Glossary of common philanthropy terms

Charitable trust  

Sometimes referred to as a ‘foundation’, a charitable trust is governed by a board of trustees for charitable purposes. Trusts enjoy varying degrees of tax benefits in most countries and must comply with charity legislation. 

Charity  

A charitable organisation established for the benefit of society. The definitions and obligations of a charity vary between countries. 

Civil society  

Also known as the ‘third sector’, this refers to organisations established for public good outside of government or the corporate sector. 

Collaborative giving  

Donors – whether individuals, companies, foundations or governmental – joining forces to address societal problems. These groups often share information, pool costs and commit funds together, with the aim of having more impact than they could individually.

Community foundations  

A foundation that typically provides donations and support to charities operating in a specific geographical area. Community foundations exist all over the world and usually have a strong understanding of local needs. 

Core support/funding  

Donations given for the specific purpose of supporting running costs or overheads, such as office space, salaries and training.

Donation  

Also known as a ‘grant’ or ‘gift’, this term usually refers to money but may also include other assets, such as stocks, bonds, mutual funds, or simply time and expertise. Donations can be ‘restricted’ to a particular project or theme but may also be ‘unrestricted’, which means the charity can choose how they are used.

Donor-advised fund (DAFs)  

An alternative to a charitable foundation, DAFs allow donors to set up an account into which they can make tax-efficient gifts and provide donations over time. 

Due diligence  

The process of assessing an organisation prior to donating, which may include research, conversations and/or site visits.

Effective altruism  

A philanthropic approach (and community of philanthropists) informed by the use of data and empirical evidence, and with a goal to maximise impact and cost-effectiveness. There is a particular emphasis on funding projects whose outcomes can be tangibly measured.

Endowment  

A donation of either money or property into a charity – often a charitable foundation – for the purposes of generating investment income.

Equality  

The state or aspiration of everyone having the same rights and opportunities.

Equity  

A term that recognises people start out in life with different circumstances and therefore what it takes to achieve genuine equality is different for each person or group. 

ESG investing

This looks to drive financial value through a better understanding of an entity’s ability to mitigate the risks that may arise from environmental, social or governance factors. ESG investors also look to use engagement and voting rights to drive long-term shareholder value. Investments with strong ESG characteristics typically benefit from high operational quality – such as strong labour practices or low exposure to environmental risk.

Foundation  

See ‘charitable trust’. Family or private foundations are set up by individuals, whereas corporate foundations are linked to, and often funded by, a business.

Giving circle  

A group of donors who come together, usually around a common goal or theme, to share intelligence, pool resources and collectively fund programmes.

Governance  

Governance is the leadership of decision-making, controls and accountability, and provides a framework for the management of organisations. Good practice guidelines exist for charities and charitable foundations globally, while organisations must also follow guidance and legislation within their local jurisdiction.

Grant

A monetary gift, often with terms and conditions applied. See ‘donation’.

Grant-making  

Grant-making usually refers to a more structured approach to giving, whereby a donor reviews proposals, undertakes due diligence, agrees terms, makes the grant and usually monitors the recipient’s progress.

Grant monitoring  

The ongoing review and assessment of a grant to check that it is being spent in line with expectations and is achieving impact.

Grantee/beneficiary  

The organisation (more commonly) or individual in receipt of the donation. The term ‘beneficiaries’ also refers to the end recipients of the donation – i.e. the community that will be supported or receive services. Other terms used are ‘partner’ and ‘recipient’.

Impact  

The fundamental change that a donor seeks to make as a result of their giving. It is the difference that the donation makes, beyond what would have happened anyway over time.

Impact investing

This has a primary goal of achieving an impact objective. Financial return is secondary, and the impact is made through the addition of financial capital, as well as the impact of the investment’s economic activity. Impact investments are often, but not exclusively, within private markets.

Landscape analysis  

The process of examining the field in which a donor is interested in order to fully understand the problem and identify the players already acting in this space. A landscape analysis also considers what existing interventions are making progress, as well as identifying gaps and needs. The goal is to determine the unique value-add a donor can bring.

