Glossary

501(c) 3:
The name of the Section of the IRS Code designating an organization as charitable and tax-exempt.

Assets:
Cash, stocks, bonds, real estate or other holdings of a foundation. Generally, assets are invested and the income is used to make grants.

Bequest:
A sum of money made available upon the donor's death.

Charitable Gift Annuity:
A gift instrument that provides payments during a donor’s lifetime in return for a charitable gift, which, after the donor’s death, is used for the ongoing support of the community or other nonprofit purposes designated by the donor.

Charitable Remainder Trust:
A gift instrument that provides income for life or a defined period of time to the donor or other named beneficiaries that is ultimately used for the ongoing support of the community or other nonprofit purposes designated by the donor.

Closely Held Stock:
Stock from a corporation for which most of the voting stock is held by a small number of shareholders, but which is still publicly traded. These shares are generally not available to the public. 

Community Foundation:
A community foundation is a tax-exempt, nonprofit public charity composed primarily of permanent funds established by many separate donors of the long-term diverse, charitable benefit of the residents of a defined geographic area. Community foundations provide an array of services to donors . There are more than 500 community foundations across the United States today. The Cleveland Foundation is the oldest; the New York Community Trust is the largest.

Donor Advised Fund:
A fund created by an individual, corporation or other entity that allows the donor to be actively engaged in the grantmaking process. Donor advisors may make recommendations from their fund to specific charities, or work with the ACF staff to identify organizations in a particular field of interest or service area. This kind of fund enables the donor to designate a successor generation of advisors to carry on the tradition of active philanthropy with a family. A donor advised fund is the most popular alternative to a private foundation.

Donor Advisor:
A donor with a donor advised fund.

Donor Recommendations:
A request by a donor advisor to make a grant from his or her fund to a named nonprofit recipient for a specified or general purpose. 

Endowment:
The principal amount of gifts and bequests that are maintained intact and invested to create a source of income for a foundation. Donors may require that the principal remain intact in perpetuity, or for a defined period of time or until sufficient assets have been accumulated to achieve a designated purpose.

Field of Interest Fund: 
A permanent fund through which an individual donor, or group of donors, has identified long-term grant interests (by geography, issue, population or other characteristic). Part of the pool used to make Board discretionary grants.

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

Payout Requirement:
The minimum amount that a private foundation is required to expend for charitable purposes (includes grants and necessary and reasonable administrative expenses). In general, a private foundation must pay out annually approximately 5 percent of the average market value of its assets.

Philanthropy:
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. Philanthropy addresses the contribution of an individual or group to other organizations that in turn work for the causes of poverty or social problems-improving the quality of life for all citizens. Philanthropic giving supports a variety of activities, including research, health, education, arts and culture, as well as alleviating poverty.

Pledge:
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.

Scholarship Fund:
A fund established to provide scholarships to students who meet specific criteria as determined by the donor.

Special Project Fund:
A fund that will have its assets contributed or granted out promptly, generally within six month; special project funds are charged higher administrative fees than standard fees.

Spending Policy:
The amount that may be distributed in grants each year from permanent funds of the foundation, as adopted by the community foundation’s Board of Directors.

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

Unrestricted Fund:
A permanent fund that can be used to support any community need or issues identified by the ACF Board of Directors. Part of the pool used to make Board discretionary grants.