation of a nonprofit corporation. Bylaws often provide the methods for the selection of directors, the creation of committees, and the conduct of meetings.

C

Capacity (as in "to build capacity")

The increasing ongoing skills or resources in a community or organization that will increase its ability to solve problems, create and sustain services and programs, and generate resources and support.

Capital Campaign (also referred to as Capital Development Campaign)

An organized drive to collect and accumulate substantial funds to finance major needs of an organization such as a building or major repair project.

Capital Grant (also referred to as Capital Support)

A grant made to an organization toward a major item of capital expenditure, such as the construction of a building. Although many trusts and foundations specifically exclude funding such appeals, there are exceptions where there is community benefit.

Cause-Related Marketing

Used when a company allies itself with a specific cause, and contributes money, time, or expertise to an organization or event for that cause in return for the right to make publicity or commercial value from that involvement. The corporate benefit is generally less overt than in a sponsorship arrangement.

Challenge Grant (also referred to as Matching Grant)

A grant that is made on the condition that other monies must be secured by the donee or recipient organization, either on a matching basis or via some other formula, usually within a specified period of time, with the objective of stimulating giving from additional sources. The term can also refer to fundraising, with a private trust or foundation matching dollar-for-dollar contributions from, for example, the local community.

Charitable Deduction

USA: The value of money or property transferred to a 501(c)(3) organization is deductible for income, gift, and estate tax purposes. In most cases the term charitable deduction refers to the portion of the gift that can be deducted from the donor's income subject to federal income tax.

Charitable Purposes

A broad, evolving concept that includes educational, scientific, religious, cultural, and other purposes.

Charitable Solicitation Laws

Laws which regulate how organizations may request and collect contributions of money or property for their support.

Charity

Australia: In popular use, the term charity is often used as a synonym for voluntary or not-for-profit organizations, popularly understood as an organization that raises funds for or offers support to the disadvantaged in society. However, the term charity also has a legal meaning, based on an act passed in England in 1601, whereby to qualify as charitable an organization's main purpose must fall into one of the following categories: the relief of poverty; the advancement of education; the advancement of religion; or other purposes beneficial to the community.

USA: In its traditional legal meaning, the word charity encompasses religion, education, assistance to the government, promotion of health, relief of poverty or distress, and other purposes that benefit the community. Nonprofit organizations that are organized and operated to further one of these purposes generally will be recognized as exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and will be eligible to receive tax-deductible charitable gifts.

Charity Commission

United Kingdom: The arm of government responsible for regulating and maintaining charities and for awarding charitable status to individual organizations.

Community

Community is often defined broadly, to refer not only to a specific geographic area, but also to a group with a common interest, such as the Chinese community, the women's community, or the arts community.

Community Foundation

An independent, nonprofit, philanthropic organization working in a specific geographic area which, over time, builds a collection of endowed funds from many donors in the community. It provides services to the community and its donors, makes grants, and undertakes community leadership and partnership activities to address a wide variety of needs in its service area. A community foundation is a vehicle for local donors who wish to contribute their cash, trusts, bequests, or real property to create permanent endowments that will benefit the community in perpetuity. Using the investment earnings on each endowed fund, a community foundation makes and builds capacity within the community to address local needs and opportunities. Their task is to build substantial, permanent funds from which grants are made to local charitable and community organizations.

Community Philanthropy Organization

An independent, non-governmental organization designed to gather, manage, and redistribute financial and other resources useful for the community's well-being, and to do so in ways that engage the community.

Conditional Grant

Australia: Conditional grants involve one grantmaker seeking the involvement of others, by making their grant of a part of the project funds conditional upon the remainder being available from other sources. Proof of the conditional offer can be used in seeking funding elsewhere, or to raise a loan for the balance of funds sought.

Constituency Building

The act of forging or creating a group or cadre of supporters of an organization or of the values it represents.

Constituent

A person who is served by or who supports an organization.

Corporate Citizenship

Term used in the business sector to refer to business giving and/or business relationships and partnerships with not-for-profit organizations.

Corporate Form (also see Trust Form)

USA: A community foundation that is incorporated as a nonprofit corporation. Investment management of assets held by the corporation is the responsibility of the managers or board of the foundation. A community foundation may include both a corporate entity and component trusts.