Legacy  

Legacy may refer to a gift made in someone's will (either assets or money), or more broadly to the impact that a family or individual wants to have in the world.

Lens investing/giving  

The concept of giving or investing in pursuit of a particular goal – for example, gender equality – with that lens applied across all of your processes and decision-making. 

Lived experience

Refers to people who have experienced first-hand the issues that an organisation or donor is seeking to address. It is recognised that for solutions to be most relevant and to address unequal power dynamics, people with lived experience should be involved in decision-making.

Multi-year grants/funding  

Donations made as a commitment for more than one year. This approach is viewed as good practice as it helps charities develop the security to make long-term plans.

Next generation

Usually refers to heirs to family fortunes who will be the new generation of donors and investors. Can also refer to creators of wealth, but their key characteristics are that they have different values, interests and priorities from their parents and grandparents.

Non-governmental organisation (NGO)

Interchangeable with ‘charity’ and more commonly used in international development.

Open-application process

The process whereby a donor, usually a foundation, publicly announces their intention to fund a particular cause or approach, and provides instructions on how to apply. 

Participatory grant-making

A form of giving in which grant decisions are fully or partially delegated to organisations or individuals from within the beneficiary community. 

Philanthropist  

A donor who uses their private wealth for the benefit of society.

Philanthropy  

Private wealth used for public good, usually in the form of donations.

Project funding

Giving that is targeted or ‘restricted’ to the delivery of a particular initiative.

Public benefit  

Under UK law, this term defines the purposes of a charity. It refers to the idea that a charitable organisation must exist to serve the wider community and this must be evidenced in its decision-making. 

Quality-adjusted life years (QALYs)

A metric used to quantify and compare the expected impact of interventions or actions on individuals' wellbeing. 

Randomised control tests/trials

Often seen as the ‘gold standard’, these are trials conducted on multiple groups to assess the impact of a particular intervention on a community’s development. In most cases, one set of participants will randomly receive a certain intervention and others will not. Those who receive the intervention are known as the ‘treatment group’ and those who do not are the ‘control group’.

Restricted/unrestricted funding

Restricted funding is allocated for specific use, while unrestricted funds can be used as the charity sees fit. 

Social enterprise  

A company with a social mission or purpose, which they prioritise above financial return.

Social investment

Any form of investment that combines financial objectives with social and environmental concerns. Social investments typically use non-conventional investment vehicles and seek to make investment available to individuals or communities that are unable to easily access loans from mainstream sources.

Spectrum of capital

A spectrum of capital maps different types of capital (traditional investing at one end and philanthropy at the other), showing how these approaches align to financial and impact goals. 

Spend-down/spend-out  

Usually used in relation to an endowed foundation, this refers to a decision to spend all capital within a defined time period.

Sustainable investing

This goes beyond ESG investing to look at an entity’s economic activity, assessing how it is aligned to sustainability objectives. Sustainable investing typically reflects an investor’s values, while pursuing a financial goal of maximising risk-adjusted return.

Systems change

A system is a configuration of connected parts which mutually influence each other, such as a food system, a marine environment or an economy. 

Systems change attempts to understand how these parts are organised and relate to one another in order to tackle the root causes of complex issues. The goal is not to focus on any individual part but to create conditions for transformative, lasting change at a broader level.

Theory of Change  

A comprehensive illustration of how and why a desired change is expected to happen in a particular context. A Theory of Change defines end goals and maps backwards to logically plot the steps needed to achieve the desired outcome.

Trust-based philanthropy  

A philosophy of giving which prioritises trust in the capability of charities and shifts the donor relationship to a partnership. Key characteristics include unrestricted giving and donor transparency.

Venture philanthropy

A way of giving that brings principles of venture capital financing to philanthropy. It usually implies rigour in identifying ‘high-impact’ social enterprises or charities to support and backing a portfolio of organisations.

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