Glossary of Terms

A glossary of program terms commonly used by foundations.

  • A

    Accountability – The responsibility of a foundation/organization to publicly disclose information on their activities, particularly justification for financial activities and the decisions surrounding them.

    Affinity group – a formal or informal collaboration of grantmakers with a shared interest in a particular subject or funding area.They represent a variety of different causes, issues and population groups. Many are volunteer-managed, a growing number are formally organized and some offer technical assistance, publish newsletters and other publications, and conduct workshops and conferences.

    Annual report – a report issued by a foundation (or other corporations) that provides financial statements and descriptions of its grantmaking activities. Annual reports vary in format from simple typewritten documents listing the year’s grants to detailed publications that provide substantial information about the grantmaker’s grantmaking programs.

    Applied dissemination – A term which refers to the process of disseminating information about an existing program, process, concept or knowledge and skills, and applying that information in a different context.

    Articles of incorporation – A document filed with provincial or federal governments by persons establishing a corporation. This is the first legal step in forming a nonprofit corporation.

    Assets – The amount of capital or principal – money, stocks, bonds, real estate, or other resources – controlled by a foundation. Generally, the resulting income from the investment of assets provides the funds used to make grants.

    Audit – A detailed examination of an organization’s financial statements and records for the purpose of determining that they are sufficiently accurate and properly representative.

  • B

    By laws – Rules governing the operation of a nonprofit corporation. By laws often provide the methods for the election of directors, the appointment of officers and the description of their duties, the creation of committees, and the conduct of meetings, etc.

  • C

    Capacity – (as in ‘to build capacity’) refers to increasing on-going skills or resources in a community or organization that will increase their ability to solve problems, create and sustain services and program, and generate resources and support.

    Challenge grant – A grant that is paid only if the donee organization is able to raise additional funds from other sources. Challenge grants are often used to stimulate giving from other donors. Sometimes also called a matching grant.

    Charitable organization – A charitable organization (such as a hospital) primarily carries on its own charitable activities. It can be a corporation, or it can be established by a constitution or a trust document. A charitable organization must have an arm’s length board of directors and generally receives its funding from a variety of arm’s length sources.

    Collaborative – A formal or semi-permanent partnership created between two or more grantees in order to better achieve mutually desired objectives.

    Community – Community is often defined broadly, to refer not only to a specific geographic area, but also a group with a common interest, such as the Chinese community, the women’s community, or the arts community.

    Corporate giving program – A grantmaking program established and administered within a profit-making company. Gifts or grants go directly to charitable organizations from the corporation. Corporate giving programs do not have a separate endowment; their expense is planned as part of the company’s annual budgeting process and usually is funded with a determined percentage of pre-tax income.

  • D

    Deliverables – Measurable outputs or change produced by a given program or activity. For example, the number of girls attending school in a given community increased by 50%, or the air pollution in a given area decreases by 30%.

    Demonstration grant – A grant made to establish an innovative project or program that will serve as a model, if successful, and may be replicated by others.

    Disbursement quota – The minimum amount that foundations are required to expend for charitable purposes (including grants, charitable activities and within certain limits, administrative cost of making grants. The current disbursement quota in Canada is 3.5% of the average market value of total assets.

    Discretionary funds – Grant funds distributed at the discretion of one or more trustees or staff, which usually do not require prior approval by the full board of directors.

    Donee – The recipient of a grant (also known as the grantee or the beneficiary).

    Donor – An individual or organization that makes a grant or contribution to a donee. (Also known as the grantor).

    Donor advised fund – A fund held by a community foundation where the donor or a committee appointed by the donor, may recommend eligible charitable recipients for grants from the fund.

    Donor designated fund – A fund held by a community foundation where the donor has specified that the fund’s income or assets be used for the benefit of one or more specific public charities.

    Due Diligence – Process of investigating all risks associated with an organization or grantee.

  • E

    Endowment – Funds intended to be invested to provide income for continued support of a charitable organization.

  • F

    Fiduciary duty – The legal duty of acting wisely (such as in the case of investing money) on behalf of another.

    Field of interest fund – A fund held by a community foundation that is used for a specific charitable purpose such as education or health research.

    Financial report – An accounting statement detailing financial data, including income for all sources, expenses, assets and liabilities. A financial report may also be an itemized accounting that shows how grant funds were used by a donee organization.

    Fiscal year – The accounting year of an organization, which may or may not be the same as the calendar year.

    Form T3010A – the form required from all charities by the Federal Government detailing their activities and expenditure through the year. Foundations are required to submit this form within six months of the end of their fiscal year.

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

  • G

    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.

    Governance – Means in which the leading authority, often the board of directors in foundations, guides and monitors the values and goals of its organization through policy and procedures.

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

    Grantee – See Beneficiary or Donee.

  • H

    High-engagement philanthropy – A type of grantmaking where the funder takes responsibility beyond financial support with a grantee, such as providing strategic assistance, coaching, etc.

  • I

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

  • K

    Knowledge-based (management) – Using an organization’s knowledge and intellectual assets to create value in terms of better internal management, grantmaking decisions, etc. For example, creating a guide of lessons learned or best practices.

  • L

    Letter of Intent (LOI) – A short summary required of a grantseeker before being invited to submit a full proposal by a grantmaker.

    Leverage – Used in grantmaking as a small, initial investment by a funder to an organization in order for that organization to create tools to attract and raise additional funds.

  • M

    Matching grant – a grant that is made to match funds provided by another donor. (Sometimes also called a challenge grant).

    Monitoring – The ongoing assessment of the progress of the activities funded by a donor, with the objective of determining if the terms and conditions of the grant are being met and if the goal of the grant is likely to be achieved.