Corporate Foundation

A private, philanthropic organization set up and funded by a legally separate, for-profit corporation. A corporate foundation is governed by a board that may include members of the corporation board and contributions committee, or other staff members, and representatives of the community. A corporate foundation is legally separate from its parent corporation. Although a corporate foundation is subject to the same rules and regulations as other private foundations, a corporate foundation often does not have substantial assets of its own, but depends upon funds paid by the corporation to the foundation each year.

Australia: A corporate foundation receives its income from the profit-making company whose name it bears, but is established as a separate legal entity, usually with a permanent endowment. A corporate foundation often receives staff contributions and/or contributions from company profits on a regular basis. Company-sponsored foundations are different from corporate giving programs, which give grants directly to charities and are usually administered through the company's corporate affairs or public relations department.

Corporate Giving Program (also referred to as Corporate Community Involvement/Investment or Direct Giving Program)

In-house contribution program run by corporations. Through this program, companies make grants to charities which may or may not directly benefit a company's employees. A giving program often is administered through a company's office of community relations.

North America: A corporate giving program is a grantmaking program established and administered within a for-profit company. Gifts or grants go directly to charitable organizations from the corporation. Corporate giving programs do not have a separate endowment; their expenses are planned as part of the companies' annual budgeting processes and usually are funded with pre-tax income.

Corporation

One of several legal entities or forms in which business or nonprofit activity is conducted in the United States. The legal structure of a business corporation will usually include shareholders, a board of directors, various committees, and officers. The legal structure of a nonprofit corporation will usually include similar elements; there are no shareholders in a nonprofit corporation, but there may be members.

Corpus

Australia: The original gift and ongoing principal that forms the asset base from which a foundation operates.

D

Decline (also referred to as Denial)

The refusal or rejection of a grant request. Some declination letters explain why the grant was not made, but many do not.

Demonstration Grant

A grant made to establish an innovative project or program that will serve as a model, if successful, and may be replicated by others.

Designated Fund

A type of restricted fund in which the fund beneficiaries are specified by the grantors.

Directed Fund

A community foundation fund in which the donor requests payment of the fund's income to one or more specific named organizations.

Disbursement

The grant funds distributed by a foundation to a grantseeker or donee.

Disbursement Rate

The minimum amount that foundations are required to expend for charitable purposes that may include grants, charitable activities, and within certain limits, administrative costs of making grants.

Discretionary Funds

Grant funds distributed at the discretion of one or more trustees, which usually do not require prior approval by the full board of directors. The governing board can delegate discretionary authority to staff.

Disqualified Person

USA: As applied to public charities, the term Disqualified Person includes (1) organization managers, (2) any other person who, within the past five years, was in a position to exercise substantial influence over the affairs of the organization, (3) family members of the above, and (4) businesses they control. Paying excessive benefits to a disqualified person will result in the imposition of penalty excise taxes on that person, and, under some circumstances, on the charity's board of directors.

Donee (also referred to as Beneficiary or Grantee or Recipient)

An individual or organization that receives a grant.

Donor (also referred to as Grantmaker or Grantor)

An individual or organization that makes a grant or contribution to a donee.

Donor-Advised Fund

Australia: Fund enabling donor participation in the distribution of income from the fund. While the donor's advice is welcomed and generally followed, it is not binding by law.

North America: A fund held by a community foundation wherein the donor, or a committee appointed by the donor, may recommend eligible charitable recipients for grants from the fund. The community foundation's governing body must be free to accept or reject the recommendations.

Donor-Designated Fund

A fund held by a community foundation in which the donor has specified that the fund's income or assets be used for the benefit of one or more specific public charities. These funds are sometimes established by a transfer of assets from a public charity to a fund designated for its own benefit, resulting in grantee endowments. The community foundation's governing body must have the power to redirect resources in the fund if it determines that the donor's restriction is unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community or area served.

Due Diligence

The degree of prudence that might be properly expected from a reasonable person in the circumstances; applicable to foundation personnel who act in a fiduciary capacity.

E

Endowment

Financial assets used to fund the creation of a private foundation or to create a fund within a community foundation to provide investment income which will be used for charitable purposes. Donors may require that the principal remain intact in perpetuity, or for a defined period of time, or until sufficient assets have been accumulated to achieve a designated purpose.

