Topic Papers and Articles

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360-degree evaluation

a form of employee evaluation in which supervisors, subordinates, and colleagues participate in the evaluation

501(c)(3)

refers to public charities and private foundations as defined by the IRS

501(c)(4)

refers to social welfare organizations as defined by the IRS

501(c)(6)

refers to trade associations and business leagues as defined by the IRS

501(h) election

an option for public charities (except churches) to measure their permissible lobbying activity using an expenditure test

527

Internal Revenue Code Section 527 regulations apply to political organizations; these include political action committees

A

Accountability

a board’s sense of responsibility, building of trust, and credibility with the public and constituents

Action organization

an organization whose primary objective may be obtained through lobbying and influencing legislation

Ad hoc committee

a temporary committee or task force established to address a specific issue

Advisory council

a group created to advise and support a nonprofit and its board, also called advisory group, advisory committee, or advisory board; usually focuses on a specific issue

Advocacy

representing an organization through articulating the mission and supporting and defending the organization’s message

Affiliate

a local chapter, an auxiliary group, or a branch of a (usually) national parent organization

Agenda for meetings

an outline for what will be discussed at a meeting; provides structure for a meeting

All volunteer organization (AVO)

a nonprofit organization that is managed and governed by volunteers

Altruism

an unselfish need and wish to help build a better world

Annual campaign

a fundraising program that occurs annually to help raise basic operational funds

Arm’s length transaction

a financial transaction where both parties act independently and agree on a fair price for a product or service

Articles of incorporation

an official statement of creation of an organization; it is filed with the appropriate state agency

Articles of organization

a charter for an unincorporated organization

Assets

all money and property owned by an organization

Association

a membership organization that may be incorporated or unincorporated

Attorney general

a senior state attorney; state government position to which nonprofits are accountable

Audit

a review of financial and/or legal transactions and activities of an organization

B

Board cycles

a term used to describe the evolution of an organization’s board from creation to full operation and establishment

Board development

a process of building effective boards and educating board members about their governance role

Board member

a person sharing the responsibility and liability for the organization with the rest of the members of the board

Board member agreement

a verbal or written commitment outlining board member expectations

Board member profile grid

a tool helping identify desired characteristics and gaps on a board

Board of directors

governing body of a nonprofit or for-profit corporation; the board has specific legal and ethical responsibilities to the organization

Bylaws

the legal operating guidelines for a board

Bylaws amendment

a change to the original bylaws of an organization; the bylaws themselves should outline amendment procedures

C

Capital campaign

a fundraising program to help raise funds for major capital projects or an endowment

Carver, John

an author and lecturer about board governance, as well as the creator of the Policy Governance Model

Case statement

a tool used in fundraising to help articulate the purpose and goals of a specific campaign

Cause related marketing

a form of corporate sponsorship where a company promotes a cause or organization by donating a percentage of the profits generated from the sale of a specific product

CEO

the chief executive officer; top staff position of a nonprofit organization or a for-profit company

Chair

the chief volunteer position in the organization; elected leader of the board

Chapter

a member or affiliated organization of a federated organization

Charitable contribution

a tax-deductible donation given to a nonprofit organization

Charity

a nonprofit organization providing a public service as defined by the Internal Revenue Code Section 501(c)(3)

Charter

the legal organizational document for a nonprofit; also known as the articles of incorporation or articles of organization

Chief executive

the top staff position of a nonprofit organization, also called CEO or executive director

Code of conduct

the high ethical standards expected of every board member

Committee

a subgroup of a board organized to help manage the board’s work

Community foundation

a foundation whose mission is to support a specific community

Confidentiality clause

a board policy defining unauthorized and improper disclosures of confidential information by board members

Conflict of interest

a situation in which the personal or professional concerns of a board member or a staff member affect his or her ability to put the welfare of the organization before personal benefit

Consent agenda

a component of the meeting agenda that groups routine items and resolutions as one agenda item

Constitution

this usually refers to the organizational documents of an organization

Consultant

an expert providing professional advice or services

Corporate foundation

a foundation whose funds are provided by a specific corporation; representatives of the corporation supervise disbursement of funds

Corporate name search

a state or national search of corporate names; should be performed as a part of the creation of the organization to ensure that the name of the nonprofit is unique

Corporate sponsorship

a relationship between a nonprofit and a company where the nonprofit receives monetary support, goods, or services in exchange for public recognition of the company

Corporation

a legal entity that exists to perpetuity until it is dissolved; a ‘fictitious person,' separate from its managers or governors, usually given the same rights and obligations as natural persons

D

D&O (Directors’ and Officers’) insurance

insurance that protects board members and top staff personnel from liability created by board decisions or actions

Determination letter

an official notification by the IRS stating that a nonprofit is recognized as a tax-exempt organization

Development

a term used to describe all methods of obtaining funding or support for an organization

Direct marketing

a fundraising method relying on a one-to-one form of communication

Disclosure form

a form on which board members annually detail personal and professional connections that could create a potential conflict of interest

Disclosure requirement

regulations requiring nonprofits to share financial or other information with the public, defining IRS form 990 as a public document

