Nonprofits or not-for-profits or 501(c)(3)s or nongovernmental organizations or… Well, we couldn’t even make it past the first sentence without going down the nonprofit jargon rabbit hole. It is true that every industry has its insider language and the social impact sector is no exception.
Nonprofit news outlets and coverage are laden with these words which can make it hard to understand for newcomers to the sector. This glossary will hopefully give people that are new to the sector a quick cheat sheet on common terms and phrases.
(A – C )
Accessibility: The degree to which a product, device, service, or environment is available to as many people as possible.
Accountability: Being answerable or responsible for something. In the context of nonprofits, accountability usually refers to organizational transparency and responsibility to donors and the public.
Accreditation: A process through which an organization or program is evaluated against a set of standards and given a formal designation. Most accreditation organizations are voluntary, meaning they are not required by law.
Advocacy: Public support for or recommendation of a particular cause or policy. Advocacy groups lobby and raise attention for a narrow list of issues in order to make an impact in just that area.
Alliance: A relationship between two or more parties who agree to cooperate in order to achieve a common goal. Alliances can be formed between nonprofits and businesses, nonprofits and other nonprofits, or any combination thereof.
Alternate Dispute Resolution (ADR): A process for resolving disputes that do not involve going to court. Common types of ADR include mediation and arbitration.
Anonymity: The state of not being identified by name. Anonymity is often used in connection with giving, as donors may choose to give anonymously to protect their privacy.
Appeal: A request for financial support made by a nonprofit organization to individuals, businesses, foundations, or government agencies. Appeals are often made in the form of direct mailings, online solicitations, or personal visits by staff or volunteers.
Assets: All of the property owned by an individual or organization that has monetary value and can be used to pay debts and other liabilities. Assets include cash, investments, real estate, and personal property such as vehicles and jewelry.
Audit: A formal examination of an organization’s financial statements by an independent certified public accountant (CPA). Audits are typically conducted on an annual basis and are intended to provide assurance that the statements fairly represent the financial position of the organization.
Bequest: A gift of personal property (e.g., cash, stocks, or real estate) that is made through a person’s will. Bequests are a common form of planned giving, as they allow donors to make a significant gift to a charity without impacting their current financial situation.
Budget: A financial plan that lays out expected income and expenses for a specific period of time. Organizations use budgets as a tool to track actual performance against planned performance and make mid-course corrections as needed.
Business Model: The way in which an organization generates revenue to sustain itself. Common nonprofit business models include earned income (i.e., charging for services), donations, grants, and social impact bonds.
Board of Directors: The governing body of a nonprofit organization. The Board is typically responsible for setting strategic direction, approving the annual budget, and ensuring that the organization complies with applicable laws and regulations.
By-laws: A set of rules governing the internal affairs of an organization. By-laws typically address topics such as membership requirements, Board composition, and voting procedures.
Capacity: The ability of an individual or organization to do something. Capacity building is the process of increasing the ability of an individual or organization to do something.
Capacity Building: The process of increasing the ability of an individual or organization to do something. Capacity building is often used in the context of nonprofit organizations, as many nonprofits lack the resources (i.e., capacity) to effectively achieve their mission.
Capital: The financial resources available to an individual or organization, including cash, investments, and lines of credit. In the context of philanthropy, capital refers to the pool of money available for charitable purposes.
Capital Campaign: A fundraising campaign with the specific goal of raising capital (i.e., money) for an organization.
Cause Marketing: A marketing strategy that involves partnering with a nonprofit organization to promote a shared cause or social issue. Cause marketing can take many forms, but often includes joint fundraising campaigns, cause-related advertising, and Corporate Social Responsibility (CSR) initiatives.
Certification: A formal designation awarded by an independent body that indicates that an individual has met certain pre-determined standards in their field of expertise. Certification is often used in connection with professional credentials such as Certified Public Accountant (CPA), Project Management Professional (PMP), and Certified Information Systems Auditor (CISA).