Estate Tax (also referred to as Inheritance Tax)

A tax on an estate; a federal or state tax paid on the property left by a person at his or her death.

Ethical Investment (also referred to as Green Investment or Socially Responsible Investment or Conscious Investment)

Australia: An investment policy which specializes in environmental and socially responsible investment, and is informed by shared commitment to improve the ethics of corporate Australia and promote ecologically sustainable and socially just enterprises through judicious investment. Ethical investment comes from the desire to ensure that an investor's investments are working in the same direction as an investor's ethics. For many people this means investing in investments that protect the natural environment while contributing to a just and sustainable human society. Ethical investment has two sides:

• avoiding unethical investments that damage others or the environment; and
• promoting environmentally and socially responsible investments, such as green and sustainable technologies.

Evaluation Grant

Made to a project that has run successfully as a pilot project and requires a formal external evaluation before seeking major support or sponsorship. The grant effectively works as a leveraging tool, enabling the recipient to seek further funding with accurate, extensive, and impartial information on their project for potential grantmakers to consider.

Excise Tax

USA: The annual tax on net investment income that must be paid to the IRS by private foundations. Normally set at two percent per year, the rate may be reduced to one percent if a foundation meets certain expenditure requirements.

Expenditure Responsibility

USA: An Internal Revenue Code requirement which ensures that a grant made by a private foundation in the US to an organization not classified by the IRS as tax-exempt under Section 501(c)(3) and as a public charity according to Section 509(a) is used for charitable purposes and not for private gain or political activities.

F

Family Foundation

A foundation whose funds are derived from members of a single family. Generally, family members serve as officers or board members of the foundation and play an influential role in grantmaking decisions. Most family foundations are run by family members who serve as trustees or directors on a voluntary basis, receiving no compensation; in many cases, second- and third-generation descendants of the original donors manage the foundation. Most family foundations concentrate their giving locally, in their communities.

Fiduciary Duty

The legal responsibility for investing money or acting wisely on behalf of another. Managers of charitable entities have fiduciary obligations to the charity.

Field of Interest Fund

A fund held by a community foundation that is used for a specific charitable purpose such as education or health research.

Financial Report

An accounting statement detailing financial data, including income from all sources, expenses, assets, and liabilities. A financial report may also be an itemized accounting that shows how grant funds were used by a donee organization. Most foundations require a financial report from grantees.

Fiscal Year

The accounting year of an organization, which may or may not be the same as the calendar year.

Flow-Through Funds

A type of fund (discretionary, field of interest, or advised) in which the donor receives help distributing grants from revenue on an annual basis.

Form 990

USA: The IRS form filed annually by public charities. The IRS uses this form to assess compliance with the Internal Revenue Code. The form lists organization assets, receipts, expenditures, and compensation of officers.

Form 990-PF

USA: The IRS form filed annually by private foundations. The IRS uses this form to assess compliance with the Internal Revenue Code. The form lists organization assets, receipts, expenditures, and compensation of officers, and includes a list of grants made during the year.

Form T3010

Canada: The form required from all charities by the Federal Government detailing activities and expenditures through the year. Foundations are required to submit this form within six months of the end of their fiscal year.

Foundations

Europe: Separately-constituted, nonprofit bodies with their own established and reliable sources of income (usually, but not exclusively) from an endowment or capital. These bodies have their own governing boards. They distribute their financial resources for educational, cultural, religious, social, or other public benefit purposes, either by supporting associations, charities, educational institutions, or individuals, or by operating their own programs.

Fund Balance

The excess of the assets a corporation owns over the liabilities it owes; net worth.

Funding Cycle (also referred to as Funding Round)

A chronological pattern of proposal review, decision making, and applicant notification. Some donor organizations make grants at set intervals (quarterly, semi-annually, etc.), while others operate under an annual cycle.

Fundraising Foundation

Europe: A foundation that is almost exclusively dependent upon annual fundraising from a variety of sources to obtain the funds that it will, in turn, distribute each year. These resources may come from appeals to the general public, governmental support, or grants from corporate funders and other foundations.

G

General Support (also referred to as Operating Support or Unrestricted Grant)

A grant made to further the general purpose or work of an organization, rather than for a specific purpose or project.

Giving Pattern

The overall picture of the types of projects and programs that a donor has supported historically. The past record may include areas of interest, geographic locations, amount of funding, or types of organizations supported.

