Demystifying the Grant Lexicon

LOI, RFP, program officer, annual return… The list of grant-related terminology is long, and even the most seasoned professional may find themselves needing to consult a dictionary. 

Are you fluent in the grant lexicon? 

Take this short quiz to find out:

1.) An in-kind donation is:

• A.) a pledge of funds made at an annual fundraising event;
• B.) a donation in the form of goods or services; or
• C.) a small grant made to a grassroots organization.

2.) An endowment is:

• A.) a gift to a nonprofit made in a person’s will;
• B.) a collection of assets used by a nonprofit or foundation to generate investment income; or
• C.) a large and unexpected gift made by a major donor.

3.) A capital campaign refers to:

• A) fundraising efforts aimed at raising money for advocacy;
• B.) fundraising efforts aimed at raising money to purchase or renovate a building or property; or
• C.) fundraising efforts carried out by politicians.

If you answered B to all of the above, you may very well be a grant wordsmith. However, these terms are constantly evolving, so you may discover something new in the following grant glossary.

If you missed one or more questions on the quiz, don’t fret! For those new to the world of grant proposal writing, the terms surrounding the world of philanthropy and grants can seem mystifying. What follows is a condensed dictionary of grant and philanthropy-related terms designed to get you up to speed.

Let’s take a look at some of the more common terms, and a few that have emerged in response to recent trends.

A Glossary of Terms from A to (Almost) Z

Administrative Costs (see Indirect Costs)

Annual Return (also: IRS Form 990) – This is a tax return that all public charities and foundations are required to file with the IRS each year. For those conducting grant research, it can provide valuable information on a foundation’s annual giving, grants awarded, and specific grant amounts. GrantStation Members can access the annual return for funders in the U.S. Charitable database. The IRS also provides a tax exempt organization search feature on its website.

Attack Philanthropy – This is a term conceived by conservative billionaire donor Barre Said, who founded the Marble Freedom Trust. It refers to “looking for ways to place financial bets that had the potential to make epochal change.” Barre engaged in this form of philanthropy to shape the arc of history, anonymously funding issues such as climate change denial. 

Budget Detail (see Budget Narrative)

Budget Justification (see Budget Narrative)

Budget Narrative (also: Budget Detail or Budget Justification) – This is a written description of the items laid out in the budget of a grant proposal, including the purpose of each expense and how those expenses were calculated.

Call for Proposals (see Request for Proposals)

Capital Campaign – This is a concerted fundraising effort aimed at raising a large amount of money in a restricted amount of time. It often involves the purchase of a building or land, or the renovation of facilities.

Challenge Grant (see Matching Grant)

Community Foundation – This is a public charity that pools funds (mostly from the public) to benefit a specific geographic area, typically supporting local nonprofits. They generally offer funding through a number of programs such as a general grant program, field of interest funds, designated funds benefiting specified charities, and scholarships. Community foundations can be found throughout the world, but they are particularly concentrated in the United States and Canada.

Crypto Philanthropy – This refers to the practice of donating cryptocurrency in lieu of traditional forms of giving such as cash or stocks. Donations of cryptocurrency are usually made by individual donors to a nonprofit organization, although some funders such as UNICEF’s CryptoFund are now awarding grants denominated in cryptocurrency. Receiving crypto donations can be a logistical challenge, and companies such as the Giving Block and BitPay have emerged to facilitate this process.  

Direct Costs (see also: Indirect Costs) – This refers to costs that are directly related to the delivery of a program, project, or service. For example, for an organization running a children’s sports program, direct costs would include hiring a coach, buying uniforms and sports equipment, and transportation costs to and from games.

Donor-Advised Fund (DAF) – This is a charitable investment account in which individuals, families, or organizations can make donations and receive an immediate tax benefit, without being required to disburse funds in a specified time frame. DAFs are usually managed by a third party, such as a community foundation or other entities such as Fidelity Charitable, Schwab Charitable, or Vanguard Charitable, with donors advising on the disbursement of funds to nonprofit organizations. Proponents claim that DAFs enable donors to be more flexible and grow their donations over time, while critics argue that they warehouse wealth at the taxpayer’s expense.

Effective Altruism – This is defined by proponents as “both a research field, which aims to identify the world’s most pressing problems and the best solutions to them, and a practical community that aims to use those findings to do good.” It often involves some sort of cost-benefit analysis to determine which problems to focus on and how many people can benefit from a given intervention. Members of the effective altruism community may do good by donating to effective nonprofit organizations, choosing careers that can have a positive impact on the world, or founding a new nonprofit or company.

Endowment – This refers to a foundation’s or nonprofit organization’s invested assets, which typically include cash, stocks, bonds, and sometimes real estate investments. The principal of these investments is generally kept intact, with income being used by foundations to distribute grants and by nonprofits to pay for expenses.

