Nonprofit Glossary

 

Advancement
Fundraising on behalf of an Independent school, college, or university.
AFP (Association of Fundraising Professionals)
The membership association for fundraising professionals. (See also CFRE, AHP, and CASE).
AHP (Association of Healthcare Philanthropy)
The membership association for hospital and healthcare fundraising professionals.
ASAE (American Society of Association Executives)
The membership association for business association executives.
Amendment
Also known as a Certificate of Amendment, it is a filing completed by an organization advising the secretary of changes made to the organization. Common reasons for amendment include changes to an organization’s formation documents, legal name, organization address, or key personnel.
Annual Fund
The general unrestricted funds raised each year for a nonprofit’s operations, programs, and other expenses. It does not include capital campaigns or endowment funds.
Annual Giving
Annually repeating fundraising campaigns seeking funds for operating budget support.
Annual Report
A comprehensive document summarizing the organization’s accomplishments in the preceding year. See also Secretary of State Annual Reports.
Appeal
A solicitation asking supporters to contribute money to your cause, generally as part of a fundraising campaign. It can be made via letter, email, social media, or online campaign page – or a combination of these methods.
Articles of Incorporation
A legal document filed with the secretary of state to create your nonprofit corporation. It is called a certificate of incorporation or corporate charter in some states.
Association Management Company (AMC)
An association management company, or AMC, provides strategic and technical guidance, management, and administrative services to business associations and nonprofits on a fee-for-service basis. AMCs often serve as an organization’s headquarters and manage its day-to-day operations. (See Business Associations.)
Audited Financial Statements
Financial Statements audited by a Certified Public Accountant in accordance with Generally Accepted Accounting Principles.
Audit Threshold
When submitting annual charitable registration filings, nonprofits must include their most recent IRS Form 990 and financial statements. In 22 states, an independent CPA must review or audit the statements once the organization reaches a statutory threshold based on its total annual revenue or contributions.
Bequest
A transfer, by will, of personal property such as cash, securities, or other tangible property from a deceased individual to a beneficiary.
Board of Directors
An organized and/or elected body of individuals with fiduciary and oversight responsibility over a nonprofit.
Business Association
A 501(c)(6) tax-exempt social welfare organization which exists to promote a common business purpose and provide products and services for its members rather than serving a charitable mission. Typically, business associations get the bulk of their funding through membership dues or fees, although they may fundraise and seek grants, much like 501(c)(3) nonprofit organizations. Business organizations include trade associations, professional societies, business leagues, and chambers of commerce. See also Association Management Company and CAE.
Bylaws
The legal document that outlines how an organization must be governed and guides its board of directors. Bylaws supplement the rules of the organization’s formation state’s corporation code.
CAE (Certified Association Executive)
A credential granted to an association executive by the American Society of Association Executives after meeting specific eligibility requirements (a Bachelor’s degree, five years of professional experience, and 100 hours of professional education) and successful passage of an exam.
Campaign
An organized effort to raise funds for a nonprofit organization.
Capital Campaign
An effort over a set period to raise a specific amount of money (usually a large amount) to improve or obtain a physical asset. Generally, the campaign allows donors to pledge gifts that may be paid over several years. Campaigns usually consist of a quiet phase, when major supporters are asked to contribute toward the goal to build momentum, and a public phase when the broader community is invited to contribute. Generally, a campaign has reached half or more of its dollar goal by the launch of its public phase.
CASE
Council for the Advancement and Support of Education, the membership association for educational advancement professionals. See also Advancement.
Cause Marketing (or Commercial Co-Venture or CCV)
An agreement between a for-profit business and a nonprofit organization to support a charitable cause while generating commercial goodwill. Examples include charitable sales promotions with revenue sharing and sponsorship of a charitable performance or event. Special fundraising licensing and reporting are often required for both the nonprofit and the business.
Certificate of Good Standing (Certificate of Authority)
A document usually issued by a secretary of state’s office that shows an organization has met its statutory requirements and is authorized to conduct business in the state.
CFRE (Certified Fundraising Executive)
A credential granted to a fundraiser by the Association of Fundraising Professionals based on performance as a fundraising executive, knowledge of the fundraising field, tenure as a fundraiser (minimum of five years), education, and service to the profession.
