Nonprofit Terms 101
Sometimes the nonprofit world's terminology can be a bit overwhelming, and quite frankly, absurd at times. We're here to help you! With help from GrantSpace, we've compiled a glossary of need-to-know terms for those involved in the nonprofit world.
501(c)(3) - 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.
Acorn Fund - A starter fund that grows over time with a maximum of five years to become fully funded. When contributions reach the minimum balance the granting can begin. Fund types include donor advised, designated, future community needs, and field of interest.
Agency Endowment Fund - A fund that provides stable sources of income and financials support for 501 (c)(3) organizations.
Assets - The amount of capital or principal - money, stocks, bonds, real estate, or other resources - controlled by a foundation or corporate giving program. Assets are typically invested and result in the income that is used to make grants.
Challenge grant - A grant that is paid only if the donee organization meets the amount of additional funds needed to be raised from other sources. Challenge grants are often used as a means to promote giving from other donors.
Community foundation - A 501(c)(3) organization that makes grants for charitable purposes and intents in a certain community or area. The funds that are available to a community foundation typically come from many donors and are placed in an endowment that is independently administered. The endowment's income is used to make grants. Even though a community foundation may be classified as a private foundation by the Internal Revenue Service (IRS), most community foundations are public charities and are eligible for maximum tax-deductible contributions from the general public.
Community Fund - A permanent fund designated to a certain area of interest.
Designated Fund - A fund that names a certain organization as its beneficiary.
Donor-Advised Fund - A fund that allows donors to make suggestions about which organization and cause they wish to support each year.
Endowment - These are funds that are to be invested in perpetuity so that they may provide continual income and support of a not-for-profit organization.
Field-of-Interest Fund - A fund that names a certain area of interest as the recipient of the fund.
Form 990 - The public information return that public charities and organizations file with the IRS.
Funding Information Network - The Foundation Center's network of libraries, community foundations, and other nonprofit agencies that provides a core collection of Center publications in addition to a variety of supplementary materials and services in areas useful to grantseekers.
Matching grant - This is a grant that is made to be matched by funds from another donor.
Program officer - A staff member of a foundation who reviews grant proposals and processes applications for the board of trustees. Only a few community foundations have program officers.
Proposal - A written document that serves as an application submitted to a foundation or corporate giving program to request a grant. Many times proposals also have accompanying documents submitted with it. Most foundations and corporations do not require printed applications forms; written proposals are mandatory. Other foundations and corporations prefer letters of inquiry instead of a proposal. Please see each foundation's guidelines to see what the organization you wish to apply for grants from prefers out of these different methods of application.
Scholarship Fund - A fund to provide support for students or individuals who wish to continue their education.
If you have any questions, please feel free to contact the Community Foundation of West Texas at (806) 762-8061 for more information.