Tuesday, March 3, 2009

Nonprofit Lexicon

My work as a nonprofit consultant and fundraiser has enabled me to work with a wide range of individuals and organizations from the very sophisticated to the neophite. Frequently I will work with people (volunteers and professionals)who are not familiar with some of the nonprofit management and fundraising language which I use. I decided several years ago to create a lexicon of nonprofit terms which I could share with my clients and those with whom I worked. I didn't want to produce a dictionary but rather, explanations that could be easily shared and understood.

In an effort to improve on my initial lexicon, I have posted it here so that readers can make suggestions for additions, changes, clarifications etc. Your input will be greatly appreciated. Comments can be sent directly to NFPConsultingResources@gmail.com


Norman Olshansky’s Nonprofit Fundraising Lexicon


501(c)(3): Organizations which qualify with the U.S. Department of the Treasury (IRS)that are nonprofit entities to which contributions are tax deductible to the extent permitted by law.

501(c)(4): Organizations which qualify with the U.S. Department of the Treasury (IRS)that are community or fraternal organizations that are not solely charitable.

80/20 Rule: 80% of dollars raised are obtained from 20% of all donors who contribute. For capital, endowment and major gift campaigns the relationship is often 90/10.

990/Form: An Internal Revenue Service form that public charities must file each year to prove compliance with tax laws.

Advanced Leadership Gift Phase of Capital Campaign:(Quiet Phase) Initial effort of campaign directed at the top prospects-those capable of giving major gifts in the 5, 6, and 7figure category. This is a targeted phase of the campaign and does not involve mass solicitations. The campaign is focused on face-to-face solicitations of the top 100 prospects

AGI (Adjusted Gross Income): includes income from salary and wages, investments and capital gains.

ASK: The request for a contribution or pledge. Most effective ask is when adequate research has been conducted on the prospect and a specific amount is presented for the prospect to consider. See article on major gift solicitation at http://nfpconsulting.blogspot.com

Assets: The amount of capital or principal money, stocks, bonds, real estate or other resources controlled by a person, association, corporation or foundation. Generally, in the case of foundations, assets are invested and the income is used to make grants.

Bequest: A gift of assets made at death by an individual through a will or trust.

Campaign Division: Group of volunteers who have been assigned to a targeted area or group of donors during the general Campaign, i.e. employee division, business division, physicians, neighborhood, etc.

Capital Campaign: A substantial fundraising effort intended to provide for major organizational needs, such as buildings, endowments or other major expenses.

Case Statement: What the campaign is all about....Features, benefits, Why, When, What, How

Charitable Lead Trust: This trust provides an income stream to a charity for a specified period of time. At the end of that period, trust assets are distributed to non charitable beneficiaries such as children or grandchildren. The donor is able to make gifts of assets to his/her heirs at favorable gift tax rates and remove assets from his/her estate while benefiting his/her favorite charity.

Charitable Remainder Trust: This trust provides an income stream to non charitable beneficiaries for a period of time. These beneficiaries can include the donor, his/her spouse, and/or their children. At the end of that period, the trust assets are distributed to a charity. The donor receives an immediate tax deduction, removes assets from his/her estate (thus eliminating estate taxes on those assets) and often increases the income stream produced by those assets while ultimately benefiting his/her favorite charity.

Community Foundation: A tax-exempt public organization serving a specific geographic area which raises funds, provides grants to nonprofit organizations and enables residents of that area to establish funds for charitable giving without the costs of establishing separate private foundations.

Corporate Foundation: A private philanthropic organization set up and funded by a corporation.

Corporation: A company or business which makes their contribution from their annual budget/revenues

Deferred Gift: A gift which is part of estate planning, trusts, annuities, bequest, etc. that is designated to the campaign but will not be available for use until after a set number of years or upon the donor’s death. Also known as a Planned Gift.

Designated Funds: A fund that is typically created to ensure that support will be provided to one or more specific charitable activities named by the donor. Designated funds often are endowed in perpetuity with the income used to support the organizations on an ongoing basis.

Donor: An individual or organization that makes a pledge, grant or contribution to the nonprofit.

Donor Advised Funds: A flexible tool for charitable giving, operating much like a personal or family foundation. Donors can contribute to their fund when it is most convenient and then recommend gifts over time to nonprofit organizations of their choice. The donor selects a fund name and investment strategy and then makes grants to organizations committed to the causes he or she cares about. Donors sometimes involve their children and grandchildren to share in a family tradition of giving. Typically donor advised funds are administered by Community Foundations. Also known as Philanthropic Funds.

Endowment: Money donated with the intention that it be invested to generate income for philanthropic purposes. The donor may require that the principal remain intact for a specific period of time or in perpetuity.

Field of Interest Funds: Donors can support an area of charitable interest, defined broadly (such as education) or narrowly (such as advanced vocal music training). Donors also can select a defined geographic area or specific community to benefit from their named fund. A donor would then establish a process to make gifts to organizations or projects doing work in this area. The donor can stay involved, appoint an advisory committee or leave the work to agency staff.

Foundation: A not for profit organization which is set up by individual, family, community or business for the purpose of distributing charitable gifts

General Campaign: Following the Advanced Leadership Gift Phase of a capital campaign, a broader campaign will take place, which goes out to specific constituencies (employees, doctors, businesses, geographic areas, Foundations, etc.) and then to the general public

Gift: Payment of cash, real property, irrevocable trusts, etc.

Gift Chart/Pyramid: Chart which shows how many prospects and closed gifts are needed at each level of giving to achieve a fundraising goal

Grant: An amount of money given to an organization or person in order to perform charitable exempt activities.