Challenge Gift
A substantial donation made on the condition that other gifts must be secured (often on a matching basis), usually within a specified period, to stimulate fundraising activity.
Charitable Gaming
Gaming or gambling activities run by a nonprofit with proceeds going to support the nonprofit’s charitable purpose. Auctions, raffles, poker, bingo, pull tabs, and casino games are typical forms of charitable gaming. States and some municipalities regulate charitable gaming. Nonprofits are often offered limited exemptions from charitable gaming laws, although special fundraising licensing and reporting are generally required.
Charitable Gift Annuity
A contract under which a charity, in return for an irrevocable transfer of assets from a donor or donors, agrees to pay the donor(s) fixed payments for a lifetime. Also called a charitable remainder annuity trust (CRAT), a charitable gift annuity is a type of planned gift.
Charitable Registration (Charitable Solicitation Registration)
Registration for authorization to solicit charitable donations from those within a specific jurisdiction. Fortyone states in the U.S. have regulations that require nonprofits to obtain charitable registration prior to solicitation. Regulations vary by state.
Charitable Reinstatement
Reinstatement restores a nonprofit to good standing with the secretary of state so it may continue to operate legally.
Charitable Trust
An irrevocable trust, all of the unexpired interests of which are devoted to one or more charitable purposes, that provides both philanthropic and tax benefits. Common types include a charitable remainder annuity trust (CRAT), also known as a charitable gift annuity, a charitable lead annuity trust (CLAT), a charitable lead unitrust (CLUT), and a charitable remainder unitrust (CRUT).
Charleston Principles
An effort by the National Association of State Charity Officials (NASCO) to provide jurisdictions with guidelines on how to regulate nonprofits who were soliciting online. Released in 2001, they provide broad guidance for states but were not codified into law and are followed by a minority of jurisdictions. Generally, nonprofits who solicit in a state must first seek charitable registration there.
Code of Conduct (Code of Ethics)
Also called a code of ethics; it is a policy that outlines the principles and standards that a nonprofit’s board members must follow. Typically the code reflects the organization’s mission and values and ties them to standards of conduct for its board members.
Combined Federal Campaign (CFC)
A program allowing specific charitable organizations to solicit workplace contributions from employees of the Federal Government.
Community Foundation
A philanthropic foundation that is specifically committed to supporting institutions in its community, often receiving bequests from persons whose means and legacies are modest. Community foundations are recognized as public charities by the IRS.
Compiled Financial Statements
Unaudited financial statements. Accountants that compile a company’s financial statements are not required to verify or confirm the records, and they do not need to analyze the statements for accuracy.
Conflict of Interest Policy
A written policy that dictates the prescribed procedures to be followed when an individual’s obligation to further a nonprofit’s charitable purposes is at odds with their personal or business activities or financial interests.
Corporate Philanthropy
Support by a business through gifts, equipment, supplies, or other contributions to charitable institutions, sometimes through organized programs that may include corporate foundations.
Consent Agenda
A meeting agenda that groups routine discussion points into a single agenda item so they may be approved in one action rather than through the filing of multiple motions.
Corporate Registration
The process of registering a corporation in a jurisdiction to obtain authorization to conduct activities there. Typically, organizations need to register in any state where they regularly conduct activities or have a physical location, an employee, or an affiliate. Registration in a jurisdiction other than where the corporation was formed is known as foreign qualification.
Crowdfunding
(or Social Fundraising) Raising funding for a project or venture by soliciting many small donations from many people, generally online.
Development
Fundraising. See also Advancement.
Determination Letter
An IRS-issued letter issued to a nonprofit organization that its application for federal tax exemption under Section 501(c)(3) has been approved.
Director of Development
The individual who heads an organization’s development program, with either this title or another, such as vice president for development or vice president for advancement.
Directors and Officers Insurance (D & O Insurance)
Insurance that protects the personal assets of a corporation’s directors and officers and their spouses in the event they are personally sued for actual or alleged wrongful acts in managing an organization.
Disclosure Statement (Charitable Disclosure Statement)
State-mandated statement containing specific language and/or details to be listed on a soliciting organization’s website, solicitation materials, donor correspondence, and other media to educate donors.