Governmental Foundation

Europe: A foundation whose initial and major source of funding comes from a local, regional, or national governmental body. Once created, additional funds may come from non-governmental sources. Key positions on the governing board are determined by a governmental body, though additional trustees are leading representatives of the public or private sectors or the foundation/association community. Governmental foundations are engaged either in grantmaking or in operational programs, or a combination of the two.

Grant

An award of funds to an organization or individual to undertake charitable activities.

Grantee (also referred to as Beneficiary or Donee or Recipient)

An individual or organization that receives a grant.

Grantmaker (also referred to as Donor or Grantor)

An individual or organization that makes a grant.

Grantmaker Support Organization

An independent, nonprofit organization or membership association that provides technical or managerial support, information, and other services to one or more emerging or established foundations and/or corporate giving programs to enhance their grantmaking capabilities.

Grant Monitoring

The ongoing assessment of the progress of the activities funded by a donor, with the objective of determining if the terms and conditions of the grant are being met and if the goal of the grant is likely to be achieved.

Grantor (also referred to as Donor or Grantmaker)

An individual or organization that makes a grant.

Grassroots Fundraising

Efforts to raise money from individuals or groups from the local community on a broad basis. Usually an organization performs grassroots fundraising within its own constituency, including people who live in the area served or clients of the agency's services. Grassroots fundraising activities include membership drives, raffles, bake sales, auctions, dances, and a range of other activities. Foundation managers often feel that successful grassroots fundraising indicates that an organization has substantial community support.

Guidelines

A statement of a foundation's goals, priorities, criteria, and procedures for applying for a grant.

I

Inclusive

Canada: An inclusive organization strives to ensure that its behaviour, values, and systems provide a welcoming culture that encourages the active participation of a broad diversity of people.

Income Tax Exempt Charity (ITEC)

Australia: A charity that is endorsed by the Australian Tax Office (ATO) is exempt from paying income tax on income derived during the period of endorsement. To be entitled to endorsement, an entity must:

• have an Australian Business Number;
• be a charitable institution or the trustee of a fund established for public charitable purposes; and
• satisfy the additional conditions for entitlement.

Independent Foundations

USA: A private foundation usually founded by one individual, often by bequest, occasionally termed non-operating because it does not run its own programs. Sometimes individuals or groups of people, such as family members, form a foundation while the donors are still living. Many large independent foundations, such as the Ford Foundation, are no longer governed by members of the original donor's family but are run by boards made up of community, business, and academic leaders. Private foundations make grants to other tax-exempt organizations to carry out their charitable purposes. Private foundations must make charitable expenditures of approximately five percent of the market value of their assets each year. Although exempt from federal income tax, private foundations must pay a yearly excise tax of one or two percent of their net investment income. The Rockefeller Foundation and the John D. and Catherine T. MacArthur Foundation are two examples of well-known, independent, private foundations.

In-Kind Contribution

A donation or contribution of goods or services rather than cash or appreciated property.

Innovation

More than just a new idea, it is a clear test of how a new approach can outperform present practice.

Intermediate Sanctions

USA: Penalty taxes applied to disqualified persons of public charities that receive an excessive benefit from financial transactions with the charity. An excessive benefit may result from overcompensation for services or from other transactions, such as charging excessive rent on property rented to the charity. Unlike private foundations, public charities are not barred from engaging in financial transactions with disqualified persons as long as the transaction is fair to the charity. Penalty taxes also may apply to organization managers, such as the charity's board, that knowingly approve an excess benefit transaction.

Internal Revenue Service (IRS)

USA: A federal agency within the US Treasury Department. The IRS is responsible for administering and enforcing the internal revenue laws, except those relating to alcohol, tobacco, firearms, and explosives (which is the responsibility of the Bureau of Alcohol, Tobacco, and Firearms). The IRS mission is to encourage and achieve the highest possible degree of voluntary compliance with the tax laws and regulations. The IRS has regulatory control over charities, including foundations.

Internship

A visit to another organization or association for the purpose of training and exchange of information and expertise.

J

Jeopardy Investment

USA: An investment that risks the foundation's ability to carry out its exempt purposes. Although certain types of investments are subject to careful examination, no single type is automatically a jeopardy investment. Generally, a jeopardy investment is found to be made when a foundation's managers have failed to exercise ordinary business care and prudence. The result of a jeopardy investment may be penalty taxes imposed upon a foundation and its managers.

