Glossary of Fundraising and Grantmaking Terminology
Friday 21 October, 2005 – 15:06
Glossary of Funding and Fundraising Terms
This glossary has been developed by Jill Ritchie of Papillon Press and Consultancy, in co-operation with the SANGONeT team.
Both Jill and SANGONeT would like you help in adding new entries to the glossary on an on-going basis. If you have a funding or fundraising term that is puzzling you, and which is not explained in the glossary already, please send it to us at ngopulse@sangonet.org.za.
See also: About.com’s Glossary of Common Nonprofit Terms
Latest additions: Ruth Osborne of Promotions for Non-profits gives us a definition of impact assessment
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accountability – in the context of funding and fundraising, typically the duty of a beneficiary NPO to inform donors of the use of their money, backed up by financial statements.
Acquisition mailing – a mailing to prospective donors specifically to bring new individual donors on board.
Allocations committee – group of people in a company, trust or any other donor body who meet in order to decide on donations to be made.
Alumni campaign – fundraising initiative undertaken, usually by an educational institution, but could also be done by a club, society or NPO, focusing on its own previous students, members or beneficiaries.
Annual giving – either an amount given annually by a donor or a fundraising drive to bring donations in once a year.
Annual report – yearly document reporting on an NPO (or a donor) as a whole, covering each programme and project, and including financial statements.
Anonymous donor – a donor, known to the beneficiary organisation, requesting that his/her/its identity not be made public.
Appeal letter – a letter asking for a donation.
Attrition rate – rate at which donors are lost due to their not renewing donations or subscriptions; usually associated with individual donors.
Benefactor – a wealthy, generous individual donor.
Bequest – money given by means of a will (after death).
Board profile – a breakdown of the governing board (trustees) of an NPO, focussing on gender, race, social standing and affiliations.
Bridging loan – money borrowed to enable or kick-start a project or fundraising campaign; such money needs to be repaid, usually from funds yet to be raised.
Budget – a document showing a breakdown of anticipated expenditure and income, usually for a year in advance.
Budget line item – different types of costs, each specified on one line in a budget, for example “rental” or “travel”.
Budget shortfall – the amount whereby expenditure exceeds income in an organisational or project budget; typically, the budget shortfall is what you are looking to cover via fundraising.
Business plan – a document, including time frames and budgets, outlining the specific steps to be taken to achieve an NPO’s objectives, usually for three to five years.
Campaign – a planned effort to mobilise a specified amount of money, resources, volunteers or donations-in-kind within a certain period of time.
Capital campaign – a one-off intensive fundraising drive for a specific item, usually a vehicle or building.
Case statement – for internal use only and is not a funding proposal. The case statement is a file of documents (business plan, mission statement, NPO certificate, organisational budget, evaluation documents and any other key documents) that form the basis from which fundraising proposals, letters and application forms can be drawn up.
Cause related marketing – a marketing exercise in which a company uses the name and logo of an NPO to assist in the sale of its goods or services and provides the NPO with a financial reward.
Codicil – an addition made to a will. This is often what individual donors do to include a bequest for a charity in their existing wills.
Cold list – list of donors not approached for money before.
Commemorative gift – a charitable donation made to remember or honour someone or an occasion.
Communications budget – a term used by some donors to refer to funds dedicated to marketing and outreach.
Constitution – a document stating fundamental principles by which an NPO is governed and which dictates trustees’ or board members’ duties, scope of authority and the handling of specific tasks such as number of people required to form a quorum, termination of board members’ involvement or dissolution of the organisation.
Consultant – someone with experience and in-depth knowledge on a certain subject (e.g. a fundraising consultant) who is hired to assist for a specified period.
Core costs – or running costs or overheads; the day-to-day expenses incurred by NPOs (including salaries, administration costs and rent) but excluding the direct costs of running projects.
Corporate governance – good, sound and accountable stewardship of donated funds (fiduciary responsibilities of board members); running an NPO within the parameters of its constitution, the laws of the land, morally and ethically.
Corporate identity – how a company, donor or NPO defines itself (embodied for example in its vision, mission, values and principles), how it markets itself (for example its logo and slogan) but also how it is perceived by the public.
Critical path – the specific sequence of functions (with dates) to be followed within the lead up time to an event (e.g. a fundraiser) or important date.
CSI (Corporate Social Investment) – companies’ term for funding donated to NPOs (external CSI) as well as for the upliftment of the communities where their employees live (internal CSI).
Current donor – a donor who has given within the past 12 months (opposite of lapsed donor).
Development officer – or donor marketer, grants officer; alternative terms for “fundraiser.”
Direct mail fundraising – sending mass mailings to individuals on selected mailing lists, requesting donations.
Discretionary trusts – money left in trust or given to a trust to be used for charitable purposes but unspecified. Trustees can disburse such monies at their own discretion.
