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.

A separate and independent coalition of grant making institutions, or individuals associated with such institutions that shares information or provides professional development and networking opportunities to individual grant makers with a shared interest in a particular subject or funding area.

A voluntary report issued by a foundation or corporation that provides financial data and descriptions of its grant making activities. Annual reports vary in format from simple typewritten documents listing the year's grants to detailed publications that provide substantial information about the grant maker's grant making programs.

A document filed with the secretary of state or other appropriate state office by persons establishing a corporation. This is the first legal step in forming a nonprofit corporation.

The amount of capital or principal - money, stocks, bonds, real estate, or other resources - controlled by a foundation or corporate giving program. Generally, assets are invested and the resulting income is used to make grants.

Rules governing the operation of a nonprofit corporation. Bylaws often provide the methods for the selection of directors, the creation of committees and the conduct of meetings.

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.

A decision-making body comprised of people who are constituents of a geographic area or issue for the purposes of making grants. The scope of a community funding board's responsibilities may include reviewing applications, participating in site visits and making final grant decisions.

Grant funds distributed at the discretion of one or more trustees, which usually do not require prior approval by the full board of directors. The governing board can delegate discretionary authority to staff.

Substantial contributors to a private foundation, foundation managers, certain public officials, family members of disqualified persons and corporations and partnerships in which disqualified persons hold significant interests. The law bars most financial transactions between disqualified persons and foundations.

A fund held by a community foundation, public charity or other entity, where the donor or a committee appointed by the donor recommends eligible charitable recipients from the fund.

Funds intended to be invested in perpetuity to provide income for continued support of a not-for-profit organization.

The annual tax of 1 or 2 percent of net investment income that must be paid to the IRS by private foundations.

When a private foundation makes a grant to an organization that is not classified by the IRS as tax-exempt under Section 501(c)(3) and as a public charity according to Section 509(a), it is required by law to ensure that the funds are spent for charitable purposes and not for private gain or political activities. Such grants require a pre-grant inquiry and a detailed, written agreement. Special reports on the status of the grant must be filed with the IRS, and the grantees must be listed on the foundation's IRS Form 990-PF.

An independent private foundation whose funds are derived from members of a single family. Family members often serve as officers or board members of family foundations and have a significant role in their grant making decisions.

The public record information return that all private foundations are required by law to submit annually to the Internal Revenue Service (IRS).

A chronological pattern of proposal review, decision-making and applicant notification. Some donor organizations make grants at set intervals (quarterly, semiannually, etc.), while others operate under an annual cycle.

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.

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

Also referred to as a grant seeker, the individual or organization that receives a grant.

Also referred to as a grant maker, the individual or organization that makes a grant.

Procedures set forth by a funder that grant seekers should follow when approaching a grant maker.

A grant making board set up by a family foundation for young family members. Often, the junior boards are set up for training purposes and those who participate are not part of the general foundation board.

A method of grant making practiced by some foundations. Leverage occurs when a small amount of money is given with the express purpose of attracting funding from other sources or of providing the organization with the tools it needs to raise other kinds of funds. Sometimes known as the "multiplier effect."

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, which is often called socially responsible investing (SRI).

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 five percent of the average market value of its total assets.

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.

A promise to make future contributions to an organization. For example, some donors make multiyear pledges promising to grant a specific amount of money each year.

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. Private foundations are established to maintain or aid social, educational, religious, or other charitable activities serving the common welfare, primarily through the making of grants.

A loan or other investment made by a private foundation to a profit-making or nonprofit organization for a project related to the foundation's stated purpose and interests. Program related investments are an exception to the general rule barring jeopardy investments. Often, program related investments are made from a revolving fund; the foundation generally expects to receive its money back with limited, or below-market, interest, which then will provide additional funds for loans to other organizations. A program related investment may involve loan guarantees, purchases of stock or other kinds of financial support.

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.

A nonprofit organization that receives at least one-third of its annual income from the general public (including government agencies and foundations). Public foundations may make grants or engage in charitable activities. Public foundations, along with community foundations, are recognized as public charities by the IRS. Although they may provide direct charitable services to the public as other nonprofits do, their primary focus is on grant making.

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.

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.

A private foundation is generally prohibited from entering into any financial transaction with disqualified persons. The few exceptions to this rule include paying reasonable compensation to a disqualified person for services that are necessary to fulfilling the foundation's charitable purposes. Violation results in an initial penalty tax equal to five percent of the amount involved, payable by the self-dealer.

Visiting a donee organization at its office location or area of operation and/or meeting with its staff or directors or with recipients of its services.

Focuses on the root causes of social, economic and environmental injustices. It strives to include the people who are impacted by those injustices as decision-makers. It also aims to make the field of philanthropy more accessible and diverse. In social change philanthropy, donors and foundations act as allies to social justice movements by contributing not only monetary resources but their time, knowledge, skills and access.

Operational or management assistance given to nonprofit organizations. This type of help can include fundraising assistance, budgeting and financial planning, program planning, legal advice, marketing, and other aids to management.

A legal device used to set aside money or property of one person for the benefit of one or more persons or organizations.

A foundation board member or officer who helps make decisions about how grant monies are spent. Depending on whether the foundation has paid staff, trustees may take a more or less active role in running its affairs.

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.