Grantee: The recipient of a grant. (Also known as the grant recipient or beneficiary.)

Grant Monitoring: Continuing evaluation of the progress of the programs funded by a donor in order to determine if the terms and conditions of the grant are being met and if the objectives of the grant are
being achieved.

In-kind Contribution: A contribution of equipment, supplies or other tangible resource as distinguished from monetary contribution. Some organizations also may donate the use of space or staff time as an in-kind contribution.

Letter of Intent: Signed, written document which details the level of gift, payment schedule, intentions, conditions, naming preferences, etc. of the donor

Leverage: A method of grant making designed to attract additional funding. Leverage occurs when an amount of money is given with the express purpose of attracting larger 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".

Life Income Plans: Planned gift arrangements offer a current income stream and a current tax deduction to the donor in exchange for an irrevocable commitment to a charitable purpose or purposes at some later date. The result may be an increase in current expendable income for a donor.

Major Gifts: Individual, Corporate or Foundation pledges and contributions of $????? and up which are paid off within agreed upon timeline. (Amount of gift varies from organization to organization based upon giving history and size of campaign goal.)

Mission Statement: A mission statement reflects an organization's core values and reason(s) for existing. It should capture what an organization does, why it does it, how it does it and for whom it does it. A mission statement broadly addresses the current and future purpose(s) of the organization.

Naming/Dedicatory Opportunity: Those physical buildings, rooms, structures, endowments, programs, etc. which have been assigned a dollar value which can be so identified with donors who contribute an amount equal to the designation. In addition to overall recognition, those who contribute for specific naming opportunities may have a plaque or other forms of recognition adjacent to their selection indicating the name of the donor and/or if it is a memorial or honorial gift

Planned Gift: See deferred gift above

Pledge: An amount that the donor agrees to contribute over a period of time or by a certain date

Principal: The dollar value of an asset. When used in relation to an endowment, it means the sum of the dollar values of all gifts to the endowment using the dollar value of each gift on the day the gift was completed.

Private Foundation: A 501(c)(3) organization that is originally funded from one source, that derives revenue from its earnings on investments and that makes grants to other charitable organizations as opposed to administering its own programs.

Prospect: An individual, Foundation, or Corporation who is identified as having capacity and
assigned for a solicitation

Rating: The dollar amount that is determined by the solicitor, leadership, and staff to be presented to the prospect for their consideration

Receipt: An official requirement for charities to acknowledge, with the amount, all gifts over $250 from any donor within the calendar year. Most charities provide a written acknowledgment for all gifts

Restricted Funds: Monies that must be used for a specific purpose or in a specific way by the recipient

RFP: An acronym for Request for Proposal. When the government or other organizations issue a new contract or grant program, it sends out RFPs to individuals, agencies or organizations that might be qualified to participate. The RFP lists project specifications and application procedures. While a few foundations occasionally use RFPs in specific fields, most prefer to consider proposals that are initiated by applicants or their own leadership.

ROI: Return on Investment - The value of effort when taking into account the time and cost of planning and producing the activity. For example:
Fundraising Costs and Return on Investment – National Averages

Method Cost Return on Investment
Direct mail to general lists (non donors) 115% -15%
Special Events 50% 50%
Planned Giving 25% 75%
Direct mail to prior donors 20% 80%
Foundations/Corporations 20% 80%
Major Gifts 5-10% 90-95%

National Average, all methods: 20% 80%

(Based on: James Greenfield, Fund-Raising: Evaluating and Managing the Fund
Development Process) See article “Fundraising Return on Investment” at http://nfpconsulting.blogspot.com


Site Visit: The donor or grantor's visit to the physical location of a grantee to meet with the grantee's staff, directors and/or clients. Often the grantor conducts an informal evaluation during this time.

Solicitation: The process (meeting) which takes place between the solicitor and the prospect at which time the request for support is made

Solicitor: The person who is assigned to ask someone to support the campaign

Steering Committee: The group of volunteer leaders who have been selected to oversee the overall Campaign

Stock Power Form: A form that transfers authority for transactions involving a stock from one party to another.

Suspect: An individual, Foundation, or Corporation who is identified as having capacity

Tax Exemption: IRS provides tax deductions for valid gifts to nonprofit organizations. Donors may not take deductions for gifts where they receive a benefit from the charity. For example, monies paid for a cruise or paid for a purchase at a charity auction would not be deductible even if the check for the cruise were made out to the charity. Monies paid “over” the fair market value are deductible.

Trust: A legal device used to set aside assets of one individual for the benefit of one or more persons or organizations.

Unrestricted Funds: Funds that allow the nonprofit to determine where grants will do the most good. Unrestricted funds offer maximum flexibility to react to changing needs in the community.

Venture Philanthropy: A model for charitable giving that arose in the 1990s, based on venture capitalism in the business world. The funder "invests" not just money but energy and expertise in the nonprofits they support. Generally, donors track their donations just as venture capitalists follow their investments with nonprofits asked to provide evidence of results and impact on a regular basis. Venture philanthropy is often associated with "new wealth" individuals and high tech entrepreneurs.

2 comments:

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  2. :- Yeah its a good article. According to you what we project managers do is communicating. And a lot of this communication is done during project meetings. It can sometimes feel like you are running from one meeting to another and that your time is often wasted. Meetings don’t start on time, the issues aren’t dealt with, there is no agenda, there is no focus, nobody assigns any follow ups or tasks and of course then they also don’t end on time. An efficient project manager is required for the good management of a project. I think a project manager should PMP certified. Looking forwards to apply what I learned in PMP classes in my company.

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