Donation-in-kind – a gift other than money (often something, or even a service, produced or offered by a donor (eg: food, stationery, equipment or even expertise).
Donor – somebody who gives (in this context money or donations-in-kind). There are many different types of donors: local and foreign, individuals, foundations, trusts, NPOs and companies, governments and government agencies.
Donor pyramid – a triangular sketch depicting sources of funding with the upper point depicting large donors who do, or could, make sizable grants. As the pyramid widens downwards, tiers depict more donors likely to give smaller amounts and less often. A donor pyramid is typically used for individual donors.
Endowment campaign – a dedicated fundraising drive to raise or generate money for the specific purpose of investing such funds in the interests of the long-term financial self-sustainability of an NPO. Ideally, interest from such investments would pay all running costs in time.
Evaluation – the process by which an NPO investigates/researches the success or otherwise of a previously run project or any other expenditure of donors’ money. Donors too may implement such processes.
Exchange rate – the value of one currency unit (for example the South African rand (ZAR)) compared to another (for example the United States’ dollar (US$)); or in more technical terms, the ratio at which two currency units are exchanged.
Feasibility study – an in-depth survey to investigate the potential success or otherwise of a new project or a fundraising campaign. Such studies can be conducted in-house or contracted to consultants.
Funding proposal – a document drawn up to be submitted to a potential donor introducing an NPO, identifying a need in society and focusing on how (via a specific project) the NPO will address the need. The proposal should also cover the evaluation process as well as the future sustainability of the project.
Fundraising audit – an evaluation of all aspects of an NPO’s fund development functions, including staff capability, computerisation levels, potential sources of funding and capital to spend on funding.
Fundraising calendar – a time frame outlining the various functions of a fundraising campaign with dates by which each step should begin and end.
Fundraising cycle – the functions of fundraising from planning to receiving donations, often covering a twelve-month period.
Grant in aid – a term that has come to be associated with donations from various tiers of government as well as foreign missions.
Grant-making criteria – policies of donors as to what type of NPO/projects they support and sometimes specifying geographical areas and/or profiles of beneficiaries (eg: HIV/Aids, environmental, health, education, etc).
Grant-making guidelines – a document produced by a donor explaining how NPOs should go about their application process and clarifying which documents need to accompany the proposal (for example a budget, audited financial statements and so on).
Impact assessment – the gathering and analysis of evidence that measures the longer-term effects of a project or of an organisation’s work on its immediate target groups, on a community or on society at large.
Income generation – NPOs making rather than raising money through the sale of products or services, consulting, venue hire, etc.
King II (Report) – latest/second and updated version of a report on the roles and responsibilities of company board members in South Africa, drawn up by Justice M. King. King II also covers NPO boards.
Lapsed donor – previous donor who is no longer giving, usually, but not necessarily, associated with individuals.
Letter of enquiry – letter to potential donors (one to three pages) briefly summarising an NPO, the cause it serves, a specific project and amount to be requested in order to gauge donors’ interests in future relationships. It is not a request for money but merely a request, in principle, as to whether the donors would be willing to receive a formal proposal or application in terms of guidelines to be provided by the them (with no obligation or promise of funding). American foundations prefer letters of enquiry as a first form of contact.
Matched funding – money promised, conditional upon the NPO obtaining (usually a rand-for-rand) matched amount.
Mission statement – a document/statement (preferably short) that summarises the reason for the existence and the main objectives of an organisation.
NPO Act (Non-Profit Organisation Act of 1998) – South African legislation governing the NPO sector. This act provides for voluntary registration by non-profit organisations and also stipulates the conditions for maintaining such registration.
NPO number – a number granted by the Department of Social Development’s NPO Directorate on successful registration by an NPO in terms of the NPO Act.
Official Development Assistance (ODA) – aid from one (bilateral) or more (multilateral) governments to a country, for example aid from the United Kingdom or the European Union to South Africa; ODA can take the form of grants or so-called concessional loans, that is loans on favourable conditions, for example with a low interest rate.
Organisational budget – a document listing/itemizing every anticipated expense as well as source of income for a coming financial year, for an entire NPO. A budget shortfall would then represent the amount to be raised/generated.
Overhead recovery (or simply overheads) – a percentage over and above a project’s costs, requested of a donor towards administration/running expenses. This amount typically varies between 5% and 15% of project expenses.
Patron – usually a high profile person who lends his or her name to an NPO, endorses the organisation and occasionally attends events or signs important letters; rarely, if ever, attends meetings.
Payroll giving – fundraising initiative whereby employees (including entry level workers) agree to have a donation (usually a small amount) deducted from their wages/salaries in order to support an NPO.