Code Of Ethics: A set of principles governing the conduct of individuals and organizations in connection with their professional activities. Ethics codes are typically developed by professional associations or regulatory bodies as a way to ensure that members adhere to high standards of conduct.
Compliance: The act of following rules or regulations. Organizations often have compliance requirements imposed on them by external agencies, such as government regulations or grantor guidelines. Compliance failure can result in negative consequences such as loss of funding or sanctions.
Conflict Of Interest: A situation in which an individual or organization has competing interests that could potentially influence their judgment or decision-making. Conflict of interest situations often arises in the context of business transactions, financial investments, and personal relationships.
Corporate Social Responsibility (CSR): A business approach that integrates social and environmental issues into an organization’s operations and decision-making. CSR is also sometimes referred to as “sustainability” or “corporate sustainability.”
Crypto Philanthropy: The use of cryptocurrency assets – like Bitcoin or Ethereum – to do good. Crypto philanthropy is often used to donate money to charities or nonprofit organizations, but can also take the form of impact investing or giving directly to individuals in need. More about crypto philanthropy and how to accept donations.
(D – F)
Diversity, Equity, Inclusion & Belonging (DEIB). Instead of Diversity and Inclusion being two separate things that organizations focus on (but often fail to achieve), Diversity, Equity, Inclusion & Belonging mean that everyone in an organization feels a sense of belonging and that the playing field is level for everyone. There are many nonprofit-focused DEIB consultants that can help organizations in this work.
Donor: An individual, business, foundation, or other entity that provides financial support to a nonprofit organization. Donors can make one-time gifts or pledge ongoing support through recurring gifts or pledges.
Donors (non-monetary): For organizations that deal with blood, organ or reclaimed/recycled materials “donors” are defined as people that give these items rather than money. For example, organ donors who signup to be a on an organ registry are referred to as donors by the industry professionals like Donate Life America.
Double Bottom line: Nonprofits are said to have a “double bottom line” that tracks both revenues as well as measurable social impact.
Due Diligence: This phrase has several meanings, but in general it refers to the process of investigating an individual or organization before entering into a relationship with them. Due diligence is often used in connection with business transactions, philanthropic giving, and hiring decisions.
Effective Altruism: The philosophy of using reason and evidence to do the most good that one can. It is based on the view that everyone should use their resources – time, money, talents – to help others as much as they can, and that we should all try to find and work on the world’s most effective ways to help others.
Election: A process in which individuals vote to select a person or group of people to fill a particular role or position. Elections are often used to select members of a Board of Directors or other governing body.
Evaluation: The process of assessing the effectiveness of a program, intervention, policy, individual, etc. Evaluations are often conducted using data collected from program participants, beneficiaries, staff, or other stakeholders. Evaluation results can be used to improve program effectiveness and/or inform future decision-making.
Fiduciary: An individual or organization that is entrusted with the care of another person’s money or property. Fiduciaries have a legal duty to manage the assets in a manner that is in the best interests of the beneficiary.
Fiscal sponsorship: An arrangement in which a 501(c)(3) public charity agrees to provide financial and/or legal oversight for a non- 501(c)(3) entity pursuing charitable activities. Fiscal sponsorships are often used by start-up nonprofits that have not yet obtained tax-exempt status from the IRS.
Foundation: A type of nonprofit organization that typically provides grants to other nonprofits working in areas aligned with the Foundation’s mission. Foundations are usually funded by endowments, which are invested to generate income that is then used to make grants on an annual basis. Some foundations also engage in direct charitable activities (e.g., operation of programs) in addition to grantmaking.
(G – I)
Governance: The process by which an organization is directed and controlled. Governance typically includes the development of policies and processes related to the management of the organization, as well as the selection of individuals to serve in leadership roles.
Grant: A type of financial support given by a government agency, foundation, or other entity to a nonprofit organization for a specific project or program. Grants are typically awarded through a competitive process in which organizations submit proposals outlining the need for funding and how the money will be used.
