What is a Nonprofit? A nonprofit organization or foundation (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is dedicated to furthering a particular social cause or advocating for a shared point of view. In summation, it is a business/corporation that has been given tax-exempt status by the Internal Revenue Service (IRS) because the further a religious, scientific, charitable, educational, literary, public safety or cruelty-prevention mission or area of work. an organization needs to request 501(c) prior to operating with a tax exemption.
The Definition of “Nonprofit” The term is meant to describe a nonprofit organization not operating primarily to make a profit. Instead it an organization whose mission focuses on furthering a social cause or a shared goal or mission. People use the term “nonprofit” to describe all of the different types of NPO’s and NFPO’s widely. There are actually about three dozen different types of nonprofits that congress has created.
The following glossary was provided by GrantSpace, which describes itself as a "learning community for the social sector, providing easy-to-use, self-service tools and resources to help nonprofits worldwide become more viable grant applicants and build strong, sustainable organizations. See the full glossary published by GrantSpace here
Annual report A voluntary report issued by a foundation or corporation that provides financial data and descriptions of its grantmaking activities.
Assets The amount of capital or principal -- money, stocks, bonds, real estate, or other resources -- controlled by a foundation or corporate giving program.
Capital support Funds provided for endowment purposes, buildings, construction, or equipment.
Community foundation A 501(c)(3) organization that makes grants for charitable purposes in a specific community or region.
Community fund 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.
Company-sponsored foundation (also known as a corporate foundation) A private foundation whose assets are derived primarily from the contributions of a for-profit business.
Cooperative venture A joint effort between or among two or more grantmakers.
Corporate giving program A grantmaking program established and administered within a for-profit corporation.
Endowment Funds intended to be invested in perpetuity to provide income for continued support of a not-for-profit organization.
Federated giving program A joint fundraising effort usually administered by a nonprofit "umbrella" organization that in turn distributes the contributed funds to several nonprofit agencies.
Fiscal sponsorship Affiliation with an existing nonprofit organization for the purpose of receiving grants.
General/operating support 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.
General purpose foundation An independent private foundation that awards grants in many different fields of interest.
Grantee financial report A report detailing how grant funds were used by an organization.
Grassroots fundraising Efforts to raise money from individuals or groups from the local community on a broad basis.
Independent foundation A grantmaking organization usually classified by the 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.
In-kind contribution A contribution of equipment, supplies, or other tangible resource, as distinguished from a monetary grant.
Matching grant A grant that is made to match funds provided by another donor. See also: challenge grant; employee matching gift.
Operating foundation A 501(c)(3) organization classified by the 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.
Payout requirement The minimum amount that private foundations are required to expend for charitable purposes (including grants and, within certain limits, the administrative cost of making grants). In general, a private foundation must meet or exceed an annual payout requirement of 5 percent of the average market value of its total assets.
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.
Program officer A staff member of a foundation who reviews grant proposals and processes applications for the board of trustees.
Program-related investment (PRI) 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.
Public charity A nonprofit organization that qualifies for tax-exempt status under section 501(c)(3) of the IRS code. Public charities are the recipients of most foundation and corporate grants. Some public charities also make grants.
Qualifying distributions 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.
Seed money A grant or contribution used to start a new project or organization.
Set-asides 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.
Tax-exempt Refers to organizations that do not have to pay taxes such as federal or state corporate tax or state sales tax.
Trustee A foundation board member or officer who helps make decisions about how grant monies are spent.