This glossary offers definitions and explanations of some of the terms most commonly used in the grantsmanship profession.
These definitions should be considered as a starting point for communicating with other grants practitioners.
Please be aware that, as is true in any area of human communication, not everyone in the field uses these terms in precisely the same way.
It's a good idea to double-check anything that isn't completely clear -- for instance, what a specific grantmaker is looking for when asking for a "letter of inquiry"; or what kinds of projects another grantmaker includes in the category of "Civic affairs."
Please email uswith any grants-related words or phrases you'd like us to add to our glossary.
A section of the Internal Revenue Service tax code. Often used as shorthand to designate an organization that has been accorded nonprofit status by the IRS. Funders and contributors will often require proof of 501(c)(3) status before making a grant or contribution. Donations to 501(c)(3) organizations are deductible from federal income taxes as charitable contributions; donations to other kinds of organizations may not qualify as charitable contributions.
The reporting form that all private grantmaking foundations must submit annually to the Internal Revenue Service to document their financial activities during the year. 990-PFs are public documents and can be a rich source of supplemental information about grantmaking foundations, including their trustees, the sources of their funds, and their grantmaking and charitable contributions during the year. Two websites that post recent 990-PFs of thousands of private foundations are: GrantSmart and GuideStar.
Funders will typically require you to submit supporting documentation with your written letter proposal or full proposal. Requirements vary widely; please be sure to check guidelines carefully. The documentation most commonly required includes:
- Letters of endorsement, support, and participation
- List of board members and officers, with titles and community affiliations
- Qualifications of key personnel
- Operating budget and project budget, if applicable
- Latest annual report (or description of organization’s mission and most recent accomplishments)
- Most recent audited financial statement (or a “letter of auditability” from your certified public accountant)
- Current list of other funding sources and current contributors
- Copy of the 501(c)(3) IRS “Letter of Determination for Tax Exempt Status”
- Any additional information related to the organization or the request that may be helpful for evaluation purposes (press clippings, service brochures, statistical reports, copies of relevant certifications and licenses, etc.)
Arts and culture:
This funding category includes the following subjects: Arts appreciation; arts associations; arts centers; arts festivals; arts funds; arts institutes; cinema; community arts; dance; ethnic arts; history/historic preservation; libraries; literary arts; museums/galleries; music; opera; performing arts; public broadcasting; theater; visual arts. Please contact individual corporations and foundations directly for specific details on their arts/culture giving programs.
Dollars awarded by the Federal government to state or local governments, in a "lump sum" form, around a specific issue area and usually with only a very few Federally-imposed guidelines. The local/state governments then have responsibility for setting more specific granting guidelines within their own jurisdictions, for creating and managing a community-based planning process to identify local needs, for coordinating and managing the grantmaking process, and for monitoring and evaluating the results. (See also "Discretionary grants" and "Formula grants.")
A growing number of funders are interested in helping nonprofits build "capacity" through their grantmaking -- but even the funders are far from consensus on what exactly that means. In our training, we offer the following working definition of "capacity-building grants": "Capacity-building refers to activities that strengthen a nonprofit organization’s internal operating structure so that it can be more effective and/or more efficient in working toward fulfilling its mission." Another way to look at this: Capacity-building feeds and strengthens the roots and trunk of the tree (the internal structure) so that the tree can produce more and better fruit (programs and services). Typical broad categories of capacity-building include: Board development; staff/volunteer development (but not training for specific service areas); marketing and communications; technology; governance; leadership development; strategic planning; accounting and records systems. They key point to keep in mind in developing a proposal for a capacity-building activity is that the funders will be supporting your mission before they're supporting the specific activity. It isn't about the cell phones. board retreats, whatever: It's about how that specific activity will make a real difference in the lives of the people or cause you're committed to serving. Capacity-building is closely related to an organizaton's Lifecycle Stage; see further information in this Glossary.
“Bricks and mortar” funds, used to purchase land and construct, renovate or substantially rehabilitate buildings and facilities. Also refers to major equipment purchases (computer systems, fleet vehicles, etc.).
A one-piece, written document telling your organization's story -- past, present, and future -- the way you and your stakeholders want it told. Why do you need one? Because you'll use the language every time a grantmaker's application materials ask: "Who are you? What are you all about? And how do we know we can trust you?"
A grant that is promised to an agency contingent on the agency coming up with additional funds from other sources. For instance, a foundation may make a challenge grant of $50,000, to be paid when the recipient has developed another $50,000 in grants and donations.