Dissolution
The process of dissolving your organization’s legal registration in your home state.
Doing Business As (DBA)
Also called an assumed name, fictitious name, doing business as (DBA), or trade name, it is an additional business name. Registering a DBA in a jurisdiction allows an organization to operate under multiple names while maintaining a single legal entity.
Donate Button or Link
A part of a charity’s website that links donors directly to its donation page or giving form so the public can make donations to support the organization. Some states view it as a solicitation requiring charitable registration.
Donor
The individual, organization, or institution that makes a gift.
Donation / Gift / Contribution
A gift of cash or property made to a nonprofit organization to help it accomplish its goals, for which the donor receives nothing of value in return. See also In-Kind Donation.
Donor Advised Fund (DAF)
A private fund administered by a third party, often an investment brokerage firm, created to manage charitable donations on behalf of an organization, family, or individual. Donors to the fund can immediately receive the tax benefits of charitable giving and can direct the fund to disperse their donation via a grant to charities of their choosing. Since the donor received a tax deduction upon contribution to the DAF, the donor is not entitled to a second tax deduction when recommending a grant to a charity.
EIN
A unique, nine-digit number the IRS assigns to identify an organization. Nonprofits use it to open bank accounts, apply for 501(c)(3) tax-exempt status, pay employees, apply for grants, and submit Form 990 returns to the IRS.
Endowment
An investment fund established by a foundation or nonprofit that makes consistent withdrawals from the invested capital. The principal investment amount is generally kept intact and grows over time, while the investment income is used as a revenue stream to support programs and operations. Building an endowment can be key to long-term sustainability.
Executive Session
A special private session within a meeting that provides an opportunity for the board to handle sensitive and confidential issues.
Exemption (or Tax Exemption)
The reduction or removal of a liability to make a compulsory tax payment to local, state, or federal authorities. Tax-exempt status may provide complete relief from taxes, reduced rates, or tax on only certain items.
Fiduciary
A person or organization with a legal or ethical obligation to act in the best interest of one or more other parties. This responsibility is often broken down into three duties: a duty of care, a duty of loyalty, and a duty of obedience. Board members have a fiduciary duty to their organizations.
Fiscal Sponsor
A nonprofit organization that provides its legal and tax-exempt status, as well as fiduciary oversight and financial management to groups and projects.
Foundation (or Philanthropic Foundation)
A corporation or trust created through contributed funds, whether by an individual, family, corporation, or community, for support of nonprofit organizations, and to which such organizations may appeal for grants in support of their programs and projects. They are also often called funders or grantmakers.
Foreign Qualification
The process of registering an organization in a state other than its state of incorporation so that the organization may conduct activities in the state.
Formation
The process of creating a business structure, such as a corporation, nonprofit corporation, partnership, proprietorship, or limited liability corporation (LLC).
Form 1023
IRS Application for Recognition of Exemption under IRC Section 501(c)(3) that organizations must file to receive tax-exempt status.
Form 990
Form used by the IRS for annual reporting by nonprofit organizations. Since nonprofits do not pay federal tax, the form is ‘informational.’
Funder (Grantor)
A philanthropic (grant-making) public or private foundation. Also known as a grantor or grantmaker.
Fundraising Plan
All of those elements comprise an organization’s procedures for attaining a fundraising goal, including objectives, a case for support, leadership, timetable, personnel, and budget, as well as the overall strategy or grand design for the successful implementation of the fundraising plan.
Fundraising Campaign
A fundraising campaign is a fundraising initiative that happens over an extended fixed period of time and highlights a specific, predetermined goal. Nonprofits use fundraising campaigns to raise awareness about their missions, specifically, the program or initiative they are currently soliciting donations.
Fundraising Counsel
An individual operating as an independent or a firm explicitly organized to counsel charitable institutions on fundraising. Typically, fundraising counsel do not receive or have custody or control of contributions at any time, whether directly or indirectly. Special fundraising licensing and reporting are often required.
Fundraising Consultant
A specialist in one or more areas of fundraising hired to recommend solutions to problems and provide general advice and guidance related to fundraising efforts. Special fundraising licensing and reporting are often required.