L

Letter of Intent

USA: A grantor's letter or brief statement indicating intention to make a specific gift.

Leverage

A method of grantmaking practiced by some foundations. Leverage occurs when a small amount of money is given with the express purpose of attracting funding from other sources or of providing the organization with the tools it needs to raise other kinds of funds. Sometimes known as the multiplier effect.

Liability

Canada: Any debt or obligation of a person or corporation. If payment is due in one year or less, the obligation is a current liability. If it is due in more that one year, it is a non-current liability.

USA: A claim on an asset held, excluding ownership equity. For a foundation, payments outstanding for grants authorized and not yet paid, or remaining grants to be paid over multiyear periods, are liabilities.

License

Permission to use property belonging to another, often in return for a fee called a royalty.

Limited-Purpose Foundation

USA: A type of foundation that restricts its giving to one or very few areas of interest, such as higher education or medical care.

Loaned Executives

Corporate executives who work for nonprofit organizations for a limited period of time while continuing to be paid by their permanent employers.

Lobbying

USA: Efforts to influence legislation by influencing the opinion of legislators, legislative staff, and government administrators directly involved in drafting legislative proposals. In the US, the Internal Revenue Code sets limits on lobbying by organizations that are exempt from tax under Section 501(c)(3). Public charities may lobby as long as lobbying does not become a substantial part of their activities. Private foundations generally may not lobby except in limited circumstances, such as on issues affecting their tax-exempt status or the deductibility of gifts to them. Conducting nonpartisan analysis and research and disseminating the results to the public generally is not lobbying for purposes of these restrictions.

M

Mandate

Things that an organization is required to do, as set out in legislation, its articles of incorporation, or its charter.

Matching Gifts Program

USA: A grant or contributions program that will match employees' or directors' gifts made to qualifying educational, arts and cultural, health, or other organizations. Specific guidelines are established by each employer or foundation. Some foundations also use this program for their trustees.

Matching Grant (also referred to as Challenge Grant)

A grant or gift made with the specification that the amount donated must be matched on a one-for-one basis or according to some other prescribed formula.

Mission Statement

The statement of purpose for an organization, public or private, that sets forth its overarching goal(s).

Monitoring

The ongoing assessment of the progress of the activities funded by a donor, with the objective of determining if the terms and conditions of the grant are being met and if the goal of the grant is likely to be achieved.

Monograph

A scholarly writing on a particular subject. The WINGS Monograph, specifically, will be an intellectual statement on the value and benefit of associations serving grantmakers and the roles they play in philanthropy.

N

Named Fund

Australia: A fund established by, or named for, an individual, family, corporation, or other group to carry out the charitable interests of the donor(s) or deceased/honoree.

Non-Discretionary Fund

Australia: Monies given to support a particular organization selected by the donor at the time of the gift.

Nongovernment Organizations (NGOs)

A term used to capture the various types of charitable, social, civil society, and other nonprofit organizations.

Nonprofit Organization (also referred to as Tax-Exempt Organization)

USA: A term describing the Internal Revenue Service's designation of 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 organization. A nonprofit organization's income is (usually) used to support its operations.

O

Officer

An individual who holds a position of authority in an organization. The officers of a nonprofit organization vary but often include a chairman of the board of directors, a president or executive director, one or more vice presidents, a secretary, and a treasurer. The officers are appointed or elected, usually by the board of directors, but sometimes by the membership.

Operating Foundation (also referred to as Private Operating Foundation)

A private foundation that uses the bulk of its income to provide charitable services or to run its own charitable programs. It makes few, if any, grants to outside organizations.

Operating Support

A contribution given to cover an organization's day-to-day, ongoing expenses, such as salaries, utilities, office supplies, etc.

P

Partnership Funding

Australia: A grant or funding program wherein various partners have input into the project. In some cases, this may refer to joint funding between government and philanthropic sources. It may also refer to partners who give resources in-kind.

Pass-Through Foundation

USA: Foundations that receive monies and make distributions to donees, with little or no principal remaining with the foundation.

Payout Requirement

USA: The minimum amount that a private foundation is required to expend for charitable purposes (includes grants and necessary and reasonable administrative expenses). In the US, the law states that a private foundation must pay out annually approximately five percent of the average market value of its assets.