Impact Measurement: The process of assessing the positive and negative outcomes of an intervention or program. Impact measurement typically includes the use of data (quantitative and/or qualitative) to track progress towards specific goals. Impact measurement can be used to improve program effectiveness and/or inform future decision-making. Digital impact measurement focuses on the online footprint of an organization.
Inclusive Language: Language that is designed to be used by and understandable to as many people as possible. Inclusive language is often used in connection with materials targeting a diverse audience, such as people of different races, ethnicities, genders, and sexual orientations. Using something like the Inclusivity Tool by Whole Whale can help find words that may be offensive on your website.
In-kind Donation: A donated item or service that has value but is not monetary. In-kind donations can take many forms, including supplies, equipment, event space, and professional services. One of the largest corporate in-kind donations in recent history has been the Google Ad Grant, which gives up to $10k per month in search ads. Here is an online Google Ad Grant training.
Independent Contractor: An individual or organization that provides goods or services to another party under terms specified in a contract. Independent contractors are not considered employees of the organizations they contract with and are not subject to the same laws and regulations (e.g., labor laws) that apply to employees.
Individual Giving: A type of philanthropy that involves direct giving by individuals (as opposed to foundations or corporations). Individual giving can take many forms, including one-time gifts, recurring gifts, planned giving, and volunteerism.
Infrastructure: The basic physical and organizational structures and facilities needed for an organization to function effectively. Infrastructure can include both tangible assets such as buildings and equipment, as well as intangible assets such as systems, processes, and people.
Interest Group: Also known as a “special interest group” or “lobby group.” An organization that seeks to influence public policy on behalf of a specific cause or constituency. Interest groups typically engage in activities such as grassroots organizing, advertising, and lobbying.
Internal Revenue Service (IRS): The federal agency responsible for administering tax laws in the United States. The IRS is also responsible for overseeing tax-exempt organizations and determining whether they meet the criteria for 501(c)(3) status. The IRC is divided into 26 sections (known as “subchapters”), each of which covers a different aspect of taxation. If you’re looking for a good time, here is the IRS nonprofit website or call 867-5309.
(J – L)
Leadership: The process of guiding and directing an organization. Leadership roles can be filled by employees, volunteers, or Board members.
Legislation: A law or set of laws enacted by a local, state, or federal government. Legislation can have a direct impact on the operations of nonprofit organizations, especially with regard to tax exemption and fundraising.
Lobbying: advocating for or against specific legislation by attempting to influence the vote of a legislator or group of legislators. Lobbying is a common activity among nonprofit organizations, as many nonprofits seek to influence public policy in furtherance of their mission.
(M – P)
Management: The process of leading and directing the work of employees in an organization. Management roles are typically filled by paid staff members (as opposed to volunteers).
Mission: The purpose or goals that an organization is striving to achieve. Missions are often expressed in the form of a “mission statement,” which is a concise statement that describes the overall purpose of the organization.
Nonprofits or not-for-profits: These are the broad ways to refer to nonprofit organizations, some thought-leaders prefer to note that “nonprofits” actually do make money. Using “non” can mislead a general audience vs using the more precise not-for-profit terminology. However, Google Trends will show that nonprofit is used 20x more times than that not-for-profit.
Nonprofit 501(c)(3)s: The IRS tax classification for nonprofits that can receive a certain type of Federal tax exemption and aren’t involved in lobbying. This includes nonprofits considered public charities, private foundations or private operating foundations.
501(c)(3): A section of the Internal Revenue Code that provides tax-exempt status for nonprofit organizations that are organized for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to animals or children. To obtain 501(c)(3) status, an organization must file an application with the IRS and meet certain requirements.
Nongovernmental organization (NGO): is a more global term for nonprofit organizations that operate separately from governments. This term includes a wider range of social impact organizations.
Operating Expenditures: All of the expenses incurred by an organization in the course of carrying out its day-to-day activities (i.e., operating expenses). Operating expenditures include salaries, rent, office supplies, and other routine expenses.