Gift Annuity (or Charitable Gift Annuity)
A contract between a donor and a charity wherein the donor transfers property to the charity in exchange for the charity’s promise to pay the donor a fixed annual income for life or some other mutually agreed-upon period. The donor’s right to income may be deferred for a period of years. Bonds and special licensing may be required.
Gift Officer
A nonprofit fundraiser whose fundraising efforts focus on a particular segment of a nonprofit’s supporters, often major donors or planned donors.
Giving Days
A 24-hour fundraising event that rallies donors around a common cause. It can be driven by geography, an organization, or a theme. Community foundations, colleges, and universities are frequent organizers of giving days.
GivingTuesday
Celebrated on the Tuesday following US Thanksgiving, #GivingTuesday is an online giving day that kicks off the charitable season and counters the consumer-orientated holiday season. Giving Tuesday drives large amounts of people to donate to a wide variety of nonprofits and acts as a way to boost end-of-year giving as nonprofits prepare to wrap up the calendar year (and their revenue goals).
Good Standing
A status that indicates an organization has filed all required state registrations, reports and paid all necessary fees, and is authorized to do business in a state. Typically this status is confirmed through the issuance of a certificate of good standing, a document issued by the state’s corporations division. A certificate of good standing is sometimes called a certificate of status, a certificate of existence, or a certificate of fact.
Governance
A set of systems and processes that govern an organization and its board of directors, providing the scope of responsibilities and a decision-making framework.
Grant
An award of funds to a charitable organization made by a foundation or a donor-advised fund (DAF). Grantmakers are often called funders. Applying for grants is often called grantseeking and is a form of state-regulated fundraising.
Grantor (Funder)
Philanthropic (grant making) public or private foundation. Also known as a grantmaker or funder.
Grant Writer
A fundraiser who researches, develops, and crafts grant applications seeking funding from private, corporate, or government funders.
In-Kind Donation or Gift
In-kind donations, also called gifts-in-kind or non-cash contributions, are donations of tangible goods to a charitable organization. You’ll want to thank your donors for in-kind gifts, but by law, your nonprofit cannot assign the gift a dollar value.
Independent Sector/Third Sector/Social Benefit or Social Good Sector
Used to describe all nonprofit organizations and institutions. Also known as the third sector, social benefit, or social good sector.
Internal Revenue Service Form 990
The Form 990 and Form 990-EZ are used by tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations to provide the IRS with financial information. The form is an information return and, as such, an organization’s completed Form 990, Form 990-EZ, and the Form 990-T of 501(c)(3) organizations is available for public inspection. Schedule B (Form 990, 990-EZ, or 990-PF), Schedule of Contributors, is open for public inspection for section 527 organizations filing Form 990 or Form 990-EZ. For other organizations that file Form 990 or Form 990-EZ, parts of Schedule B may be open to public inspection. Most state agencies that regulate charitable solicitations require charitable organizations to file Form 990s annually by specific due dates.
Lapsed Donor
A donor who contributed regularly but has yet to do so for a set time. Sometimes referred to as LYBUNTS (last year but not this year) and SYBUNTS (some years but not this year).
Legacy Gift (Planned Gift)
A legacy gift (or planned gift) is a significant charitable gift arranged in the present and allocated at a future date, generally through a will or trust. The process of making these arrangements is called legacy or planned giving.
Major Gifts
These are often the most significant single gifts a nonprofit receives. There is no set dollar amount for a major gift; it might be $1,000 or $100,000, depending on the nonprofit.
Matching Grant
A matching grant is a way of leveraging additional funds from other funders. A funder agrees to match an amount the grant seeker raises from other sources.
Membership Association
A nonprofit that has members. Only specific nonprofit organizations (typically civic leagues, fraternal, educational, social, patriotic, and/or alumni organizations) can be membership associations in some states. In some states, membership associations may be entitled to exemption from charitable solicitation registration requirements if the solicitation is only done by members and to members.
Memorial Gift
Charitable donation made in memory of someone who has died.
Mission Statement / Charitable Purpose
A short statement detailing the nonprofit’s cause, purpose, goals, and how it intends to achieve those goals.
Name Reservation
The process of protecting an organization’s preferred name while the organization is preparing to file formation documents with the state.