Peer Learning Meeting

A two- to three-day retreat for senior staff, with an agenda planned and delivered by participants to provide the opportunity for peers to come together and consider issues of mutual interest and concern, participate in joint problem-solving, gain new ideas and information, and build relationships and ongoing connections.

Philanthropy

Philanthropy is defined in different ways. The origin of the word philanthropy is Greek, meaning love for mankind. Today, philanthropy includes the concept of voluntary giving by an individual or group to promote the common good. Philanthropy also commonly refers to grants of money given by foundations to nonprofit organizations. Philanthropy addresses the contributions of an individual or group to other organizations that, in turn, work for the causes of poverty or social problems, improving the quality of life for all citizens. Philanthropic giving supports a variety of activities, including research, health, education, arts and culture, and alleviating poverty.

Pilot Funding

Given to a project for the purpose of carrying out a trial, which will enable the outcomes to be evaluated before any further funding or expansion of the project. Pilot projects are often for a duration of one year.

Pledge

A promise to make future contributions to an organization. For example, some donors make multiyear pledges promising to grant a specific amount of money each year.

Portfolio

The total investment pool held by an organization; normally divided into several segments such as equities, fixed-income, real estate, and the like.

Post-Grant Evaluation

A review of the results of a grant, with the emphasis upon whether the grant achieved its desired objective.

Preliminary Proposal

A brief draft of a grant proposal used to learn if there is sufficient interest to warrant submitting a full proposal.

Private Foundation

Australia: A trust or foundation usually set up by an individual through a bequest. In some cases it is established while the donor is alive. If set up through a bequest, it is administered by a trustee (or trustees) who distributes grants on an annual basis in accordance with the donor's wishes. Many are limited to a particular geographic area, such as a state or region, and some can only make grants to charitable organizations that have been granted tax deductible status by the Australian Tax Office (ATO).

USA: 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, established to maintain or aid social, educational, religious, or other charitable activities serving the common welfare, primarily through grantmaking. US private foundations are tax-exempt under Section 501(c)(3) of the Internal Revenue Code and are classified by the IRS as private foundations as defined in the code.

Pro Bono

Provision of products or services at low or no cost.

Program Officer (also referred to as Corporate Affairs Officer, Public Affairs Officer, Community Affairs Officer, Community Relations Officer, or Development Officer)

A staff member of a foundation or corporate giving program who may do some or all of the following: recommend policy, review grant requests, manage the budget, and process grant applications.

Program-Related Investment

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 purpose and interests. Often, program-related investments are made from revolving funds; the foundation generally expects to receive its money back with limited or below-market interest, which then will provide additional funds for loans to other organizations. A program-related investment may involve loan guarantees, purchases of stock, or other kinds of financial support.

Prohibited Transaction

One of a number of activities in which certain foundations and/or foundation representatives may not engage.

Proposal

A written request for a grant or contribution. Proposals usually outline why the grant is needed, the purpose it will serve, the plan for meeting the need, the amount of money needed, and background about the applicant.

Public Accountability

The responsibility of an organization to make available to the general public information about its purposes, policies, activities, and finances. Publishing annual reports and audited financial statements is an example of an act of public accountability.

Public Benevolent Institutions (PBIs)

Australia: PBIs are organizations with tax deductible status; that is, donations to PBIs are tax deductible. The definition of a PBI has never been set down in legislation, but has evolved out of a series of High Court decisions.

Public Charity

USA: A nonprofit organization that is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and that receives its financial support from a broad segment of the general public. Religious, educational, and medical institutions are deemed to be public charities. Other organizations exempt under Section 501(c)(3) must pass a public support test to be considered public charities, or must be formed to benefit an organization that is a public charity. Charitable organizations that are not public charities are private foundations and are subject to more stringent regulatory and reporting requirements.

Public Foundation

USA: Public foundations, along with community foundations, are recognized as public charities by the IRS. Although they may provide direct charitable services to the public as other nonprofits do, their primary focus is on grantmaking. A public foundation normally acquires its assets broadly from the general public, including individuals, private foundations, government agencies, and fees for services provided.