This funding category includes the following subjects: Better government; business/free enterprise; civil rights; consumer affairs; economic development; economics; ethnic/minority organizations; First Amendment issues; international affairs; law and justice; municipalities; national security; nonprofit management; philanthropic organizations; professional/trade associations; public policy; public broadcasting; recreation and athletics; rural affairs; safety; urban/community affairs; zoos and botanical gardens. Please contact individual corporations and foundations directly for specific details on their civic/public affairs giving programs.
This funding category indicates corporations or foundations that are willing to sponsor professional development or special-interest events around a particular priority area. Please contact individual corporations and foundations directly for specific details on their sponsorship of conferences and seminars.
That broad category of Federal or state-level grants processes to which individual community-based organizations, schools, and/or local governments are eligible to apply directly. There is a pot of money; it is set aside for a specific purpose; criteria are set for what kinds of organizations are eligible to apply; those organizations then develop their own proposals and submit them directly to the funding agent for review, consideration, and consideration. (This is unlike the "block" grants where the funds are distributed through a pass-through agent, for instance, the state). (See also "Block grants" and "Formula grants.")
See "Donated products."
Any goods, products, equipment, or other tangible property that is donated to an organization to become its property and for its use. These can include consumable products (such as food items, paper goods, office supplies, etc.) as well as furnishings, computer equipment, automobiles, etc. Donated products are part of an agency’s “in-kind” support and should be included in an agency’s budget, at fair-market value.
This funding category includes the following subjects: Agricultural education; arts education; business education; career/vocational education; colleges and universities; community/junior colleges; continuing education; economic education; education administration; education associations; education funds; elementary education; engineering education; faculty development; health and physical education; international exchange; international studies; journalism education; legal education; liberal arts education; literacy; medical education; minority education; preschool education; private education (precollege); public education (precollege); religious education; science/ technology education; social sciences education; special education; student aid. Please contact individual corporations and foundations directly for specific details on their education giving programs.
Grants made (almost always on a one-time basis) to help an agency through an extraordinary, short-term financial need.
Employee matching gift:
A program in which a corporation makes cash donations to match donations from its employees and (sometimes) retirees and family members. In other words, when an employee donates $25 to her favorite charity, her employer will match that with a corporate gift to the same agency. Match amounts vary widely, as do the eligibility requirements for recipient agencies. Some corporations will match “dollars for doers,” offering cash grants to agencies for which their employees volunteer. It is almost always the employee’s responsibility to make the arrangements for a matching gift; the corporation will rarely deal directly with the recipient agency.
A body of funding that generates investment or interest income for an agency. Usually the principal of the endowment fund remains untouched, while the agency is free to spend or reinvest the interest income it generates.
This funding category includes all topics related to environmental affairs; protection, preservation, and regeneration of natural resources, including water, air, earth, and wildlife. Please contact individual corporations and foundations directly for specific details on their giving programs for environmental causes.
Many funders require that you include an "executive summary" as part of your proposal -- though they may call it any number of other things, including "proposal overview," "executive overview," "highlights," and so on. The key characteristic is that this section summarizes, briefly, completely and compellingly, the information contained in each other section of your proposal or project plan. (For more detail on what these sections are, please see "Full Proposal.") Many organizations will develop an "Executive Summary" for each project to serve as a concept paper -- not as part of a specific request for funding -- knowing that the time spent developing a tight, concise and comprehensive summary will pay off many times over. Two important points: (1) Don't try writing the summary until you've developed the full text. Then you can literally go into the body of your document and pull out the two or three most cogent sentences from each section to include in your summary. (2) How long should an Executive Summary be? No longer than your funder's guidelines allow, in the first place. If you aren't working with someone else's guidelines, a good rule of thumb is about 5% of the total document length -- in other words, a 1/2-page Executive Summary for a document that is 10 pages long. But remember -- that's just a rule of thumb. Yours may need to be longer or shorter.
Grants from the Feds or state to a lower level of government where a specific dollar amount is attached to some socioeconomic standard. For example, a formula grant may be awarded to a state in the form of a certain amount of money for every school-aged child whose family is below 125% of the federal poverty level. Thus, the amount awarded to each jurisdiction will vary by the number of people (or other variable) that meet the standard. (See also "Block grants" and "Discretionary grants.")
The word "foundation" itself has no legal status. Any organization can call itself a foundation or use the word as part of its name without necessarily operating as a grantmaking or philanthropic entity. True charitable or philanthropic foundations, on the other hand, are usually organized under the Internal Revenue Service tax code that allows them to accumulate, invest and hold assets tax-free (called the "corpus") as long as they make charitable grants or contributions amounting to at least 5% of the corpus value each year. So a philanthropic foundation with $100 million in assets can invest and grow those assets tax-free, but must contribute at least $5 million a year to qualifying charitable organizations in order to maintain its tax-exempt status.
