Glossary of Philanthropic Terms
The Internal Revenue Code labels nonprofit, charitable, tax-exempt
organizations as 501(c)(3)s. Almost all foundation giving must be
granted to organizations that have 501(c)(3) status – with
A section of the Internal Revenue Code that defines the public support
status and tests for nonprofit, charitable organizations. Most foundations
will make grants only to organizations that are publicly supported,
not to organizations defined as private foundations under this section.
Annual information return that private foundations are required
to file with the IRS. Included on the return will be a complete
list of grants awarded during the year, a list of the directors
of the foundation, and application guidelines and procedures. These
returns are public documents and are available for use at the Foundation
Center libraries and for inspection at foundation offices.
Annual information return similar to the 990PF filed by publicly
supported charities. Interested members of the public can request
copies directly from the charity they are interested in.
A voluntary report published by a foundation or corporate giving
program that details its financial status, grant activities, and
application guidelines and procedures. Produced primarily by larger
foundations, an annual report can be a valuable source of information
about a potential funder.
The amount of money, stocks, bonds, real estate or other holdings
the foundation has. Most foundations use the income earned from
their assets to make grants.
Successful innovations or techniques of top-performing organizations.
A grant made for equipment or construction projects.
A grant that will be paid only if the recipient organization is
able to raise additional "matching funds" from another
source or sources. The challenge grant is used to stimulate giving
from other foundations or donors.
A cooperative effort among funders to address a particular need
or project more effectively. Collaboration can involve information
exchange, program or project review, and/or shared funding responsibility.
It can be done informally or through a structured re-granting program.
Community foundations allow donors to give to a particular community
while supporting an entity that already exists to administer the
grantmaking. Donors may designate charities or advise the Board
of Directors as to which charities they wish to support or pool
funds and allow professional staff to designate grants.
Corporate Giving Programs
Programs funded through company profits and administered through
the company. Accountability and regulations are different than those
of a private foundation.
The letters provided by the IRS stating that the organization has
been determined to be a tax-exempt charitable organization under
section 501(c)(3) and ruling on its public support status under
section 509(a). Many foundations require copies of both letters
to be submitted with grant proposals.
Donors select charities that provides programs and services that
reflect values similar to their own, and make gifts of cash or other
assets such as appreciated stock.
The packet of materials prepared for a meeting of the foundation's
board of directors or trustees. The docket often includes staff
analysis of proposals submitted to the board, full copies or summaries
of the proposals, lists of organizations turned down at the staff
level, reports on previously funded projects, and other information
on the foundation's investments or management.
Individual or organization that receives a grant. (Also known as
Individual or organization that makes a grant or contribution. (Also
known as grantor.)
Charitable funds managed by community foundation, or investment/trust
companies. Donor-advised funds allow individuals to donate initially
to an endowment and advise how the funds are distributed to charities.
However, the community foundation or investment/trust company manages
the administrative and legal aspects of the giving.
Employee Matching Gift
A contribution to a charitable organization by a corporate employee
that is matched by a similar contribution from the corporation.
Funds that are kept permanently and invested to create income for
The federal tax code requires private foundations to pay an annual excise tax, equal to either 1 or 2 percent of their net investment income depending on how much foundations distribute in grants. There are proposals to eliminate the two-tiered system and replace it with a flat rate.
Family foundations allow families to retain personal control and
flexibility over families’ charitable giving. Donors and families
may make decisions or delegate to an independent board of trustees
or to a trust officer acting on the donor’s behalf.
An accounting of how grant funds were used by a grantee organization,
usually required by the foundation making the grant.
A nonprofit, tax-exempt organization that acts as a sponsor for
a project or group that does not have its own tax-exempt status.
Grants are made to the fiscal agent which manages the funds and
is responsible for reporting back to the foundation on the progress
of the project.
An award of funds to an organization or individual to undertake
Individual or organization that receives a grant.
Individual or organization that makes a grant.
General Support Grant
A grant made to support the work of an organization generally, rather
than for a specific purpose or project.
Provides hands-on opportunity to collaborate and practice philanthropy
with peers. Donors pool funds for the purposes of joint-decision
The informal term for raising money from individuals and the community
served by the organization. Grassroots fundraising includes membership
drives, raffles, bake sales, benefits, and a range of other activities.
A foundation's stated goals, priorities, limitations, and application
A non-cash donation of goods or services. Meeting space, staff time
and equipment are some examples of in-kind contributions.
Letter of Inquiry (Query Letter)
A brief letter outlining a program and its funding needs, sent to
a foundation to determine if it would be interested in the project
and would like to receive a full proposal.
A grant made in response to a challenge grant.
Foundations set-up to specifically operate facilities or institutions
devoted to a specific charitable activity as determined by the donors.
Private operating foundations are not primarily grantmaking entities.
Operating Support Grant
A grant to support the general operations of the organization. Also
known as general support grant.
Including philanthropy in estate planning establishes a legacy of
giving. Donors employ a variety of planned giving vehicles, such
as charitable remainder trusts and charitable lead trusts.
Private foundations allow donors to retain personal control and
flexibility over charitable giving. Donors may make grantmaking
decisions or delegate to an independent board of trustees or to
a trust officer acting on the donor’s behalf.
Program-Related Investment (PRI)
An investment in a community development or business venture that
serves a charitable purpose. Unlike a grant, the foundation expects
its investment to be repaid, although usually not at the same rate
of return that it would expect from its normal investments.
A written application or materials submitted to a foundation requesting
A nonprofit, charitable, tax-exempt organization that is not a private
foundation as defined by the IRS. Some public charities engage in
grantmaking activities, but most engage in direct services to their
Pools of donations with like-minded donors in support of a particular
issue or cause. Public foundations choose an issue or mission that
they promote through grantmaking and offer donors options for involvement.
Often act as a fundraising source as well.
Restricted Funds or Grant
A grant made to an organization for a particular project or purpose.
The funds may be used only for the purpose designated by the foundation.
A grant or contribution used to start a new project or organization.
Seed grants may cover salaries and other administrative expenses
of a new project.
Exploring alternatives (before they are implemented) and improving
performance by adopting strategies to meet certain goals.
Donors tie funds to one or more public charities in a way that is
significant to the total support of those organizations. An alternative
to establishing a private foundation, allowing close involvement
with grant decisions.
A grant or in-kind contribution for management assistance to help
a nonprofit organization operate more effectively. Accounting, financial
planning, fundraising. and legal support are some common types of
A board member of a foundation. A foundation's trustees generally
make the final decisions on grant applications.
A proposal sent to a foundation without invitation or prior knowledge
of the foundation. Some foundations will not accept unsolicited
proposals or applications.
The stated dream of what an organization wants to be, where it wants
to go, or what it wants to stand for. For a vision statement to
be meaningful it must be achievable and measurable..
Employer provided philanthropy programs. Companies match employees’
charitable contributions, and often offer automatic payroll deductions
which the donor may designate for specific charities.