Guide to Better Giving: Dictionary

"I don't think you ever stop giving. I really don't. I think it's an on-going process. And it's not just about being able to write a check. It's being able to touch somebody's life."
Oprah Winfrey
Dictionary of Terms

C   -   D   -   F   -   G   -   I   -   N   -   O   -   P   -   R   -   S   -   T   -   U   -   V  

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Community Foundation: A community foundation is a tax-exempt, nonprofit, autonomous, publicly supported, philanthropic institution composed primarily of permanent funds established by many separate donors for the long-term diverse, charitable benefit of the residents of a defined geographic area. Typically, a community foundation serves an area no larger than a state. Community foundations provide an array of services to donors who wish to establish endowed and non-endowed funds without incurring the administrative and legal costs of starting independent foundations. s_cnjg/sec.asp?CID=1858&DID=4848

Corporate Foundation: A corporate (company-sponsored) foundation is a private foundation that derives its grantmaking funds primarily from the contributions of a profit-making business. The company-sponsored foundation often maintains close ties with the donor company, but it is a separate, legal organization, sometimes with its own endowment, and is subject to the same rules and regulations as other private foundations. http://www.cnjg.or g/s_cnjg/sec.asp?CID=1858&DID=4848

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Donor Advised Fund: A fund held by a community foundation or other public charity, where the donor, or a committee appointed by the donor, may recommend eligible charitable recipients for grants from the fund. The public charity's governing body must be free to accept or reject the recommendations. http://www.cnjg.or g/s_cnjg/sec.asp?CID=1858&DID=4848

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Family Foundation: "Family foundation" is not a legal term, and therefore, it has no precise definition. Yet, approximately two-thirds of the estimated 44,000 private foundations in this country are believed to be family managed. The Council on Foundations defines a family foundation as a foundation whose funds are derived from members of a single family. At least one family member must continue to serve as an officer or board member of the foundation, they or their relatives play a significant role in governing and/or managing the foundation throughout its life. 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. http://www.cnjg.or g/s_cnjg/sec.asp?CID=1858&DID=4848

Fiscal sponsor: An organization or individual not classified by the IRS as a “public charity” will occasionally establish an affiliation with an existing nonprofit organization for the purpose of receiving grants. The nonprofit serves as the fiscal sponsor for the grant and assumes oversight responsibility for ensuring that the grant is carried out and the funds are used as intended. http://www.skol

Fundraising Efficiency: The amount a charity spends to raise $1 in charitable contributions. cfm?bay=glossary.word&word=Fundraising%20Efficiency&mid=1&cid=16&print=1

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General Operating Support: A contribution given to cover an organization's day-to-day, ongoing expenses, such as salaries, utilities or office supplies. http://www.cnjg.or g/s_cnjg/sec.asp?CID=1858&DID=4848

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Impact: A high-impact nonprofit is one which produces lasting improvements that address the core problems in a particular social cause

Independent Foundation: An individual usually founds these private foundations, often by bequest. They are occasionally termed "nonoperating" because they do not run their 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 5% of the market value of their assets each year. Although exempt from federal income tax, private foundations must pay a yearly excise tax of 1%-2% of their net investment income. http://www.cnjg.or g/s_cnjg/sec.asp?CID=1858&DID=4848

IRS Form 990: The 990 form is titled "Return of Organization Exempt From Income Tax." It is submitted by tax-exempt organizations and non-profit organizations to provide the Internal Revenue Service with annual financial information. (Organizations with gross receipts of under $25,000 in a year are not required to file a form 990). The Form 990 provides the public with financial information about a given organization, and is often the only source of such information. It is also used by government agencies to prevent organizations from abusing their tax-exempt status. wiki/IRS_tax_forms#990

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Nonprofit Effectiveness: The extent to which a nonprofit fulfills their mission. Put another way, how successful a nonprofit is in executing on their planned work or areas of programmatic operation. This is another way of looking at impact.

Nonprofit Organization: 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 company. A nonprofit organization's income must be used solely to support its operations and stated purpose.