Charitable and philanthropic foundations come in all shapes, sizes and varieties, from the very small, single-purpose family-run foundations to the multibillion-dollar, multipurpose international foundations. The only feature that all such foundations share in common is the IRS's 5% contributions requirement.
A complete, written “business plan” for the project or idea you are proposing for funding. A “full proposal” differs from a “letter proposal” only in the degree of detail it contains; the basic components are identical. Requirements vary widely from funder to funder about length, format, and contents of a full proposal; be sure to check guidelines carefully. If your potential funder offers no guidelines for content, you can follow the format suggested by the “Proposal Checklist and Review Worksheet” included in the Planning Worksheets section of the Alliance Website. A full proposal typically includes:
- Cover letter
- Introduction: History, mission and accomplishments of the applicant agency
- Summary: A brief mini-proposal covering the major points of the proposed project.
- Issue statement: What is the situation your proposal will address?
- Targets or success indicators: What changes do you hope to make in this situation?
- Methods/strategies: The who, what, where, when and how of your program or project concept
- Evaluation: What steps will you take to measure your success and to make course adjustments and technical improvements?
- Future or continuation funding
- Attachments and appendices
Usually refers to monies given to an agency without restrictions on how the monies are used.
Goals and objectives:
The section of a funding proposal commonly called "Goals and Objectives" is one of the most important components of your request for funding -- and one of the easiest to misunderstand. The terms themselves are often confused or used differently by organizations in different fields. Basically, the two terms refer to two different levels of changes, outcomes or impacts that will be achieved through your program or services. The first is the broad, overarching purpose served by your program or service -- for instance, "Our purpose [or goal] is to help women victimized by abuse recover their strength, stability and self-esteem." The second might best be called your targets or success indicators -- those results that are specific, measurable and timebound and that directly contribute toward accomplishing the overall purpose. An example: "Within 6 months of graduating from our program, 75% of the women will have secured and maintained employment at or above the median income level by household size." (See also "Outcome objective.")
As used by Arizona Guide to Grants Online, the word “grant” refers to a sum of money given to support the work of an agency, organization, or (occasionally) individual, usually as a result of a formal decision-making process involving a written or oral presentation and review. Grants are distinct from loans in that they are given outright, with no conditions for repayment.
This funding category includes the following subjects: disease-related education and research programs; emergency/ambulance services; geriatric health; health care cost containment; health funds; health organizations; hospices; hospitals; medical rehabilitation; medical research; medical training; mental health; nursing services; nutrition/health maintenance; outpatient health care; pediatric health; public health; single disease health associations. Please contact individual corporations and foundations directly for specific details on their health-related giving programs.
See "In-kind support."
Any contributions to an agency that have value but are not monetary in nature. In-kind support can include the value of donated products or equipment; volunteer services; donated office space or staff time; loaned executives; and donated professional services, among others. In-kind support should always be included in an agency’s budget, at fair-market value.
See "Outcome objective."
This funding category covers: Foreign educational institutions; international development; international relief; international health care; international organizations. Please contact individual corporations and foundations directly for specific details on their international giving programs.
Letter of auditability:
Many times, if your grantseeking organization is very new, very small, or very short of resources, conducting a full audit of your financial status can be financially beyond your reach. Many grantmakers will instead accept a "letter of auditability." This is simply a letter prepared by your CPA or other independent third-party financial expert affirming that your organization's records are well-maintained, that everything is properly documented and receipted, and that financial reports are prepared on a monthly basis. In other words, if an audit were required, the auditor would find your recordkeeping system in good order.
Letter of inquiry:
A brief letter to assess a potential funder’s interest in considering your proposal for funding. Unless the funder specifies otherwise, a letter of inquiry is never more than one page long. It should include: (a) A few sentences of background on your agency; (b) a very brief description of the project or service you’re proposing; (c) the specific dollar amount that will be requested; and (d) an explanation of why you believe your proposal matches the funder’s priorities and interests. A funder will occasionally make a grant award on the basis of a letter of inquiry. More often, the funder will ask for a full proposal if the idea is of interest.
Unlike a letter of inquiry, a letter proposal includes all the information a potential funder will need in order to make a decision about funding your project. A letter proposal differs from a “full proposal” only in the degree of detail it contains; the basic components are identical. Requirements vary widely from funder to funder about length, format and contents of a letter proposal; be sure to check guidelines carefully.