Public Support Test

USA: In the US, in order to maintain tax exempt status, a public charity that is not a governmental unit, church, school, or medical institution must meet certain tests showing that it normally receives a specified minimum amount of support from the public. There are two public support tests, both of which are designed to ensure that a charitable organization is responsive to the general public rather than to a limited number of persons.

• One test is for charities like community foundations that rely mainly on gifts, grants, and contributions. To be automatically classed as a public charity under this test, organizations must show that they normally receive at least one-third of their support from the general public (including government agencies and foundations). However, an organization that fails the automatic test still may qualify as a public charity if its public support equals at least 10 percent of all support and it also has a variety of other characteristics, such as a broad-based board, that make it sufficiently public.
• The second test applies to charities, such as symphony orchestras or theater groups, that get a substantial part of their income from the sale of services that further their mission, such as the sale of tickets to performances. These charities must pass a one-third/one-third test. That is, they must demonstrate that their sales and contributions normally add up to at least one third of their financial support, but their income from investments and unrelated business activities does not exceed one-third of support.

Q

Qualified Donee

Canada: Under Canada's Income Tax Act, foundations can only transfer funds to qualified donees which include registered charities, registered Canadian amateur athletic associations, registered national arts service organizations, the United Nations and its agencies, and a few other categories.

Query Letter (also referred to as Letter of Inquiry)

A brief letter outlining an organization's activities and a request for funding sent to a prospective donor to determine if there is sufficient interest to warrant submitting a full proposal. This saves the time of the prospective donor and the time and resources of the prospective applicant.

R

Regional Associations of Grantmakers

USA: Nonprofit membership associations of foundations and related organizations that share a common goal of strengthening philanthropy in a distinct geographic region.

Replication

Duplicating a successful initiative from a particular location to one or more different locations. Replications are not necessarily exactly the same as the original, in order to incorporate local variations in opportunities and problems. However, they make use of learnings gained during the original program, and avoid reinvention.

Research and Development (R&D)

The process of defining, building, and testing specific, new ideas.

Research Funding

A grant made to test a hypothesis or to undertake research in a particular field. Research grants are generally made to the researcher's academic institution and directed toward the staff member concerned.

Restricted Funds

Asset or income that is restricted in its use, in the types of organizations that may receive grants from it, or in the procedures used to make grants from such funds.

Request for Proposals (RFP)

North America: In order to solicit bids, a foundation disseminates a call for proposals for a specific program. This process is known as an RFP.

S

Seed Funding (also referred to as Seed Money)

A grant or contribution used to start a new project or organization. Seed grants may cover salaries and other operating expenses of the new project or organization.

Self-Dealing

Canada: An act whereby a director/trustee derives personal benefit from the foundation he/she administers. For instance, a foundation would not be permitted to loan money from its endowment fund to one of its board members at a below-market rate.

USA: A private foundation is generally prohibited from entering into any financial transaction with disqualified persons. The few exceptions to this rule include paying reasonable compensation to a disqualified person for services that are necessary to fulfilling the foundation's charitable purposes. Violations will result in an initial penalty tax equal to five percent of the amount involved, payable by the self-dealer.

Site Visit

A fact-finding visit to a donee organization at its office location or area of operation, which may involve meeting with its staff or directors or with recipients of its services. Site visits are normally conducted before the grant is approved, during project implementation, and/or during project evaluation.

Social Change

Significant change in structures, systems, policies, resources, and attitudes that improve the quality of life for disadvantaged people.

Social Indicators

Data or statistics that point to trends surrounding significant social issues. The high school dropout rate would be an example of a social indicator.

Social Investing (also referred to as Ethical Investing or Socially Responsible Investing)

The practice of aligning a foundation's investment policies with its mission. This may include making program-related investments and refraining from investing in corporations with products or policies inconsistent with the foundation's values.

Social Progress

Conditions which result in increased opportunities and improved quality of life for disadvantaged people.

Spending Policy

An agreed-upon policy that determines what percentage of a group of assets, such as an endowment, should be spent to cover both operating costs and grants of an institution. Typical spending rules combine calculations based on previous years' spending, the current year's income and investment return rates, and the policy of the foundation covering grant commitments.

Stakeholder

Any person, group, or organization that can place a claim on an organization's attention, resources, or output, or is affected by that output.

