Nonprofit terms and lingo can be confusing.
Nonprofit

Nonprofit Terms You Should Know

Nonprofit organizations (NPOs) have their own commonly-used jargon, just like any other community. Nonprofit terms share many similarities with nomenclature used by regular for-profit businesses. The main differences come when describing sources of income and restrictions of their use.

For anyone looking to start a nonprofit, or join one, there are a few exclusively nonprofit terms that can be confusing. To ease this confusion, we compiled a short glossary of commonly used nonprofit terms for easy reference:


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501(c)(3) – organizations that are nonprofit entities to which contributions are tax-deductible to the extent permitted by the law.


A


Annual Fund  – organized attempts by nonprofits to solicit contributions made on an annual basis.

Annual Operating Budget – an itemized listing for a specific year that includes:

  • the amount of all estimated support and revenue which an organization anticipates receiving
  • all estimated expenses that will be incurred.

Annual Report – an annual document provided to stakeholders and donors that lays out organizational income, expenditures, programs, and progress.

(The) Ask – the nonprofit equivalent of a sales pitch.

Audited Financials – an examination and verification of records by a certified individual for compliance reasons.


B


Board Member – an individual who serves on the governing board of an organization.

Business Corporation-  a common term used for “for profit” corporations.


C


Charity and heart symbol

Capital Campaign – any major campaign intended to raise significant amounts of funds.

Charitable Corporation  – a kind of nonprofit corporation focused on charitable causes and whose income is generally exempt from taxation by Federal and State law.

Community Foundations–  tax-exempt foundations that serve a specific geographic area and enable residents of that area to establish specified funds for charity without the expense of establishing individual private foundations.

Contributions – unconditional transfers of cash, other assets, forgiveness of debt, or in-kind goods to an organization.


D


Direct Mail the act of sending out information for solicitation, donations, volunteers etc. through mass mailing. These can be through postcards, flyers, brochures, or anything that passes USPS requirements.

Director  a person selected by the membership of a nonprofit corporation or the board of directors to serve as a person in charge of the overall policy of an NPO, including the selection of officers.

Donation   see “contribution”

Donee  – a charitable organization receiving gift pledges.

Donor  –  a person, group of persons, or institution making donations or pledges.

Donor-Imposed Condition – condition specified by a donor that will release them from an obligation.

Donor-Imposed Restriction  a donor-imposed condition, temporary or permanent, that specifies a use or uses for a contribution.


E


Endowment Fund  a permanently-maintained fund established to provide income for a nonprofit organization.

Executive Director the person in a nonprofit responsible for management of the day-to-day affairs. They are also in charge of implementing policies set by the board of directors.


F


Financial Statement    an accounting statement detailing financial data of an organization. This includes expenses, income, assets, and liabilities.

Foreign Corporation any corporation, whether for profit or not, that is organized in one state and does business in another.

Form 990  annual return required by the Internal Revenue Service of all tax-exempt organizations as specified under section 501c of the United States Internal Revenue Code of 1986.

Foundation – a nonprofit organization that is established for funding other non-profits.

Fundraising   any activity intended to raise income.


G


Soup kitchen charity nonprofit

Gift See “contribution”

Giving Circles  a group that meets regularly to donate or make related decisions.

Goal –  the specific purpose of a project, NPO, or fundraiser.

Grant  funds given to non-profit organizations by foundations and institutions to be used for a specific purpose, such as a study.

Grassroots – the lowest local level.


I


In-Kind Contribution – the giving of goods or services instead of cash, real property, or real estate.

IRS Letter of Determination – official documentation given by the IRS verifying an organization’s tax-exempt status.


L


Lobbyist – someone who attempts to influence the votes of public officials, for or against, specific causes.


N


Negligence failure to perform in a reasonable manner in a given situation.

Nonprofit Corporation – an incorporated nonprofit organization, usually but not always barred by law from making a profit.

Nonprofit Organization (NPO) an entity, either incorporated or not incorporated, with the following characteristics that distinguish it from a business enterprise:

  • contributions from donors who do not expect profit.
  • operating purposes other than to provide goods or services at a profit.
  • absence of ownership interests.

O


nonprofit officer presentation.

Officer –  a person elected by the board of directors to serve as an appointed agent of a corporation.  Common positions include: president, one or more vice-presidents, one or more secretaries, and treasurer. They is not necessarily a director or even an employee of a for-profit or nonprofit corporation.

Organization Name  any name by which a group is known.

Organization Legal Name  an organization’s name listed on the IRS Letter of Determination.


P


Permanent Restriction a donor-imposed restriction that states all or part of a fund may be used under specified circumstances.

Press Release  – announcements to mass media (newspapers, radio, TV etc)

Pitch Letter – a relatively long piece of content sent to reporters and other possibly interested parties.

Planned Giving – funds from bequests, life insurance, and charitable annuities. These are often released upon a donor’s death.

Pledge a verbal or written promise to donate a specific amount.

Project Budget  an itemized list of all estimated support, revenue, and expenses that an organization anticipates receiving for a specified project.


R


Restricted Support  donor-restricted revenue or gains from contributions.


S


Schedule A  the section of Form 990 that provides detailed information to support the annual return required by the IRS of all tax-exempt organizations as specified in section 501c of the United States Internal Revenue Code of 1986.

Social Venture Funds funds whose donors also contribute labor. Similar to funds from a venture capitalist in for-business enterprises.

Sustainability – how an organization can fund a project after a grant period has elapsed.


T


working together nonprofit

Target Population/ Target Demographic the set of people as defined by demographics served by a specific NPO or specific project.

Temporary Restriction restrictions on funds specified by a donor dependent on the passage of time, or some other temporary condition.

Trust  a legal instrument for holding assets of an individual for the benefit of one or more persons or organizations.


U


Unrestricted Support Revenues revenue from donations that may be used in any way.


Did we miss a common nonprofit term? Comment below.


These are among the most common terms you will encounter in the day-to-day running of an NPO. There are other nonprofit terms that see wide use regionally, or within one or a handful of institutions. If you know a common nonprofit term that we missed, comment below and we’ll try to see if we should include it.


 

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