We hope you find this glossary of fundraising terms for nonprofits helpful. We recommend bookmarking this page for current and future nonprofit fundraising questions.
The 501(c)(3) section of the Internal Revenue Code designates an organization as charitable and tax-exempt. Organizations qualifying under this section include religious, educational, charitable, amateur athletic, scientific or literary groups, organizations testing for public safety, or organizations involved in prevention of cruelty to children or animals. Most organizations seeking foundation or corporate contributions secure a Section 501(c)(3) classification from the Internal Revenue Service (IRS).
Foundations or corporations publish an annual voluntary report to describe their grant activities. It may be a simple, typed document listing the year’s grants or an elaborately detailed publication. A growing number of foundations and corporations use an annual report as an effective means of informing the community about their contribution activities, policies, and guidelines. The annual contributions report is not to be confused with a corporation’s annual report to the stockholders.
Your fundraising appeal is your organization’s request for donations to support your mission. It can take the form of an email, print letter, social media post, or it can even occur during a live or broadcasted event. An appeal explains your cause, shows its impact, and creates a sense of urgency on the part of your donor.
Crowdfunding is a fundraising method where an individual or organization asks many people for small donations to reach a larger goal. In an online crowdfunding campaign, the fundraiser creates a personalized page on a site that allows them to collect donations, share the page via social media channels and email, and update people on their progress.
Donor-Advised Fund (DAF)
A 501(c)(3) organization administers an account, known as a donor-advised fund, that acts as a fiscal sponsor to manage donations on behalf of organizations, families, or individuals. This fund allows people to make a donation in return for an immediate tax benefit. The fiscal sponsor has legal control over the fund, but contributors retain the right to recommend (or advise) which groups or projects the assets should benefit.
Your donor database contains the list of people who’ve given to your organization, either currently or at some point in the past. It might also include people who are strong potential donors, such as volunteers, or anyone who has attended one of your events. A donor database will include things like contact information, when and how much a person gave, whether they’re recurring donors, and how often they volunteer with your nonprofit.
A donor-designated fund is held by a community foundation where the donor has specified that the fund’s income or assets be used for the benefit of one or more specific public charities. These funds are sometimes established by a transfer of assets by a public charity to a fund designated for its own benefit, in which case they may be known as grantee endowments.
Donor retention is the percentage of people who repeatedly support your organization. Organizations typically calculate retention rates by year.
Giving Tuesday is a global day of giving that takes place on the first Tuesday after Thanksgiving as a way of countering the consumer-oriented holiday shopping season. Often hashtagged #GivingTuesday on social media, the event began in 2012 by the 92nd Street Y in New York City in partnership with the United Nations Foundation. Today, it’s a global fundraising event that engages more than 10,000 nonprofits.
LYBUNT is an acronym for donors who gave “Last Year But Unfortunately Not This” (year). Also referred to as lapsed donors, they can be great prospects to reach out to during your year-end appeals.
A monthly giving program allows supporters to make an automatic donation of a specific amount every month, typically as a recurring credit card charge. Donors who might not be able to give a large one-time gift are often willing to sign up for monthly giving, ultimately donating more over time than they would have otherwise.
Also known as social fundraising, peer-to-peer is a fundraising method where supporters raise donations from their social networks on an organization’s behalf. The nonprofit usually supplies the tools, such as social media assets, a personalized fundraising page, and sample messages, to help their fundraisers succeed.
Recurring giving is an important option on your donation page that allows donors to give an amount in regular increments, typically monthly. Donors will often choose recurring gifts when presented with the option. Recurring giving is an easy and effective way to boost overall fundraising over the course of a year, so this option should be prominently displayed on your donation page. People who strongly support your cause but might not be able to make a large donation all at once like recurring giving because it allows them to give more over time than they could otherwise. It also helps your organization budget more effectively since you can predict how much money will likely come in going forward.
Segmentation refers to breaking down your overall audience or email list into smaller, targeted groups that your organization can market to directly. Some ways to segment your audience are by giving history (frequency and how long they’ve been a donor), lapsed donors, gift size, program interest, and email inactivity.
SYBUNT is an acronym for donors who gave “Some Year But Unfortunately Not This” (year). Depending how long it’s been since they gave and how often, these folks can be good prospects to reach out to during your year-end appeals.
The tax-deductible amount is the part of a donation a donor can claim as a deduction on their income tax return. Charitable donations must be paid in cash or other property before the close of the tax year to be deductible. In general, donations to charities can be deducted up to 50% of adjusted gross income, though some gifts to private foundations, veterans’ groups, etc., have lower limits.
Unrestricted funds are financial gifts an organization may use as it sees fit, such as to offset operational expenses like rent, payroll, and utilities.