Commonly Used Terms
501 c 3
This refers to the Section of the Internal Revenue Code that designates an organization as charitable and tax-exempt.
Assets
Money, real estate, stocks, bonds or other holdings of the foundation. These assets are invested and the interest income is used to fund grantmaking activities.
Agency Endowment
A sum of money placed with MCCF by a local not-for-profit organization. The interest income from an agency endowment serves as a perpetual source of income for the organization that places the endowment with MCCF.
Bequest
A sum of money that a donor leaves to the foundation upon his or her death.
Endowment
A sum of money that is kept permanently and invested to create income in perpetuity. All of MCCF’s holdings are considered endowment funds.
Grant
A financial award to an organization that funds charitable activities.
Grantmaking Cycle
A chronological pattern in which grant applications are reviewed, subjected to discovery and decision-making, and in which applicants are notified. MCCF has three grantmaking cycles annually.
Grantee
A not-for-profit organization that receives grant monies from MCCF.
In-Kind Contribution
A gift of goods or services rather than appreciated securities, cash, or property.
Operating Endowment
The money that is permanently set aside to generate the interest income that funds the grantmaking, fundraising, and administrative functions of the foundation.
Public Support Test
A test that ensures that a foundation receives at least one third of its financial support from the general public, and is thus not captive to the private interests of a limited number of persons.
Tax-Exempt Organization
An organization that is not obligated to pay state and/or federal income taxes.
General Endowment
A fund made up of unrestricted gifts. Used at the discretion of MCCF’s Board of Directors to fund a wide variety of community needs, projects, and programs.
Unrestricted Fund
A donated fund that is not designated in any way by the donor. An unrestricted fund is maintained separate from the General Endowment. The income from unrestricted funds is disbursed at the discretion of the foundation’s Board of Directors.
Field of Interest Fund
A fund in which the donor specifies what types of activities the interest income should support. No specific agency is named as recipient of interest income, but rather a broader interest area such as literacy, youth, medical assistance, cultural programs, social services, etc. is designated as the fund purpose.
Donor-Advised Fund
A fund in which the donor’s suggestions are considered as the Board of Directors makes grants. While the Board of Directors must make the final decision regarding fund recipients, the donor’s input is taken into account.
Scholarship Fund
A fund which the donor has designated to the benefit of students. Scholarship funds may be subject to specific criteria, such as awards for students who excel in certain subjects, students of particular socioeconomic circumstances, etc., depending upon the wishes of the donor.
Restricted Fund
Restricted funds are established in order to benefit a specific organization. Donors who want to provide perpetual support to an organization that they value may establish a restricted fund to provide a permanent income stream to that organization.
Investment committee
The group of MCCF board members and carefully selected community members who make decisions regarding the investment of MCCF’s endowment funds.
Investment policy
A set of guidelines which binds the investment committee. The investment policy is designed to protect foundation assets while allowing for a reasonable return.
Lilly Endowment
The Indianapolis-based private charitable foundation. The Lilly Endowment has provided funds to MCCF through a series of GIFT (Giving Indiana Funds for Tomorrow) programs.
Planned Giving
A way to manage wealth so that donors ultimately control the destiny of more of their capital. Some planned giving options offer lifetime income payments and significant tax advantages.
