Section of the Internal Revenue Code that designates an organization as charitable and tax-exempt.
Adjusted Gross Income
The adjusted gross income is the level of income on which you pay federal income tax, before any deductions and personal exemptions are made. This amount may be used for computing limitations on certain deductions.
Altruism, like passion, is the key intent that philanthropy expresses; a concern for the welfare of others; selflessness.
A voluntary report published by a foundation or nonprofit organization describing their activities and financial conditions.
Payment of a fixed sum of money to a specified person at regular intervals.
Articles of Incorporation
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.
Cash, stocks, bonds, real estate or other holdings of an individual or institution. Generally, assets are invested and the income is used to make grants.
A sum of money or other property directed by a will to a specified person or organization. (See Will)
Board of Directors (Board of Trustees)
An organized and/or elected body of advisors with fiduciary and oversight responsibility.
A fundraising drive that seeks funds for construction or renovation of buildings and facilities.
Cash gifts are outright gifts of checks, drafts and wire transfers. Cash gifts mailed before the end of the year enable those who itemize to take an income tax deduction for that year. These gifts are deductible for up to 50% of the donor's adjusted gross income, and those in excess of the deduction limitations may be carried over and deducted in the five tax years following the gift.
A grant that is paid only if the grantee organization is able to raise additional funds from other sources, usually within a specified period of time. Challenge grants are often used to stimulate giving from other donors.
Charitable Gift Annuity
An agreement between a donor and a public charity whereby the donor irrevocably makes a gift of cash or stock and, in turn, the public charity agrees to pay a fixed annuity to one or two beneficiaries for life. Upon the donor's death, the remainder is the public charity's to utilize for charitable purposes.
Charitable Giving Plan
A plan that best reflects one's life experiences, values, goals and passions that structures giving to a charitable organization(s).
Charitable Lead Trust
A legal device used to set aside money or property of one person for the benefit of one or more persons or organizations. Specifically, this type of trust allows for a regular, fixed amount to go to a charity for a specific number of years. At the end of that time, the remainder of the trust passes to one's heirs.
In its traditional legal meaning, the word "charity" encompasses religion, education, assistance to the government, promotion of health, relief of poverty or distress and other purposes that benefit the community. Nonprofit organizations that are organized and operated to further one of these purposes generally will be recognized as exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code (see 501(c)(3)) and will be eligible to receive tax-deductible charitable gifts. (See Charity)
Charitable Remainder Trust
A legal device used to set aside money or property of one person for the benefit of one or more persons or organizations. Specifically, this type of trust allows one to take a deduction for a gift to the trust in the year in which the trust is formed. One receives income from this type of trust for life and after one's death, the assets pass to the charity you designated.
Any trust designated to make a substantial gift to a charity, and also achieve income and estate tax savings for the grantor.
An unconditional transfer of cash or other assets to an organization for no consideration. The contribution is irrevocable and immediately tax deductible.
A corporate (company-sponsored) foundation is a private foundation that derives its grant making funds primarily from the contributions of a profit-making business. The company-sponsored foundation often maintains close ties with the donor company, but it is a separate, legal organization, sometimes with its own endowment, and is subject to the same rules and regulations as other private foundations. (See Corporate Giving Program)
Corporate Giving Program
A corporate giving (direct giving) program is a grant making program established and administered within a profit-making company. Gifts or grants go directly to charitable organizations from the corporation. Corporate foundations/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 pre-tax income. Also referred as a "Company-Sponsored Foundation."
A type of restricted fund in which the fund beneficiaries are specified by the grantors.
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.
Some nonprofit organizations set aside money that is invested and earns interest. The charity spends only the interest and keeps the original sum untouched. Such a fund is called an endowment and is commonly found within charities with large physical plants, such as hospitals and colleges. From time to time, charities launch fundraising efforts to start, or add to, an endowment. Funders of an endowment grant want to be sure that the gift to an endowment will remain in the endowment earning interest and not be drawn out of the endowment to satisfy transitory operating expenses.
The process of creating an orderly and desirable arrangement for the disposition of your estate by working with an advisor (attorney, accountant, trust officer, life insurance agent, etc.). The main objective is to ensure that your wishes regarding the security of your family and others are fulfilled. Tax consequences are also taken into consideration during estate planning.
Taxes imposed on your property as it passes from the dead to the living.
A tax on the net investment income of private foundations. Normally set at 2% per year, the rate may be reduced to 1% if the foundation meets certain expenditure requirements.
The person named in your will to manage your estate, deal with the probate court, collect your assets and distribute them as you have specified.
An accounting statement detailing financial data, including income from all sources, expenses, assets and liabilities. Typically included in a charity's or private foundation's annual report (see Annual Report). A financial report may also be an itemized accounting that shows how grant funds were used by a charitable organization. Most foundations require a financial report from grantees.
The overall picture of the types of projects and programs that a donor has supported historically. The past record may include areas of interest, geographic locations, dollar amount of funding or kinds of organizations supported.
An award of funds to a charitable organization.
The right to use trust property, and receive income for it, during one's lifetime.
Life Insurance Trust
An irrevocable trust designed to own life insurance and reduce the size of the original owner's taxable estate.
A trust set up while a person is alive and which remain under the control of that person until death.
A document where you provide that you do not want to have your life artificially prolonged by technical means, but choose a natural death.
Matching Gifts Program
A grant or contributions program that will match employees' or directors' gifts made to qualifying public charities. Specific guidelines are established by each employer or foundation. (Some foundations also use this program for their trustees.)
Nonprofit (a.k.a., Non-profit, not-for-profit)
A nonprofit is an organization whose income is not used for the benefit or private gain of persons with an interest in the organization, as designated by the Internal Revenue Service. Funds received by a nonprofit must be used only in support of its mission and operations.
The word is derived from the Greek language, meaning, "love for mankind." Modern definitions include the concept of voluntary giving by an individual or group to promote the common good and improve the quality of life.
A written or oral agreement to make future contributions of cash or other assets to another entity. A pledge may be either conditional or unconditional.
A 501(c)(3) organization, further defined in the IRC section 509(a), that does not qualify as a public charity. Generally, a Private Foundation is a nonprofit organization established and supported primarily by private funds. Private operating foundations conduct their own programs, expending funds directly for charitable activities.
Individuals who assist in planning and executing charitable giving through providing information on giving options according to one's specific financial situation. Types of professional advisors include: attorney, accountant, estate planner, financial planner, stockbroker, insurance broker, planned giving officer, philanthropy consultant.
Organizations that do not have to pay state and/or federal income taxes. Organizations other than churches seeking recognition of their status as exempt under Section 501(c)(3) of the Internal Revenue Code must apply to the Internal Revenue Service. Charities may also be exempt from state income, sales and local property tax.
A legal arrangement used to set aside money or property of one person or institution (trustee) for the benefit of one or more persons or organizations (beneficiary).
The person(s) or institutions responsible for the administration of a trust.
Valuation is an assessment of the actual value of an item to the person or organization that possesses. Value may be determined by any number of methods and may reflect net present value, the future purchasing value, or even a subjective value, such as a qualified appraisal by a qualified appraiser. The Valuation Standards for Charitable Planned Gifts define valuation as a "reflection of the present value of the ultimate purchasing power of the gift."
Performing an act of kindness, freely giving of your talent, time and effort for the simple fulfillment of community expectations.