National Council of Nonprofits
A membership organization that serves as a resource and advocate for America’s charitable nonprofits. Forty-two state associations of nonprofits are members. The Council of Nonprofits works to inform nonprofits about emerging trends, new legislation, and best practices. It also works to create a positive public policy environment for the sector.
NGO
Short for Non-Governmental Organization. As the name suggests, NGOs operate independently of any government. While they are mainly government-funded, they operate without government oversight or representation from that government. NGOs are a subset of NPOs.
Nonprofit (or not-for-profit) Organization
A corporation that provides a public benefit without the purpose of profit for the organization’s members. An organization’s nonprofit status refers to its incorporation status under state law, while tax-exempt status refers to an organization’s federal income tax exemption under the Internal Revenue Code.
NPO
Short for Nonprofit Organization, a NPO (or nonprofit) is a private organization offering a public service.
NTEE
Short for National Taxonomy of Exempt Entities, the NTEE is a comprehensive coding scheme developed by the National Center for Charitable Statistics to establish a unified national standard for classifying nonprofit activities.
Online Fundraising
Internet solicitation, including website, donate buttons and links, email and social media solicitations, virtual and hybrid events, giving days, and peer-to-peer campaigns.
Payroll Tax Registration
Registration by employers authorizing them to collect and remit payroll taxes levied on the wages and salaries of employees, generally withholding and unemployment insurance (aka unemployment tax and unemployment compensation). Payroll tax registration is required to hire employees, process payroll, and file tax returns. Most states require foreign qualification and registered agent as prerequisites to payroll tax registration.
Peer-to-Peer (P2P)
A type of online fundraising campaign. Individuals create personal fundraising pages and solicit donations on behalf of your organization from their friends, family, and extended personal networks. Typically, the nonprofit supplies tools like social media assets, a personalized fundraising page, and sample messages. Examples include walkathons and the ALS Ice Bucket Challenge.
Planned Gift (Legacy Gift)
A significant charitable gift arranged in the present and allocated at a future date, generally through a will or trust. The process of making these arrangements is called planned or legacy giving.
Pledge
A donor’s promise to give a certain amount of money to a nonprofit over a set period, often made in response to a nonprofit’s solicitation for a capital campaign. Pledges may be unrestricted, restricted, or conditional. Restricted pledges are those whose use is restricted for a specific purpose. Conditional pledges are those where the donor will only make payment once a particular condition is met.
Principal Gift
A substantial donation, typically of $1,000,000 or more, generally made in response to a capital campaign solicitation. Principal gifts are usually made through appreciated assets (stock) and are often restricted in purpose.
Private Foundation
An independent legal entity created solely for charitable purposes, whose funding generally comes from a single individual, a family, or a corporation. Both public charities and private foundations are classified as 501(c)(3) organizations by the IRS.
Professional Fundraiser
A blanket term meaning individuals or firms paid for their expertise in development. Examples include professional solicitors, fundraising consultants, fundraising counsel, and retained gift officers. Special fundraising licensing and reporting may be required.
Professional Solicitor
An individual or firm that raises funds for their clients. They are directly involved in the act of asking for donations and generally have custody of the funds for some amount of time. Special fundraising licensing and reporting are often required.
Public Charity
A legal entity created for exclusively charitable purposes, whose support comes mainly from the public, meaning at least 33% of its funding comes from donations from the public, publicly supported organizations, and/or the government. Both public charities and private foundations are classified as 501(c)(3) organizations by the IRS.
Public Phase
The second period of a capital campaign when the broader community is asked to contribute. Generally, a campaign has reached half or more of its dollar goal at the launch of its public phase.
Quiet Phase
The first period of a capital campaign, when major supporters are privately asked to contribute toward the campaign’s goal to build momentum before the public announcement of the campaign.
Quorum
The minimum number of Board members or trustees required to be present at an organization’s meetings to make the meeting’s proceedings valid.
Recurring Donation
An ongoing, specific gift amount determined by a donor that is charged monthly to a donor’s credit card or through ACH. Also known as a recurring gift.
Registered Agent
A nonprofit’s legal appointee to receive notice of lawsuits and other legal or government notices within a particular state. Certain states require the appointment of an in-state registered agent by out-of-state nonprofits who intend on soliciting within their state.
