Community foundations play a pivotal role in supporting local charities and non-profits. Whether you’re a donor, a non-profit leader, or a community member, understanding the terminology used in community foundations is essential. Below is a glossary of common terms and phrases you might encounter.

Glossary

  1. Endowment Funds: Investment funds set aside for long-term support of charitable organizations. The principal amount is kept intact while the investment income is used for charitable purposes.
  2. Community Foundation: A community foundation is a philanthropic organization that manages charitable funds with the goal of supporting community-based initiatives and non-profits. These foundations often pool the resources of multiple donors to create endowments and funds that provide sustainable support to local charities and projects.
  3. Private Foundation: Unlike community foundations, private foundations are typically funded by a single individual, family, or corporation. They are independent legal entities that distribute grants to non-profits or individuals. Private foundations are required to donate a minimum percentage of their assets each year.
  4. Charity: A charity is an organization designed to benefit the public interest or specific groups of people by performing acts of kindness and philanthropy. Charities can operate on local, national, or international levels, and they often provide aid, support, and resources to individuals in need or to other organizations with charitable goals.
  5. Legacy Giving: Legacy giving, also known as planned giving, involves donors providing contributions through wills, trusts, life insurance policies, retirement funds or other, more complex instruments. This form of giving allows individuals to make larger gifts than they could from their income, often providing long-term support to charities and foundations.
  6. Investing: In the context of community foundations, investing refers to the allocation of assets— including current dollar gifts, stocks, bonds, real estate, and planned gifts—to generate income and increase the value of an endowment, donor advised fund or agency fund over time. Responsible investing ensures that the foundation can continue to support charitable activities sustainably and effectively.
  7. Charity Planning: Charity planning is a strategic approach to philanthropy that helps donors maximize their impact on chosen causes. This process involves selecting which charities to support, deciding on the amount and type of donation, and often working with legal and financial advisors to optimize tax benefits and ensure that contributions are used effectively.
  8. Donor-Advised Funds (DAFs): Investment accounts for charitable giving. Donors contribute to the fund and recommend grants to their preferred charities over time, receiving tax benefits immediately upon making contributions to the DAF.
  9. Agency Funds: Established by nonprofit organizations, these are investment accounts owned by the nonprofit organization. They allow nonprofits to leverage professional investment management, enhancing their ability to focus on mission-critical activities while ensuring financial growth.
  10. Planned Giving: Major gifts made during a donor’s lifetime from donor assets; often coming to fruition at the death of the donor as part of their overall financial and/or estate planning.
  11. Testamentary Gifts: Donations made through wills or trusts or other vehicles, allowing donors to leave a legacy supporting charitable causes after their death.
  12. Stewardship: Responsible management and allocation of resources, funds, and donations to maximize impact and support the foundation’s mission. This also refers to the communication by and between the foundation and/or organizations whose funds are held by the foundation and their donors and benefactors. 
  13. Philanthropy: The desire to promote the welfare of others through assistance provided directly or through charitable organizations. 
  14. Legacy Society:  Recognition provided to donors who have made an organization specified gift – usually a planned gift – to that organization.
  15. Socially Responsible Investing (SRI): The United States Conference of Catholic Bishops published guidelines calling for Catholics to evaluate specific investments in terms of how those companies or entities protect human life, promote human dignity, act justly, enhance the common good, and provide care for the environment.
  16. Supported Ministries: Various charitable organizations and causes supported and assisted by the foundation through fund and/or endowment management.
  17. Grantmaking: The process of distributing funds to non–profits to support specific projects or general operations.
  18. Operating Foundation: A type of foundation that uses its resources to provide charitable services, as opposed to giving grants to charitable organizations.
  19. Field-of-Interest Fund: A fund set up to support particular issue areas or causes, as defined by the donor or group of donors.
  20. Designated Fund: A fund that supports specific organizations designated by the donor.
  21. Unrestricted Fund: A fund without donor-imposed restrictions, allowing the foundation or the organization flexibility in distributing funds.
  22. Scholarship Fund: A fund established to provide financial aid to students, often based on merit, need, or specific criteria set by the donor.
  23. Perpetuity: A term referring to the indefinite preservation of endowment funds, ensuring support for charitable causes forever.
  24. Community Impact: The positive changes and benefits brought to a community as a result of the foundation’s and/or supported organization’s initiatives and grantmaking.
  25. Asset Development: The process of increasing and managing the financial resources available to a foundation or other non-profit for charitable work.
  26. Beneficiary: An individual or organization that receives funds or other benefits from a foundation or other non-profit organization.
  27. Capacity Building: Strengthening the skills, competencies, and abilities of people and communities to sustainably develop and manage resources effectively.
  28. Community Engagement: The process of working collaboratively with community members to address issues affecting their lives.
  29. Discretionary Funds: Funds distributed at the discretion of the foundation’s board or designated advisors.
  30. Donor Circle: A group of donors who pool their funds and decide together where to donate the money.
  31. Due Diligence: The process of investigating a nonprofit before making a grant to ensure it is effective and responsible.
  32. Fiduciary Responsibility: The legal duty of trustees to manage a foundation’s assets responsibly and efficiently.
  33. Gift Agreement: A legal contract outlining the terms under which donations are made.  This most often refers to Charitable Gift Annuities.
  34. Impact Investing: Investments made with the intention of generating positive social or environmental impact alongside financial return.
  35. In-Kind Donation: A contribution of goods or services rather than cash.
  36. Letter of Intent (LOI): A document outlining an agreement between two parties before the agreement is finalized.
  37. Matching Grant: A grant that is made to match funds provided by another donor.
  38. Nonprofit Sector: The portion of the economy composed of nonprofit organizations.
  39. Operating Support: Unrestricted funding to cover an organization’s regular, ongoing expenses.
  40. Restricted Fund: A fund subject to limitations set by the donor regarding its use.
  41. Rollover: The process of moving funds from one account to another.
  42. Seed Money: Initial funding used to start a new project or business.
  43. Sustainability: The ability of a project or organization to continue its programs and services over the long term.
  44. Transparency: The extent to which a foundation shares information about its operations, governance, and finances.
  45. Venture Philanthropy: The application of venture capital strategies to philanthropy to increase social returns.
  46. Volunteerism: The policy or practice of volunteering one’s time or talents for charitable, educational, or other worthwhile activities.