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Overhead Ratio: Operating expenses divided by the sum of taxable equivalent net interest income and other operating income. This ratio shows the proportion of expenses, in relation to total income, that cannot be allocated directly to production of the good or service. Operating expenses include items such as office rent, maintenance of machinery, depreciation costs, etc. In general, companies want to minimize these costs since it is difficult to quantify the revenues generated by undertaking these costs. (http://www.invest

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Philanthropist: A person who loves humanity, is committed deeply to making society a better place, who believes that each individual, each dollar and each action makes a difference.

Philanthropy: Philanthropy is defined in different ways. The origin of the word philanthropy is Greek and means 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 contribution 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, as well as alleviating poverty.

Private Foundation: 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. U.S. private foundations are tax-exempt under Section 501(c)(3) of the Internal Revenue Code and are classified by the IRS as a private foundation as defined in the code.

Professional Advisor: Individuals who assist in planning and executing charitable giving through providing information on giving options according to one's specific financial situation. Types of professional advisors include: attorney, accountant, estate planner, financial planner, stockbroker, insurance broker, planned giving officer, philanthropy consultant.

Program/Organizational Efficiency: How well a nonprofit runs the operations of the organization. This could also be measured as the amount of impact per dollar invested. Fundraising efficiency would be one measure, but another could be program efficiency. For example, if it costs one nonprofit $50 to feed a child for a year and another nonprofit $100 to feed that child (all else being equal), then the first charity would have a more efficient program

Project-Based Giving: When nonprofits list specific project or pieces of work that donors can specifically and directly contribute to. The money given to that project may only be spent on executing that project.

Public Charity: 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 (See Public Support Test) to be considered public charities, or must be formed to benefit an organization that is a public charity (see Supporting Organizations). Charitable organizations that are not public charities are private foundations and are subject to more stringent regulatory and reporting requirements (See Private Foundations).

Public Foundation: Public foundations are nonprofit organizations that receive at least one-third of their income from the general public. Public foundations may make grants or engage in charitable activities. The IRS recognizes public foundations, along with community foundations, as public charities. Religious, educational and medical institutions are deemed to be public charities.

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Restricted Funds: Assets 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.

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Social Cause (or social issue area or cause): A field of work within the nonprofit sector, such as climate change, education, health, etc.

Social Investing: Also referred to as ethical investing and socially responsible investing, this is 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 Return on Investment (SROI): SROI is an attempt to measure the social and financial value created by a nonprofit, NGO or business. A number of services are now looking at analysing the 'investment' in charities as yielding a social return on investment. SROI is an approach to understanding and managing the impacts of a project, an organization or a policy. It is based on stakeholders and puts financial values on the important impacts identified by stakeholders which do not have market values. The aim is to include the values of people that are often excluded from markets in the same terms as used in markets, that is money, in order to give people a voice in resource allocation decisions.

Strategic Giving: Engaging in philanthropy in a strategic manner to make a major philanthropic impact through making better choices surrounding how much one spends, invests and gives back to society.

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Tax-Exempt Organizations: Organizations that do not have to pay state and/or federal income taxes. Organizations other than churches seeking recognition of their status as exempt under Section 501(c)(3) of the Internal Revenue Code must apply to the Internal Revenue Service. Charities may also be exempt from state income, sales and local property tax.

Theory of Change: A theory of change is a strategy or blueprint for achieving large-scale, long-term goals. It identifies the preconditions, pathways and interventions necessary for an initiative's success. The term can refer to a specific planning tool as well as to a more general overview of how an organization intervenes in a system to initiate and sustain positive change. For more information, visit the Theory of Change site sponsored by ActKnowledge and the Aspen Institute Roundtable on Community Change at

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Unrestricted Funds: Normally found at community foundations, an unrestricted fund is one that is not specifically designated to particular uses by the donor, or for which restrictions have expired or been removed.

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Venture Philanthropy: A philanthropy that borrows some of the best practices of the venture capital world to invest deeply in nonprofits to build their capacity effectively. Venture philanthropists value their donor dollars in terms of the social return of investment.

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Through independent research, Philanthropedia has leveraged the wisdom of 3128 experts to provide reviews on 783 top nonprofits across 48 causes.