Dissolution of nonprofits

the formal procedure by which a nonprofit ceases to operate or exist; involves filing with the state and distribution of assets

Diversity

inclusivity; equal opportunity; collective mixture of participants

Domestic corporation

a corporation is considered domestic in the state where it has filed its articles of incorporation; it is foreign in any other state

Donor-advised funds

donations given to an entity in which the donor retains some control over how the funds are spent

Due diligence

an expectation that a board member exercises reasonable care and follows the business judgment rule when making decisions

Duty of care

an expectation that a board member exercises reasonable care when making decisions

Duty of loyalty

an expectation that a board member remains faithful and loyal to the organization

Duty of obedience

an expectation that a board member remains obedient to the central purposes of the organization and respects all laws and legal regulations

E

EIN (Employee Identification Number)

a number issued by the IRS to all corporations

Emeritus status

an honorific title usually given to a former board member who is invited to stay on board as a non-voting member in an advisory capacity

Endowment

a fund or collection of assets whose investment earnings support an organization or a specific project

Estate tax

a federal tax on inheritances over a specific amount; planned giving can provide a way to avoid paying some or all of this tax

Ex officio

"by reason of their office"; a person serving on a board due to his or her position rather than through elections

Excess benefit transaction

a transaction in which an economic benefit is provided by a nonprofit, directly or indirectly, to a disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration (including the performance of services) received by the organization

Excise tax

a tax issued by the IRS on nonprofits that violate specific regulations

Executive committee

a committee that has specific powers, outlined in the bylaws, which allow it to act on the board’s behalf when a full board meeting is not possible or necessary

Executive session

a meeting of a board in which no staff are present

F

FASB

the Financial Accounting Standards Board; organization that develops concepts and standards for financial accounting and reporting for organizations and businesses; these standards are recognized as authoritative by the Securities Exchange Commission and the American Institute of Certified Public Accountants

Feasibility study

a first step for a capital campaign to determine whether adequate support exists to launch the campaign

Federated organization

an organizational structure composed of a national umbrella organization and smaller local chapters

Fiduciary duty

a responsibility of board members and the nonprofit board as a whole to ensure that financial resources of an organization are sufficient and handled properly

Fiscal agent

an organization or a legal entity managing the funds for a nonprofit organization

Fiscal sponsor

an arrangement where an established nonprofit provides financial support for a project that may be independent or which has yet to obtain its own tax-exempt status

Foreign corporation

a corporation that is incorporated in another state than where it carries out business

Form 1023

an application form for nonprofits that want to be recognized as a 501(c)(3) organization

Form 1024

an application form for nonprofits that seek tax-exempt recognition as any other type of 501(c) organization than a 501(c)(3)

Form 8282

a Donor Information Return form to be filed by a charity that sells property valued over $5,000 that was donated to the organization

Form 8283

a Noncash Charitable Contributions form to be filed by an individual who claims a total charitable deduction worth more than $500

Form 8718

a User Fee for Exempt Organization Determination Request Letter form to be sent to the IRS with your application form and payment

Form 990

an annual information form submitted to the IRS

Form 990-PF

an information form for private foundations to be filed with the IRS

Form 990-T

a financial form for organizations who must pay unrelated business income tax

Form SS-4

an application form for an Employee Identification Number

Foundation

a tax-exempt nonprofit organization that normally distributes funds rather than running its own programs

Founderitis

a situation in which the founder of an organization is resistant to changes proposed by the board

Fund accounting

a nonprofit accounting method that separates various restricted assets in different fund categories

Fund balance

an organization’s claim to its assets; the net worth of the organization

Fundraiser

a special event or activity organized to raise funds for a nonprofit

Fundraising

a wide variety of activities that help generate donations for an organization

G

Governance

the legal authority of a board to establish policies that will affect the life and work of the organization while holding the board accountable for the outcome of such decisions

Governance committee

a committee responsible for recruiting, orienting, and training of board members

Grant

funding provided to an organization through a foundation or government source

Grassroots lobbying

influencing legislation indirectly by attempting to mold the general public’s opinion on an issue

Group exemption

IRS tax-exempt recognition of all organizations under an already recognized 501(c)(3)

I

In-kind donation

a donation of products or services instead of money to a nonprofit by a company or individual

Incorporation

a legal process in which a group is created and recognized by the state as an entity separate from the individuals who manage or govern it

Incorporator

a person or group who signs and delivers the articles of incorporation to the appropriate state agency

Indemnification

a guarantee by an organization to rely on its own resources to pay board members' legal costs for claims that result from board service

Independent contractor

an individual who is contracted to perform a specific project or service for a specified amount

Insider

a board, staff, or family member of a board or staff member who has influence on the decisions made by the organization

Intermediate sanctions

IRS regulations creating penalties for nonprofit board members and staff who receive or authorize an excessive benefit transaction for an insider

Involuntary dissolution

a mandate from the state requiring a nonprofit to cease all operations and distribute all assets

IRS (Internal Revenue Service)

a government agency that regulates the tax-exempt status of nonprofit organizations

