Glossary of Charitable Giving Terminology
Charitable giving comes with its own language and understanding the terminology empowers you to make more informed, strategic decisions about your philanthropy.
Whether you're exploring donor-advised funds for the first time, considering establishing a family foundation, or simply want to maximize the impact and tax efficiency of your giving, this glossary demystifies the concepts you'll encounter on your philanthropic journey.
We've defined terms in clear, accessible language because philanthropy shouldn't require a law degree to understand. Use this as your reference guide whenever you come across unfamiliar terminology in our resources, conversations with your advisors, or your own research.
**Not sure where to start?** Begin with terms like donor-advised fund, "strategic philanthropy, and The EPIC Journey to understand the foundation of effective giving.
A
Annual Check-In
A scheduled review (typically yearly) of your philanthropic strategy to assess progress, evaluate impact, and adjust giving based on changing circumstances or priorities.
Appreciated Assets
Property or securities that have increased in value since you acquired them. Donating appreciated assets directly to charity (rather than selling them first) can provide significant tax advantages by avoiding capital gains taxes while still receiving a charitable deduction for the full fair market value.
B
Beneficiary
An individual or organization designated to receive benefits from a charitable vehicle, trust, or estate plan. In charitable giving, this is typically a qualified 501(c)(3) nonprofit organization.
Bequest
A charitable gift made through your will or estate plan that takes effect after your death. Bequests can be specific amounts, percentages of your estate, or remainder gifts after other obligations are fulfilled.
C
CAP® (Chartered Advisor in Philanthropy)
A professional designation for advisors specializing in charitable planning. CAP® professionals complete rigorous education in tax law, philanthropic vehicles, estate planning, and strategic giving, and are held to fiduciary standards.
Capital Campaign
A focused fundraising effort by a nonprofit to raise significant funds for a specific purpose, such as building construction, major programs, or endowment growth, typically over a defined time period.
Charitable Deduction
A tax benefit that reduces your taxable income when you make qualified charitable contributions. The amount you can deduct depends on the type of asset donated, the recipient organization, and IRS limitations.
Charitable Lead Trust (CLT)
An irrevocable trust that provides income to one or more charities for a set period, after which the remaining assets pass to your heirs. This vehicle can reduce gift and estate taxes while supporting charitable causes.
Charitable Remainder Trust (CRT)
An irrevocable trust that pays income to you (or other beneficiaries) for life or a set term, with the remaining assets going to charity. This provides income, tax deductions, and avoids capital gains on appreciated assets.
Community Foundation
A public charity that manages charitable funds for a specific geographic area. Community foundations offer donor-advised funds, expertise on local nonprofits, and can facilitate collaborative giving among donors.
D
DAF (Donor-Advised Fund)
A charitable giving account that allows you to make a tax-deductible contribution, receive an immediate tax benefit, and then recommend grants to qualified charities over time. It's like a charitable investment account that you advise but don't control.
Direct Giving
Making charitable contributions directly to nonprofit organizations without using an intermediary vehicle like a DAF or foundation. This is the simplest form of charitable giving.
Disqualified Person
An IRS term for individuals who have special relationships with private foundations (such as substantial contributors, foundation managers, and their family members) and are subject to restrictions on transactions with the foundation to prevent self-dealing.
Due Diligence
The research and evaluation process used to assess a nonprofit organization's effectiveness, financial health, governance, and impact before making a grant or donation. Thorough due diligence increases the likelihood your gift will achieve intended results.
E
Endowment
A permanent fund established by a donor or nonprofit where the principal is invested and only the investment income (or a percentage of the fund's value) is used for charitable purposes. Endowments are designed to provide perpetual support.
EPIC Journey
Epic Philanthropy's proprietary four-phase framework for strategic giving: Empower (recognize your power), Purpose (clarify your why), Impact (design your strategy), Change (create lasting impact). This methodology guides clients from generous intentions to strategic action.
Estate Planning
The process of arranging for the transfer of your assets after death, including charitable bequests and planned gifts that can reduce estate taxes while supporting causes you care about.
Excise Tax
A tax that private foundations must pay on their net investment income, typically 1.39% (or lower with qualifying distributions). This is different from income tax and is required regardless of whether grants are made.
F
Fair Market Value (FMV)
The price an asset would sell for on the open market between a willing buyer and seller. When donating non-cash assets, FMV determines your charitable deduction amount.
Family Foundation
See Private Foundation (Family)
Fiduciary
A person or entity with a legal duty to act in another's best interest. Trustees, foundation board members, and certain advisors (including CAP® professionals) are fiduciaries who must prioritize their clients' or beneficiaries' interests above their own.
501(c)(3)
The IRS tax code section that defines charitable organizations exempt from federal income tax. Donations to 501(c)(3) organizations are generally tax-deductible. Most charities in the U.S. fall under this classification.
G
Gift Acknowledgment
Written confirmation from a charity documenting your contribution, required by the IRS for tax deductions of $250 or more. Proper acknowledgments describe what you gave and what, if anything, you received in return.
Governance
The system of policies, practices, and decision-making structures that guide an organization (or philanthropic vehicle like a foundation). Good governance ensures accountability, transparency, and effective stewardship.
Grant
A financial award made by a foundation or donor-advised fund to a qualified nonprofit organization. Grants may be restricted (designated for specific purposes) or unrestricted (used at the organization's discretion).
Grantee
The nonprofit organization or charity that receives a grant from a foundation, donor-advised fund, or other grantmaking entity.