If your potential funder offers no guidelines for content, you can follow the format suggested by the “Proposal Planning and Review Checklist,” included in the Planning Worksheets section of the Alliance Website. Typically, a letter proposal will be submitted with supporting documentation (see “Appendices/Attachments”).
Lifecycle Stages -- Mature Organization:
Funding targeted to support ongoing programs and services of a successful, stable, well-established organization.
Lifecycle Stages -- Growth Stage:
Funding targeted to support organizations that are in a rapid-growth stage or are moving quickly to a new, higher level of operation.
Lifecycle Stages -- Start Up:
Funding targeted to support the formation of a new nonprofit or community organization, or to help a very new organization establish solid operating base and begin offering programs and services.
Lifecycle Stages -- Turnaround:
Funding targeted to support a major "change" process in an organization that has encountered serious challenges in its operating environment; i.e., financial, leadership, mission, service mix, and so on.
A program in which a company “loans” key executives or managers to community-based organizations, to share their expertise and leadership. The “loan” may involve a full-time sabbatical lasting up to several months; or it may involve a commitment of several hours a week or month to provide a specific service. Corporations often find it easier to arrange for “loaned executive” services than to make an outright cash grant. (For more details, see “In-kind support.”)
See "Employee matching gifts."
Can indicate either: (1) grants that extend for more than one year, or (2) the option of reapplying to the same funder for additional monies in future budget periods. Multiyear and continuing grants are often contingent on the agency’s performance during the initial grant period.
These terms, though often used interchangeably, have very different meanings from a legal and fiscal standpoint. An organization can incorporate as an Arizona "not-for-profit" through the State Corporation Commission. This is not the same as being accorded "nonprofit status" as a charitable, tax-exempt organization by the Internal Revenue Service. In order to receive IRS nonprofit status [usually under IRS code 501(c)(3)], you must apply directly to the IRS and secure a "Letter of Determination." This letter is your documentation that you have been accorded nonprofit status by the IRS and that contributions to your organization are tax-deductible. A copy of the IRS letter of determination is often required by funders as part of your proposal package.
See "Goals and Objectives."
Operating expenses: The costs of keeping an agency open; expenses related to internal or administrative operations, rather than to specific programs or services.
An evaluation process that focuses on measuring success in achieving specific, measurable and meaningful change in the community or in the lives of people being served (see "Outcome objective") rather than simply counting inputs or reporting on the process.
This terminology describes a target or success indicator that directly addresses the change that will "come out of" your proposed service or program. The "outcome" is the change itself -- the answer to the question, "What will be different in our community or in the lives of the people we're serving as a result of our effort?" An outcome objective is distinct from a process or input objective,which focuses on activities or to-do list items. An example of an input objective would be: "By Dec. 2003, we will provide 60 hours of reading instruction to 50 adult learners." A related, and much stronger, outcome objective -- focusing on the change, not what it takes to produce the change -- would be: "After 60 hours of instruction, 75% of the adult learners will have improved their reading abilities by at least two grade levels."
See "Outcome objective."
Funds given to an agency to support a specific, well-defined, often short-term project or set of activities designed to address a specific need or achieve a specific goal.
This funding category includes giving to religious welfare; churches, missionary activities, religious organizations and synagogues, and evangelical efforts. Please contact individual corporations and foundations directly for specific details on their giving programs for religious causes.
Request For Proposals:
Often abbreviated as "RFP," this is simply a formal announcement issued by a grantmaker (private or public) letting agencies know that it is looking for proposals for funding in specific topic or program areas. The RFP will usually include complete details on the kinds of services or programs the grantmaker will consider; what the proposal needs to contain; deadline information; proposal review and evaluation; and other guidelines to help respondents submit a technically qualified, highly competitive proposal.
A grant made to an educational institution or individual to support a specific research project.
See "Request For Proposals."
This funding category includes: Medical research; observatories and planetariums; science exhibits/fairs; scientific institutes; science research; scientific organizations. Please contact individual corporations and foundations directly for specific details on their science-related giving programs.
Seed or startup money:
Funding to support a brand-new agency or project through its startup stage. Sometimes seed monies will be granted to tide a new agency or program over until another, larger funding source kicks in.
This funding category includes the following causes: Child welfare; community centers; community service organizations; counseling; day care; delinquency and crime; disabled; domestic violence; drugs and alcohol; elderly programs; emergency relief; employment/job training; family planning; family services; food/clothing distribution; homes; housing; legal aid; refugee assistance; shelters/homelessness; united funds; volunteer services; women's affairs; youth organizations. Please contact individual corporations and foundations directly for specific details on their social services giving programs.