Supporting Organization

USA: A charity that is not required to meet the public support test because it supports a public charity. To be a supporting organization, a charity must meet one of three complex legal tests that assure, at a minimum, that the organization being supported has some influence over the actions of the supporting organization. Although a supporting organization may be formed to benefit any type of public charity, the use of this form is particularly common in connection with community foundations. Supporting organizations are distinguishable from donor-advised funds because they are distinct legal entities.

Synergy

Any situation in which two or more organizations working together have a greater total effectiveness than the sum of their efforts working individually.

System

A collection of policies and activities related to a clearly defined portion of an organization, such as performance review systems, evaluation systems, and financial control systems. It can also be used to describe larger social systems, such as the educational system and the justice system, which include many diverse institutions, policies, and activities.

T

Tax Deductibility (also referred to as Deductible Gift Recipient Status)

Australia: An organization's tax status under Australia's Income Tax Assessment Act 1997 which allows donations to be tax-deductible for the donor.

Tax-Exempt Organization (also referred to as Nonprofit Organization)

USA: An organization that does not have to pay state and/or federal income taxes. Charities may also be exempt from state income, sales, and local property taxes.

501(c)(3)

USA: Section of the US Tax Code that designates an organization as charitable and tax-exempt. Organizations qualifying under this section include religious, educational, charitable, amateur athletic, scientific or literary groups, organizations testing for public safety, or organizations involved in prevention of cruelty to children or animals. Most organizations seeking foundation or corporate contributions secure a Section 501(c)(3) classification from the Internal Revenue Service (IRS).

509(a)

USA: Section of the US Tax Code that defines public charities (as opposed to private foundations). A 501(c)(3) organization must also have a 509(a) designation to further define the agency as a public charity.

Technical Assistance

Operational or management assistance given to a nonprofit organization. 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 a foundation or corporate staff member or in the form of a grant to pay for the services of an outside consultant.

Third Sector

A modern substitute for voluntary sector. It is usually used to refer to all organizations not part of the business or government sectors. It could include unions, churches, clubs, associations, fundraising charities, self-help groups, grantmaking trusts and foundations, community organizations, pressure groups, etc.

Tipping

USA: The situation that occurs when a gift or grant is made that is large enough to significantly alter the grantee's funding base and cause it to fail the public support test. Such a gift or grant results in tipping, or conversion from public charity to private foundation status.

Triple Bottom Line

Australia: The triple bottom line is a term coined by John Elkington (1997), author and management consultant, which refers to the three prongs of social, environmental, and financial accountability. It is a term that is finding increasing and widespread international acceptance within the corporate community and is transforming corporate reporting practices.

Trust

Canada: An arrangement under which one person or company, often a trust company, for the benefit of another person or persons, holds money or other property. These assets are administered according to the terms of the trust agreement. Each province has a Trustee Act that regulates the kinds of investments that can be made by the trustees of a trust fund.

USA: A legal device used to set aside money or property of one person for the benefit of one or more persons or organizations.

Trust Deed

Australia: The legal document that defines the purpose and operations of a foundation.

Trust Form (also see Corporate Form)

USA: A community foundation made up of multiple forms. Investment responsibilities generally remain with the trust department of a bank (or banks) and such trust departments are responsible for the development and implementation of investment policy.

Trustee

The person or institution responsible for the administration of a trust.

Trustee Companies

Australia: Trustee companies are corporations that are legally authorized to serve as trustees, as executors or administrators of estates, or as guardians of the property of minors or people requiring assistance to manage their own financial affairs. Many private charitable trusts and foundations in Australia are managed by trustee companies. Trustee companies offer a structure through which the wishes of the donor can be carried out as instructed in perpetuity.

U

Umbrella Trusts

Australia: Umbrella trusts allow donors tax deductibility on donations without having to go through the usually long process of setting up a stand-alone trust and getting tax deductibility recognition from the Australian Tax Office (ATO). The purpose of these charitable shell structures is to allow donors easy access to tax deductibility, to enjoy the benefits of balanced fund management, and to allow donors to choose between giving to a general fund or to create a sub-trust that may be named after the donor or his/her family.

Unrestricted Fund

A fund that is not specifically designated to particular uses by the donor, or for which restrictions have expired or been removed.

V

Venture Philanthropy

Asia Pacific and USA: The practice of applying venture capital investment principles and strategies to social investments. Venture philanthropy focuses on leadership, bold ideas, developing strong teams, active board involvement, and long-term funding.