If you are just starting to get acquainted with nonprofits and grantmaking, you could be overwhelmed by all of the new terminology. Here are some common terms and definitions.

501(c)(3): Section of the Internal Revenue Code (“Code”) that designates an organization as charitable, tax-exempt and nonprofit.

509(a): Section of the Code that defines public charities (as opposed to private foundations). A 501(c)(3) organization may also have a 509(a) designation to further define the agency as a public charity.

IRS Form 990: The return of organizations exempt from tax. It is filed annually with the Internal Revenue Service (“IRS”) and often the state Attorney General or Secretary of State offices by tax-exempt organizations.

IRS Form 990-PF: The return of private foundations. It is filed annually with the IRS by all private foundations.

Endowment: A bequest or gift that is intended to be kept permanently and invested to generate income for an organization or foundation.

Foundation: A private, nonprofit organization with funds and a program managed by its own trustees and directors, established to further social, educational, religious, or other charitable activities by making grants.

Grant: The award of funds to an organization to undertake charitable or tax-exempt activities.

Grantee: Individual or organization that receives a grant. Also called a donee.

Grantor: Individual or organization that makes a grant. Also called a donor.

Independent Foundation: A private foundation that is no longer controlled by the original donor or donor’s family.

Nonprofit: A term describing an organization whose income is not used for the benefit or private gain of stockholders, directors, or any other persons with an interest in the company. A nonprofit organization’s income must be used solely to support its operations and stated purpose.

Payout Requirement: Private foundations are required by law to pay out at least 5% of the fair market value of their assets each year in grants and administrative expenses.

Private Foundation: A foundation that receives most of its income from, and is subject to control of, an individual or other single or limited source. (See Foundation.) Also the technical IRS term for an organization which is tax-exempt under Code Section 501(c)(3) and classified as a private foundation.

Public Charity: Public charities are designated under Code Section 501(c)(3) and are defined in Section 509 (identified by the Code as “not a private foundation”). A public charity normally receives a substantial part of its income, directly or indirectly, from the general public or from government sources. The public support must be fairly broad, not limited to a few individuals or families.

Tax-Exempt Organization: A nonprofit organization which does not have to pay state or federal taxes. An organization must apply to both the IRS and its state Attorney General’s or other state regulator’s office to receive tax-exempt status.