Planned giving – a broad term with varied uses in different countries for arrangements made between individual donors and NPOs to allow for either bequests or to defer bequests until after the deaths of their beneficiaries. Planned giving today can also include creative but legal arrangements for people to support NPOs while saving on income tax and/or saving their estates death duties/taxes.
Pledge – a promise, in writing, to donate (usually at a later date).
Project – typically used to describe the kind of services an NPOs delivers to its target groups (eg: HIV/Aids project or pet inoculation project). Sometimes called programmes. Be careful of confusion around the term “project” as some Northern donors call NPOs “projects”!
Project budget – a document detailing all expenses and anticipated sources of income (with the budget shortfall representing the amount to be raised/generated) pertaining to a specific project of an NPO.
Prospective donor (or potential donor) – a donor with which/whom a fundraiser has begun communication regarding a donation and who has indicated interest or not yet declined.
Public Benefit Activities – these are determined by the minister of finance and denote a) the activities, which qualify an organisation for tax exemption under section 10 (1) of the Income Tax Act (see SARS Notice No. 697 for activities, which currently qualify) or b) the activities, which would make an organisation eligible for section 18 (A) status (see SARS Notice No. 696 for activities, which currently qualify). Note that many more activities qualify for tax exemption under section 10 (1) than for section 18 (A) status.
Public Benefit Organisations – defined in section 30 of the Income Tax Act as non-profit organisations carrying out Public Benefit Activities (mainly) in South Africa.
Reply device – a form to be completed with a pre-addressed envelope, coupon or any other document or mechanism that makes the donation process easier; usually associated with direct mail fundraising from individuals, but also relevant to email appeals to individuals.
Reporting requirements – in this context typically the needs and the wants of a donor in terms of reporting; for example a) how often an NPO must report to the donor (every month, every quarter, every year), b) in which format (typically in writing), and c) what the NPO must report on (typically project progress and finances).
Resource mobilisation – a newer term rapidly gaining popularity to describe the broad process of NPOs finding money, friends, volunteers, donations-in-kind and establishing income generating projects in the interests of their future financial self-sustainability.
Section 10 (1) (of the Income Tax Act) – provides for tax exemption for NPOs, which fall within the definition of Public Benefit Organisations (see Section 30 below).
Section 18 (A) (of the Income Tax Act) – allows donors a tax rebate on donations made to NPOs and institutions that have Section 18 (A) status. Currently given to some types of Public Benefit Organisations, namely NPOs carrying out Public Benefit Activities in the welfare and humanitarian, health, education and development sectors (refer to SARS Notice No. 696). This status is not automatic and must be applied for.
Section 30 (of the Income Tax Act) – specifies what kind of organisations qualify as Public Benefit Organisations.
Section 501 (C) 3 (American legislation) – similar to 18 (A) status locally, section 501 (C) 3 refers to registration by NPOs in the USA in terms of their Internal Revenue Service regulations in order to allow tax deductions to donors. South African NPOs too should have such registration in the USA in order to seek funding directly from American donors there. Does not apply if you seek funding from American donors with representation in South Africa.
Seed funding or seed money – an early donation to begin a new project or to launch an NPO. There is an accepted element of risk to giving this money.
Sponsorship – money given by the marketing department of a company in return for advertising/brand promotion; a business deal based on ad-spend (numbers of people likely to see the company’s logo/advert) and not usually given for philanthropic purposes.
Strategic plan – a plan (often written up as a Business Plan for three to five years) outlining the strategies to be employed in order to achieve an NPO’s goals, objectives and to fulfil its mission.
Sustainability – a term used loosely and broadly but usually meaning the financial self-sustainability of an NPO or one of its projects. Donors often ask “how will the NPO/project be sustained after our grant?”
SWOT analysis – (Strengths, Weaknesses, Opportunities, Threats) useful in all planning to identify an NPO’s internal strengths and weaknesses as well as to highlight opportunities and threats externally.
Telethon – telephone appeal to existing and potential donors (corporate or individual), supported by publicity, the involvement of celebrities and the media.
The ask – the crux of any fundraising letter, proposal, telephone call or one-on-one meeting: telling the prospective donor exactly what (how much) you would like them to give and how their donation will be used.
Underwriting sponsorship – money given or guaranteed by the marketing department of a company for a fundraising event for which it receives advertising, naming rights, brand promotion and/or corporate identity promotion but conditional upon the repayment of money given should the event make a profit. If the event shows a loss, the company forfeits its money or has to cover costs.
Vision statement – a document laying out what an NPO envisages becoming in the future.
Volunteer – someone who works for an NPO entirely without payment other than reimbursements of expenses such as telephone calls, travel and meals; people who receive nominal payment/honoraria are not volunteers, but employees and their NPOs are liable under current labour regulations.
Workplan – a document, typically internal to a project, setting out responsibilities, time frames and courses of action on how to go about achieving project results and objectives.
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