Evaluation – This refers to the process of gathering data to determine whether a given program or intervention has achieved its intended outcomes (outcome evaluation) and the process used to achieve those outcomes (process evaluation). Grant proposals often require an evaluation plan outlining how the organization will conduct their analysis. Evaluations may be carried out by a professional evaluator or a team from within or outside of the organization. (GrantStation Members can learn more about evaluations here.)

Fiscal Sponsor – This refers to an established nonprofit organization that utilizes their legal and tax-exempt status to help unregistered organizations or projects get funding. In order to receive foundation funding, U.S. nonprofit organizations usually need to have their 501(c)(3) status. A fiscal sponsor can help an organization without this status by receiving grants on their behalf, and then managing or providing fiduciary oversight for those funds. 

Foundation – This refers to a type of charitable trust or nonprofit organization that typically awards grants to other nonprofit organizations that align with its mission. Examples of different types of foundations include private foundations (often funded by individuals or families), community foundations (largely funded by the public), and corporate foundations (funded by companies).

Full Proposal (see Grant Proposal)

Funding Guidelines (also: Guidelines) – This refers to the criteria laid out by a funder that outlines which organizations and types of programs are eligible for funding. The funding guidelines usually define this criteria by geographic scope, areas of interest, and the types of organizations that are eligible for funding. The funding guidelines also outline the documents a nonprofit needs to submit in their grant applications, with details on questions to answer and attachments to include.

General Operating Support (also: Operating Support, Unrestricted Funds) – This refers to funding that supports an organization’s mission, and is not tied to a specific program or project. This type of support may enable an organization to meet its day-to-day operating needs, such as paying staff salaries and office-related expenses. While foundations traditionally have awarded project support to their grantees, general operating support became more common during the pandemic.

Giving Circle – This is a voluntary association formed for philanthropic purposes. Typically, each individual in the giving circle donates a specified amount of money each month or year, and as a group, the giving circle decides where to donate the funds. Giving Circles are found around the world and are often organized by location, identity, or a specific theme. Philanthropy Together hosts a directory of giving circles.

Grant Agreement – This refers to a legal agreement between a funder and a grant recipient that outlines the terms and conditions of the grant. Upon receipt of a grant award, the grantee typically must sign the grant agreement prior to receiving funds.

Grant Management – This refers to the process of administering a grant once it has been received. Different aspects of grant management include monitoring to ensure that progress is being made towards goals and objectives, tracking expenses, and ensuring that grant requirements are being met.

Grant Monitoring (see Monitoring)

Grant Proposal – (also: Proposal, Full Proposal) This refers to a written request for a grant, and typically explains why funding is needed for a specific program or project. A grant proposal, or full proposal, is oftentimes submitted following the approval of the more succinct letter of inquiry. Common elements of a grant proposal include the organizational background, statement of need, a description of the program or project activities, outcomes and indicators, budget, budget narrative, timeline, and the evaluation plan. (GrantStation Members can learn more about how to write an effective grant proposal here.)

Guidelines (see Funding Guidelines)

Impact (see Program Goals and Objectives)

In-Kind Donation (see also: Product Donation) – This refers to non-monetary donations of goods or services. In-kind donations may include product donations (such as computer equipment or raffle prizes), as well as the donation of professional services, volunteer time, and buildings or land. (GrantStation Members can learn more about the different types of in-kind donations and how to secure them here.)

Indirect Costs (also: Administrative Costs, Overhead) – This refers to any cost that is not directly related to a program, project, or service. For example, expenses related to the day-to-day running of an organization such as rent, utilities, and non-program related salaries can be considered indirect costs or overhead expenses. (See also: Direct Costs)

IRS Form 990 (see Annual Return)

Letter of Inquiry (LOI) (also: Letter of Intent) – This is a short letter that provides an overview of the organization and the funding request. Many foundations require this as the first step in the application process. Applicants that make it through this round are usually invited to submit a grant/full proposal, or application.

Letter of Intent (see Letter of Inquiry)

Limited Liability Company (LLC) – This type of business structure is increasingly used by billionaire donors as a giving vehicle in lieu of establishing a private foundation, as it provides them with more flexibility. LLCs are not required to make minimum distributions, are not prohibited from engaging in lobbying, and are afforded more privacy (or are less transparent) than their foundation counterparts. One famous example is the Chan Zuckerberg Initiative.

Logic Model (also: Road Map, Theory of Change) – This refers to a visual representation of how a program is intended to work. Logic models can be utilized for new projects, as an aid in the planning phase, or for existing projects, as a method to describe, improve upon, or evaluate the results of a project.

