Grantmaking Glossary

501(c)(3)
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 few exceptions

509(a)
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.

990 PF
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.

990
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.

Annual Report
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.

Assets
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.

Best Practices
Successful innovations or techniques of top-performing organizations.

Capital Grant
A grant made for equipment or construction projects.

Challenge Grant
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.

Collaborative Funding
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
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.

Determination Letters
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.

Direct Gifts
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.

Docket
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.

Donee
Individual or organization that receives a grant. (Also known as grantee.)

Donor
Individual or organization that makes a grant or contribution. (Also known as grantor.)

Donor-Advised Funds
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.

Endowment
Funds that are kept permanently and invested to create income for the organization.

Family Foundations
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.

Financial Report
An accounting of how grant funds were used by a grantee organization, usually required by the foundation making the grant.

Fiscal Agent
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.

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

Grantee
Individual or organization that receives a grant.

Grantor
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.

Giving Circles
Provides hands-on opportunity to collaborate and practice philanthropy with peers. Donors pool funds for the purposes of joint-decision grantmaking.

Grassroots Fundraising
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.

Guidelines
A foundation's stated goals, priorities, limitations, and application procedures.

In-kind Contribution
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.

Matching Grant
A grant made in response to a challenge grant.

Operating Foundations
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.

Planned Giving
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
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.

Proposal
A written application or materials submitted to a foundation requesting a grant.

Public Charity
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 communities.

Public Foundations
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.

Seed Money
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.

Strategic Benchmarking
Exploring alternatives (before they are implemented) and improving performance by adopting strategies to meet certain goals.

Supporting Organizations
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.

Technical Assistance
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 technical assistance.

Trustee
A board member of a foundation. A foundation's trustees generally make the final decisions on grant applications.

Unsolicited Proposal
A proposal sent to a foundation without invitation or prior knowledge of the foundation. Some foundations will not accept unsolicited proposals or applications.

Vision
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..

Workplace Giving
Employer provided philanthropy programs. Companies match employees’ charitable contributions, and often offer automatic payroll deductions which the donor may designate for specific charities.