  • N

    Non-profit organization – Under the Income Tax Act, a non-profit organization is an association, club or society operating exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit. It is not a charity.

  • P

    Philanthropy – the concept of voluntary giving by an individual or group to promote the common good.

    Pledge – A promise to make future contributions to an organization. For example, some donors make multi-year pledges promising to grant a specific amount of money each year (usually conditional on performance).

    Portfolio – The total investment pool held by an organization; normally divided into several segments such as equities, fixed-income, real estate and the like.

    Post-grant evaluation – A review of the results of a grant, with the emphasis upon whether or not the grant achieved its desired objective.

    Preliminary proposal – A brief draft of a grant proposal used to learn if there is sufficient interest to warrant writing a full proposal.

    Private foundation – A private foundation may either carry out its own charitable activities or it may give funds to other qualified donees, usually other registered charities. It must be established either as a corporation or a trust. A registered charity will be designated a private foundation if 50% or more of its directors or trustees do not deal with each other at arm’s length, and/or more than 50% of the capital is contributed by an person or group of persons not dealing with each other at arm’s length.

    For more information on private foundations, refer to RC4108 – Registered Charities and the Income Tax Act.

    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.

    Proposal – Written request for a grant or contribution. Proposals usually outline why the grant is needed, the purpose it will serve, the plan for meeting the need, the amount of money needed, and background about the applicant.

    Public foundation – A public foundation (such as a hospital foundation) generally gives more than 50% of its income annually to other qualified donees, usually other registered charities. It must be established either as a corporation or a trust, and more than 50% of directors/trustees deal with each other at arm’s length. A public foundation generally receives its funding from a variety of arm’s length sources. It may carry out some of its own charitable activities.

    For more information on public foundations, refer to RC4108 – Registered Charities and the Income Tax Act.

  • Q

    Qualified donees – The Income Tax Act permits qualified donees to issue official tax receipts for donations they receive from individuals or corporations. Registered charities are one example of a qualified donee. Others include Canadian municipalities and registered Canadian amateur athletic associations. For more examples of qualified donees, read Which donations can I claim?

  • R

    Registered charity – A registered charity means a charitable organization, public foundation, or private foundation that was established in Canada and is resident in Canada. It is operated for charitable purposes and must devote its resources to charitable activities. A registered charity has received a Registration Number from the Canada Revenue Agency and is exempt from paying tax on its revenue. It can issue donation receipts for gifts that it receives. You can consult the lisiting of registered charities on the CRA web site.

    Registered charity information return – All registered charities are required to fill out a T3010A – Registered Charity Information Return, each year and submit it to the Canada Revenue Agency. The return provides information about the charity, including contact information, a general account of the charity’s activities, and financial information such as income, expenditures, assets, and liabilities.

    Replication – Duplicating a successful initiative from a particular location to one or more different locations. Replications are not necessarily exactly the same as the original, in order to incorporate local variations in opportunities and problems. However, they make use of knowledge developed during the original program, and avoid “reinventing the wheel”.

    RFP – An acronym for Request for Proposals. A foundation will put out a call for proposals for a specific program.

  • S

    Seed money – A grant used to start a new project or organization. Seed grants may cover salaries and other operating expenses of a new project.

    Self-dealing – An act whereby a director/trustee derives personal benefit from the foundation they administer. For instance, a foundation would not be permitted to loan money from its endowment fund to one of its board members at a lower than market value rate.

    Site visit – A fact-finding visit by grant reviewers to an organization that has applied for funding.

    Social capital – The value and cooperation created through social human relationships or networks.

    Social entrepreneurship – An entrepreneur who engages in business seeking both financial and social return.

    Social investing – Also referred to as ethical investing and socially responsible investing, 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.

    Social return – The rewards, opportunities, or improvements in society created through social capital. Often, the creation of social capital is due to a non-profit program or activity.

    Strategic (planning, decision-making) – A future-oriented perspective where foundation decisions are made based on an analysis of external and internal trends and data.

    Sustainability – The ability to meet the needs of today’s people and environment without compromising that of subsequent generations. When a program seeks to create sustainability, it aims to create an environment that can renew itself without damage to future stakeholders.

  • T

    Technical assistance – Operational or management assistance given to nonprofit organizations. It can include fundraising assistance, budgeting and financial planning, program planning, legal advice, marketing, and other aids to management. Assistance may be offered directly by the staff of a foundation or corporation, or it may be provided in the form of a grant to pay for the services of an outside consultant.

    Trust – An arrangement under which one person or company, often a trust company, for the benefit of another person or persons, hold money or other property. These assets are administered according to the terms of the trust agreement. Each province has a Trustee Act that regulates the kinds of investments that can be made by the trustees of a trust fund.

  • V

    Venture philanthropy – A combination of long-term investment practices and venture capital models applied to the voluntary sector, where a financial investment is made to a non-profit organization in order to build capacity, produce deliverables, and create social return.

    Sources: Cambridge Business Research,’The Language of Business’; The Council on Foundations’ Glossary of Terms; Finance Canada, Glossary of Frequently-used Terms; The Foundation Center’s User-Friendly Guide; The Ontario Trillium Foundation Glossary; Gateway to Giving: A Philanthropy Glossary; Philanthropy Australia Glossary Terms; The Donors Forum: Glossary of Terms in Philanthropy; The Giving Forum: Glossary of Philanthropic Terms; and The Nonprofit Good Practice Guide Glossary.

    See also a glossary of terms by the global network WINGS which reflects the variety of cultural and legal contexts in the field of philanthropy.