Matching Grant (also: Challenge Grant) – This type of grant requires the recipient to raise a certain amount of money before receiving the grant. Matching or challenge grants can have different ratios. A 1:1 match means that an organization receiving a $50,000 grant would first need to raise $50,000. Oftentimes, nonprofits can calculate the value of volunteer hours, product donations, or other non-cash donations towards the required matching amount.

Monitoring (also: Grant Monitoring) – This refers to the process of tracking a project’s or program’s progress toward its goals and objectives. Grant monitoring, specifically, refers to the funder’s oversight of a project to ensure that funds are being spent appropriately and program objectives are being met. Grantees are often required to regularly submit grant reports to funders for this purpose.

Need Statement (also: Statement of Need, Needs Assessment, Problem Statement) – This is a part of a grant proposal that describes the problem or need that a project or program is intended to address. This is a crucial component of any grant proposal in that it provides background on the need or problem by providing relevant data, and conveys a sense of urgency to the funder.  

Needs Assessment (see Need Statement)

Operating Support (see General Operating Support)

Outcomes and Indicators (see Program Goals and Objectives)

Overhead (see Indirect Costs)

Pass-Through Funding – This is a type of funding issued by the U.S. government, specifically “funds issued by a federal agency to a state agency or institution that are then transferred to other state agencies, units of local government, or other eligible groups per the award eligibility terms.”

Payout Rate – This refers to the percentage of a foundation’s assets or endowment that is distributed as grants each year. In the U.S., foundations are legally required to disburse 5% of their endowment’s market value on a yearly basis.

Planning Grant – This refers to a type of grant that enables an organization to plan a new project, program, or initiative.

Problem Statement (see Need Statement)

Product Donation – This refers to the donation of products. Corporate funders usually provide this type of donation.

Program Goals and Objectives (also: Outcomes and Indicators, Impact, Results) – This refers to the visionary goals of what your program is trying to achieve with specific, measureable, achievable, realistic, and time framed (SMART) objectives. (GrantStation Members can learn more about how to set program goals and objectives here, and specifically, grant program goals and objectives here.)

Program Officer – This is a foundation employee who manages a portfolio of grants, works with grant applicants, and monitors the program outcomes of existing grantees. The program officer is often the first point of contact for a grantseeker.

Program Support (see Project Support)

Project Support (also: Program Support) – This refers to funding that is awarded to support a specific project (or program). This is the most common type of support awarded by foundations.

Proposal (see Grant Proposal)

Request for Applications (see Request for Proposals)

Request for Proposals (RFP) (also: Call for Proposals, Request for Applications) – This is a formal solicitation for grant proposals or letters of inquiry which is usually announced on a foundation’s website. RFPs typically focus on a specific thematic area with applications being accepted for a limited time period.

Results (see Program Goals and Objectives)

Road Map (see Logic Model)

Seed Funding (also: Startup Funding) – This refers to funding awarded in the start-up phase that helps launch a new program or initiative, and may include support for pilot programs.

Startup Funding (see Seed Funding)

Sunset – This refers to the process of winding down or ending a foundation’s lifecycle. It usually involves spending down the foundation’s endowment until the funds have been entirely exhausted and the foundation closes its doors. However, most foundations are set up to exist in perpetuity, with only the returns on investments being spent in any given year.

Site Visit – This refers to a visit by foundation staff, typically a program officer, to a nonprofit’s office or program site in order to learn more about the organization and its work. It is usually conducted as part of the due diligence process before awarding a grant, in order to help determine whether the organization will receive funding.

Statement of Need (see Need Statement)

Target Population – This refers to the group of people who are intended to benefit from a project or program, and might be defined by race, gender, income, age, or other identifiable characteristics.

Technical Assistance – This refers to a type of non-financial support provided by foundations or other organizations to help nonprofits improve their operations or programs. Examples of this type of assistance include consulting services related to fundraising, grant proposal writing, and staff development.

Theory of Change (see Logic Model)

Trust-Based Grantmaking (see Trust-Based Philanthropy)

Trust-Based Philanthropy (also: Trust-Based Grantmaking) – This refers to a philanthropic approach that aims to rebalance the power dynamic between funders and grant recipients by establishing relationships based on mutual trust and respect. The Trust-Based Philanthropy Project outlines six practices of trust-based philanthropy for funders: giving multi-year unrestricted funding, doing the homework, streamlining the paperwork, being transparent and responsive, soliciting and acting on feedback, and offering support beyond the check.

Unrestricted Funds (see General Operating Support)

Unsolicited Proposals – This refers to grant proposals submitted by nonprofit organizations that haven’t been solicited by the funder. In other words, it refers to proposals submitted by applicants on their own initiative, and not in response to a request for proposals or other direct solicitation from the grantmaker. (Some foundations engage in strategic grantmaking, whereby they themselves research and identify organizations to support.)