Outcome: The result or consequence of an action or decision. Outcomes can be positive (e.g., increased productivity) or negative (e.g., decreased morale). In the context of program evaluation, outcomes are often measured using indicators such as changes in knowledge, attitudes, behaviors, or conditions
Payroll: The total amount of money paid by an employer to its employees in a given period of time (usually a week or month). Payroll includes wages, salaries, bonuses, and other forms of compensation.
Performance Management: The process of setting goals and measuring progress towards those goals. Performance management systems are often used by businesses and other organizations as a way to improve organizational performance.
Policy: A set of principles or guidelines that govern the actions of individuals and organizations. Policies can be formal (e.g., written down in a policy manual) or informal (e.g., unwritten rules that everyone is expected to follow).
Program: A set of activities designed to achieve specific objectives within a given timeframe. Programs are often implemented by nonprofit organizations as a way to achieve their mission.
Program Evaluation: The process of assessing the effectiveness of a program. Program evaluations are typically conducted using data collected from program participants, beneficiaries, staff, or other stakeholders. Evaluation results can then be used to improve program effectiveness and/or inform future decision-making.
Proposal: A document submitted by an individual or organization in response to a request for proposal (RFP) issued by another party. Proposals typically include an overview of the proposed project, a description of the organization’s qualifications, and estimated costs.
Public Charity: A type of 501(c)(3) organization that is supported primarily by donations from the general public (as opposed to foundations or corporations). Public charities must meet certain requirements in order to maintain their tax-exempt status with the IRS.
Private Foundation: A type of 501(c)(3) organization that is funded primarily by donations from individuals, businesses, or other foundations (as opposed to the general public). Private foundations must meet certain requirements in order to maintain their tax-exempt status with the IRS
(Q – S)
Qualitative Data: Data that can be observed and/or measured, but not expressed in numerical form. Qualitative data includes items such as opinions, attitudes, and perceptions.
Quantitative Data: Data that can be expressed in numerical form. Quantitative data includes items such as counts, percentages, and averages.
Research: A systematic process of investigating a subject in order to gain new knowledge or update existing knowledge. Research is often used in the context of developing new products, services, or programs.
Return On Investment (ROI): A measure of the financial return generated by an investment relative to the amount of money invested. ROI is typically expressed as a percentage and is often used to compare different investment options.
Salaries: The total amount of money paid by an employer to its employees in a given period of time (usually a week or month). Salaries include wages, commissions, bonuses, and other forms of compensation.
Social Entrepreneur: An entrepreneur who applies commercial strategies to solve social problems. Social entrepreneurs often start or work for social enterprises, which are businesses that are organized around a social or environmental mission.
Sustainability: The ability of an individual, organization, or system to survive over time. In the context of business, sustainability refers to the ability of an organization to generate enough revenue to cover its costs without depleting its resources (e.g., water, forests).
(T – Z)
Tax-Exempt Status: A designation given by the IRS to organizations that qualify for exemption from federal income taxes under one or more sections of the Internal Revenue Code (e.g., 501(c)(3)). Tax-exempt status also confers exemption from some state and local taxes
Theory of Change: A theory of change is a specific type of logic model that is used to visualize the long-term impact of an organization or program. Theory of change models typically includes a description of the problem being addressed, the intervention being used to address the problem, and the desired outcome of the intervention.
Value Proposition: A brief statement that describes the unique benefits offered by a product, service, or organization. Value propositions are often used in marketing and sales contexts to help persuade potential customers or clients to patronize a particular business.
Volunteerism: The act of donating one’s time and energy to a cause or organization without expecting financial compensation. Volunteerism is often seen as a way to “give back” to the community or make a difference in the world.
Volunteers: Individuals who donate their time and energy to an organization without the expectation of compensation. Volunteers typically perform tasks such as office work, fundraising, event planning, and direct service delivery.
Voter registration: The process of adding eligible citizens to the list of people who are qualified to vote in an election. Voter registration is typically handled by government agencies such as elections boards or registrars of voters.
Voting: The act of casting a ballot in an election or voting on a proposal. Voting is a common activity among nonprofit organizations, as many nonprofits have members who are entitled to vote on Board decisions and other matters of importance.