Glossary of nonprofit terms

The section of the tax code that defines nonprofit, charitable, 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.

A voluntary report issued by a nonprofit, 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.

Candid APIs are a set of application programming interfaces provided by Candid that allow developers to access and integrate detailed nonprofit data into their own applications or systems.

A Charitable Organizations Act that regulates online platforms and charities that solicit or receive donations in California.

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.

In philanthropic terms, the donee or grantee receiving funds from a foundation or corporate giving program is the beneficiary, although society may benefit as well. See also: donee.

An informal term for grants for buildings or construction projects.

An Internal Revenue Service (IRS) master file containing information about tax-exempt organizations and other entities that are required to file various forms of IRS Form 990 series.

Support to increase organizations’ sustainability and effectiveness through strategic and long-range planning, organizational assessment and development, business planning, and the use of outside consultants. Used primarily for process-oriented capacity building that seeks to improve organizational practices.

Funds are provided for endowment purposes, buildings, construction, or equipment. A campaign to raise funds, such as building construction or acquisition, endowments, land acquisition, etc.

Also called the case for support, a core document that articulates your mission, need, solution, and funding request to motivate donors to give.

A grant that is paid only if the grantee organization is able to raise additional funds from other sources. Challenge grants are often used to stimulate giving from other donors.

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 Internal Revenue Service (IRS) as a private foundation, most are public charities and are thus eligible for maximum tax-deductible contributions from the general public.

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.

A joint effort between or among two or more grantmakers. Cooperative venture partners may share in funding responsibilities or contribute information and technical resources. Also known as a funder collaborative.

A private, company-sponsored foundation whose assets are derived primarily from the contributions of a for-profit business. While a corporate 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.

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.

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.

The recipient of a grant. Also known as a grantee or a beneficiary.

An individual or organization that makes a grant or contribution to a donee. Also known as the grantor or grantmaker.

A fund managed by an investor that the donor still has a say in. Or put another way, it’s a way for an individual to make ongoing donations to their favorite charities without the need to start a foundation of their own.

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.

The federal tax ID number assigned by the Internal Revenue Service (IRS) to identify a nonprofit or other organization.

Funds intended to be invested in perpetuity to provide income for continued support of a not-for-profit organization.

In general, when a private foundation makes a grant to an organization that is not classified by the Internal Revenue Service (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.

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.

A joint fundraising effort usually administered by a nonprofit “umbrella” organization that in turn distributes the contributed funds to several nonprofits. United Way and community chests or funds, the United Jewish Appeal and other religious appeals, the UNCF, and joint arts councils are examples of federated giving programs. See also: community fund.

Affiliation with an existing nonprofit organization for the purpose of receiving grants. Grantseekers may either apply for federal tax-exempt status or affiliate with a nonprofit sponsor.

The public information return that public charities file with the Internal Revenue Service (IRS).

A shorter version of Form 990, designed for smaller tax-exempt organizations with gross receipts less than $200,000 and total assets less than $500,000, providing a simplified overview of their financial activities.

The simplest version of Form 990, required from tax-exempt organizations with annual gross receipts normally $50,000 or less, allowing them to satisfy annual reporting requirements by electronically submitting basic information.

A form used by private foundations, regardless of financial status, to report their assets, grants, and activities to the Internal Revenue Service (IRS), ensuring compliance with the specific tax regulations that apply to private foundations.

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 or basic support.

An independent private foundation that awards grants in many different fields of interest.

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.

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. Some funders may require an audited financial report.

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.

Procedures set forth by a funder that grantseekers should follow when approaching a grantmaker.

A contribution of equipment, supplies, or other tangible resource, as distinguished from a monetary grant. Some corporate contributors may also donate the use of space or staff time as an in-kind contribution.

A grantmaking organization usually classified by the Internal Revenue Service (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. See also: private foundation.

A document published by the Internal Revenue Service (IRS) that lists organizations that qualify to receive tax-deductible contributions.

A brief letter outlining an organization’s activities and its request for funding that is sent to a prospective donor 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. Also called a letter of interest.

A grant that is made to match funds provided by another donor.

Investments from a foundation’s endowment aligned with mission and financial return goals (unlike PRIs, MRIs don’t count toward payout).

A 501(c)(3) organization classified by the Internal Revenue Service (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 amount of grants awarded generally is small relative to the funds used for the foundation’s own programs. See also: 501(c)(3).

A common misconception that a nonprofit’s effectiveness can be judged primarily by how little it spends on overhead—such as salaries, rent, and software—rather than by the actual impact of its programs and services.

A nongovernmental, nonprofit organization with funds (usually from a single source, such as an individual, family, or corporation) and programs 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.

Funds that are used to support a particular program administered internally by a foundation or corporate giving program.

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.

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.

A nonprofit organization that qualifies for tax-exempt status under section 501(c)(3) of the Internal Revenue Service (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.

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.

When the government 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 an increasing number of foundations use RFPs in specific fields, most still prefer to consider proposals that are initiated by applicants. See our listing of current RFPs.

Candid’s Seals of Transparency are a recognition system indicating how much information a nonprofit has publicly shared about itself. Organizations earn one of four levels of a Seal (Bronze, Silver, Gold, Platinum) when they provide progressively more detailed nonprofit data on their profile.

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.

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.

A private foundation that focuses its grantmaking activities in one or a few areas of interest.

The United Nations’ Sustainable Development Goals (SDGs) aim to address global challenges such as poverty, inequality, climate change, and peace. NGOs often tailor their projects and initiatives to align with one or more of these 17 goals, thereby contributing to a global effort toward sustainable development.

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.

Operational or management assistance given to nonprofit organizations. This type of help 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.

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.