Reinstatement
The process of restoring a nonprofit to good standing with the secretary of state so it may continue to operate legally. The most common reason nonprofits must seek reinstatement is failure to file an annual report on time with the secretary of state.
Robert’s Rules of Order
A parliamentary procedure manual governing the meetings of most organizations with boards of directors.
Sales Tax Registration
Registration to receive a permit or license to collect and remit sales and use tax in a state or other locality. An organization may be liable for sales taxes in a given jurisdiction if it has a nexus, or presence there, which can be a physical location, an employee, or an affiliate, depending on the laws in that jurisdiction.
Secretary of State Annual Reports
Regular filings required to maintain an organization’s good standing with a secretary of state. Required in most states, annual reports’ due dates vary by jurisdiction and type of organization.
Single Portal
An online system that would allow soliciting nonprofit organizations and their professional fundraisers to comply with all states’ charitable registration and annual filing requirements in a single place. Such a system does not currently exist.
Silent Auction
An auction at which attendees silently and anonymously place bids on and purchase items for sale during a specific period, using a bidding number and an item bid sheet.
Small Games of Chance
Games usually played for money or other items of monetary value, the outcome of which involves an element of chance, even though the contestants’ skill may also influence the outcome. Small games of chance include bingo, wheel and spindle games, pull-tab games, punchboards, tip boards, raffles, and drawings. Small games of chance are a type of regulated charitable gaming.
Social Media Campaign
A fundraising campaign that uses social media as the primary avenue for soliciting donations.
Social Responsibility
The concept of individuals and organizations, in addition to pursuing personal gain or profit, acting in the best interest of their society and environment. Social responsibility in the business is known as Corporate Social Responsibility or CSR.
Solicitation
The request for funds for a charitable purpose. Also known as an “ask.”
Special Event
A fundraising event designed to attract and involve large numbers of people to raise money or cultivate donors. Such events may be in person, virtual, or a hybrid of both.
Sponsor
An individual or organization that supports an event by paying some or all of the associated costs in exchange for something of value.
Standards for Excellence
A national initiative established to promote the highest standards of ethics, effectiveness, and accountability in nonprofit governance, management, and operations and to help all nonprofit organizations meet these high benchmarks. The centerpiece of the Institute’s program is the Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector. Compliance is part of the Ethics and Accountability Code.
State Employee Campaign
Annual programs that offer state employees the opportunity to make charitable contributions through recurring payroll deductions and other payment methods.
Supporting Organizations
Tax exempt organizations that carry out their exempt purpose by supporting one or more other exempt organizations, usually public charities. Supporting organizations are classified by the IRS as public charities, even though they are often funded by a few persons, similar to a private foundation.
Tax Exempt
Exempt from federal, state, or other tax. Organizations granted 501(c)(3) status by the IRS are exempt from federal income tax. Tax-exempt status refers to an organization’s federal income tax exemption under the Internal Revenue Code, while an organization’s nonprofit status refers to its incorporation status under state law.
Text-to-Donate
A form-based mobile fundraising method initiated through a text message from the organization or the supporter. Supporters are then sent a link to the mobile giving form. The gift is successful when supporters finish entering their information into the form.
Text-to-Give
A carrier-based mobile fundraising method that allows supporters to give via text message. Supporters simply text a keyword to the shortcode, and the donation amount is added to the supporters’ phone bill.
Third Sector
Another name for the nonprofit sector. Also called the independent sector, civic sector, or social sector of the economy, the term distinguishes nonprofits from the public or private sector.
Trustee
An organized and/or elected individual with fiduciary and oversight responsibility over a charitable trust.
Unified Registration Statement (URS)
A consolidated charitable registration form intended to assist nonprofits registering in multiple states. Several states do not accept the URS and the ones that do often require the submission of additional supplements.
Vehicle
The particular form in which a fundraising program is organized and executed; for example, annual giving, major giving, capital campaign, planned giving, direct mail, etc.
Wealth Screening
A tool that assists in determining a prospective donor’s capacity to give by examining top wealth indicators like real estate ownership, business affiliations, and stock holdings in public companies.
Withdrawal
The process of withdrawing your organization’s legal registration in a jurisdiction other than your home state. See also dissolution.