Grantor
The person who creates and funds a trust. In charitable planning, the grantor establishes charitable trusts and determines their terms, though in irrevocable trusts, the grantor relinquishes control over the assets.
I
Impact Investing
Investing in companies, organizations, or funds with the intention of generating measurable social or environmental impact alongside financial returns. Also called mission-aligned investing.
Impact Measurement
The process of assessing and quantifying the results and outcomes of charitable giving or nonprofit programs. Effective impact measurement helps donors understand whether their philanthropy is achieving intended goals.
Itemized Deductions
Tax deductions listed individually on Schedule A of your tax return (rather than claiming the standard deduction). Charitable contributions are itemized deductions, so they only reduce taxes if your total itemized deductions exceed the standard deduction.
L
Legacy Giving
Charitable gifts planned during your lifetime but that take effect after your death, typically through bequests, beneficiary designations, or charitable trusts. Also called Planned Giving.
Letter of Intent (LOI)
A document outlining your philanthropic goals, values, and giving instructions. For families, an LOI helps communicate your charitable vision to heirs and ensures continuity of your philanthropic legacy.
M
Matching Gift
A charitable contribution made by an employer (or other donor) that matches an employee's donation to a nonprofit, often dollar-for-dollar. Matching gifts effectively double the impact of individual donations.
Mission-Aligned Investing
See Impact Investing
Multi-Year Pledge
A commitment to make charitable contributions over several years rather than a single gift. Multi-year pledges help nonprofits plan strategically and can be fulfilled through DAF grants or direct contributions.
N
Net Asset Value (NAV)
The total value of assets minus liabilities. For foundations and DAFs, NAV represents the amount available for charitable giving and administrative expenses.
Nonprofit Organization
An organization operated for charitable, educational, religious, scientific, or other purposes that benefit the public rather than private individuals. Most nonprofits are tax-exempt under IRS code section 501(c)(3).
O
Operating Foundation
A private foundation that primarily conducts its own charitable programs rather than making grants to other organizations. Operating foundations have different payout requirements than traditional grantmaking foundations.
P
Planned Giving
See Legacy Giving
Pledge
A promised commitment to make a charitable gift in the future. Pledges may be legally binding depending on how they're structured and documented.
Private Foundation (Family)
A charitable entity typically funded by a single source (an individual, family, or corporation) that makes grants to other nonprofits. Family foundations offer significant control but require annual tax filings, payout requirements (typically 5% annually), and adherence to strict IRS rules.
Program-Related Investment (PRI)
An investment made by a foundation where the primary purpose is achieving charitable goals rather than financial returns. PRIs count toward a foundation's 5% payout requirement.
Public Charity
A tax-exempt organization that receives significant public support (from many donors or government sources) rather than from a single source. Public charities face fewer restrictions than private foundations and offer higher deduction limits for donors.
Q
Qualified Charitable Distribution (QCD)
A direct transfer from an IRA to a qualified charity, available to individuals age 70½ or older. QCDs satisfy required minimum distributions without increasing taxable income, up to $105,000 annually (as of 2024).
Qualified Appraisal
An independent evaluation of a donated property's fair market value, required by the IRS for non-cash contributions over $5,000. The appraisal must meet specific IRS requirements and be conducted by a qualified appraiser.
R
Restricted Grant
A grant designated for a specific purpose, program, or project as determined by the donor. The recipient organization must use restricted funds only for the specified purpose.
Required Minimum Distribution (RMD)
The minimum amount that must be withdrawn from retirement accounts (like traditional IRAs) annually once you reach age 73 (as of 2023). QCDs offer a tax-efficient way to fulfill RMDs through charitable giving.
S
Self-Dealing
Prohibited transactions between a private foundation and disqualified persons (such as substantial donors or their family members). Self-dealing violations result in severe IRS penalties.
Sponsoring Organization
The public charity that administers donor-advised funds. Sponsoring organizations (like community foundations, Fidelity Charitable, or Schwab Charitable) legally own DAF assets and approve grant recommendations.
Standard Deduction
A fixed dollar amount that reduces your taxable income, available to all taxpayers. Charitable deductions only provide tax benefits if your itemized deductions (including charitable gifts) exceed the standard deduction for your filing status.
Strategic Philanthropy
An intentional, goals-based approach to charitable giving that aligns donations with your values, maximizes impact, and considers tax efficiency. Strategic philanthropy involves planning rather than reactive giving.
T
Tax-Exempt
Organizations that don't pay federal income tax on revenue related to their charitable mission. Most charities are tax-exempt under section 501(c)(3), though other tax-exempt categories exist (like 501(c)(4) social welfare organizations).
Theory of Change
A comprehensive framework explaining how and why philanthropic interventions will lead to desired outcomes. It maps the logical connections between activities, outputs, and long-term impact.
U
Unrestricted Grant
A grant made without limitations on how the recipient organization uses the funds. Unrestricted grants provide nonprofits maximum flexibility to address their most pressing needs and are highly valued by organizations.
V
Values-Based Giving
A philanthropic approach where charitable decisions are guided by your core beliefs, priorities, and what matters most to you. Values-based giving ensures your philanthropy reflects your authentic self.
W
Wealth Transfer
The process of passing assets to heirs or other beneficiaries, often involving estate planning strategies. Charitable giving can be integrated into wealth transfer to reduce taxes and instill philanthropic values in the next generation.