J

Joint venture

a specific project or event conducted by two or more nonprofits, or a nonprofit and for-profit corporation

K

Knowledge management

capturing, compiling, and disseminating data or information and turning it into knowledge

L

Lead gift

a major gift, usually from a board member to launch a capital campaign

Legal audit

a process of systematically reviewing all legal documents and processes, usually with professional help

Liability

any legal responsibility, duty, or obligation

Lobbying

attempting to influence legislation through direct contact with lawmakers or with constituents

M

Membership organization

a nonprofit that grants its members specific rights to participate in its internal affairs

Mentoring

an orientation tool where an experienced board member helps teach new board members about the organization and the work of the board

Merger

combining two organizations into one nonprofit

Micromanagement

this usually refers to a manager who is paying too much attention to details and is not focusing on the big picture

Minutes

a legal written record of what occurred during a meeting

Mission

the fundamental purpose and reason to exist for an organization

Mission statement

this describes the needs the organization was created to fill and answers the basic question of why the organization exists

MSO (Management Support Organization)

an organization providing management assistance services for other nonprofits

Mutual benefit organization

a nonprofit providing services to its members rather than the public in general

N

NGO (Non-Governmental Organization)

any nonprofit organization that is independent from government

Nonprofit organization

an organization established for activities other than profit making

Nonprofit sector

this includes organizations that are independent from government and not part of the for-profit business sector

Not-for-profit

a term that usually refers to an activity rather than to a nonprofit organization as an entity

O

Officer

a board leadership position; typically refers to the chair, vice chair, secretary, or treasurer

Open meeting laws

also called “Sunshine Laws”; state regulations that require government agencies and some nonprofit organizations receiving public funding to open at least some of their board meetings to the public

Operating foundation

a foundation that actively runs programs rather than just distributing grants

Operational reserves

a reasonable buffer against unforeseen, seasonal, irregular, or exceptional cash shortages

Orientation

educating board members on their roles, responsibilities, their organization, and how the board works

P

PAC (Political Action Committee)

a separate organization or a segregated fund whose function is to influence federal, state, or local public office elections

Piercing the corporate veil

a failure to maintain separate records or commingling of funds and assets

Planned giving

gifts through wills, bequests, or trusts

Policy

a written plan used to influence and determine decisions or actions about a specific issue

Policy governance

a structured governance model created by John Carver

Policy manual

a book in which all policies are compiled

Political organization

a party, committee, association, or fund organized and operated for the purpose of influencing federal, state, or local public office elections

President

a term used to describe the chief volunteer officer or the chief staff officer of an organization

Private inurement

this happens when an insider, an individual who has sizable influence over the organization, enters into an arrangement with the nonprofit and receives benefits greater than she or he provides in return

Public support test

an IRS regulation used to determine whether a nonprofit organization is a private foundation or public charity; involves determining the source of the majority of funding for the organization

Q

Quid pro quo contribution

a donation that is given with the condition that the donor receives something in return

Quorum

a minimum number of people required at a meeting in order for business to be conducted

R

Relief organization

an organization that provides humanitarian aid

Retreat

a day or weekend event where the board or staff go to a location outside of the office or board room and focus on a specific issue or a specific group of issues; examples include orientation, strategic planning, or self-assessment

Robert’s Rules of Order

a parliamentary procedure used to conduct meetings

S

Secretary

an officer position that involves taking minutes and keeping records and archives of the board

Self-assessment

a process by which the board evaluates its own performance

Staggered term limits

an organizational structure where board members' terms expire in alternating years

Sunshine laws

also called open meeting laws; state regulations that require government agencies and some nonprofit organizations that receive public funding to open at least some of their board meetings to the public

SWOT analysis

a tool for strategic planning; focuses on strengths, weaknesses, opportunities, and threats

T

Tax-deductible donation

a donation in which the donor can deduct the amount of the donation from his or her taxable income

Term limits

a restriction on the number of consecutive terms that a person can serve as a board member

Third sector

a term used to describe the nonprofit sector, as it is separate from government and the for-profit sector

Transparency

a system of operation that allows outsiders to see how the organization operates, makes decisions, and uses resources; an important aspect to ensure the public trust in an organization

Treasurer

a board officer position that is responsible for coordinating and ensuring financial oversight of the organization

U

UBI (Unrelated Business Income)

income generated by a nonprofit through activities that are not related to the mission of the organization

UBIT (Unrelated Business Income Tax)

a tax levied on the unrelated business income of a nonprofit; the tax is equivalent to corporate taxes

Unincorporated association

an organization that has decided not to seek incorporation by the state

V

Values statement

a written description of the beliefs, principles, and ethical guidelines that direct a nonprofit’s planning and operations

Vice-chair

a board officer whose main duty is to replace the chair when the chair is not able to carry out his or her duties

Vision

a picture or a dream of a desired future

Vision statement

a written description of the ultimate desired objective of the organization

Voluntarism

this refers to anything voluntary

Volunteer

a person working without compensation

Volunteer Protection Act

a law that protects volunteers from personal financial liability when acting for an organization

Volunteerism

this refers to volunteers and volunteer activities