Glossary of Charitable Giving Terms
Below are definitions of many of the estate planning and fundraising terms that professional advisors might typically encounter in the course of their professional work.
adjusted cost base (or basis)
the amount paid for property, increased by capital improvements and decreased by depreciation.
the person appointed by the court to settle an estate when a person has died without a valid will.
a donation made each year, usually with few restrictions. Increasingly, the term regular gift is substituted as it better conveys the idea of periodic giving throughout an annual cycle.
a contracted right to receive payments of a specific amount at stated intervals in life, or for a term of years, in consideration of a transfer of cash or other assets.
property, such as securities, real estate, and artworks, whose current fair market value (FMV) exceeds the purchase price.
the person or organization that receives a bequest under a will, death benefits from a life insurance policy, or payments from a trust.
to leave property to a beneficiary by means of a will.
a gift of property through a will to a particular beneficiary. Also called a legacy.
with reference to a trust, the principal upon which income is earned.
an intensive effort undertaken by an organization to meet a specified financial goal for specified projects/purposes (usually capital expansion or a new building) to be completed within a specified time period.
capital gain or loss
the profit or loss resulting from the sale or other disposition of a capital asset.
the portion of a donation receipt not used in the current year and carried forward for use in succeeding years.
cash surrender value
the cash paid by an insurance company to the owner of a policy when the policy is terminated prior to the death of the
a fixed sum of money paid by a charity, at certain intervals, for the life of the annuitant(s), or for a term of years, in exchange for a donation of cash or other property.
charitable remainder trust
an irrevocable trust that pays income to one or more individual beneficiaries for life or a term of years, and then distributes the remaining assets to one or more charities.
an addition or amendment to a will.
Contingent bequest refers to a legacy which is intended by the testator to vest only in the event of the happening of a contingency.
the principal or capital of a trust.
the amount payable by an insurance company to the beneficiary(ies) at the death of the insured.
a person who has recently died and whose estate is in process of being settled.
a document used for transferring the ownership of real estate.
deed of gift
a document used for transferring personal property.
any charitable gift arrangement where the charity’s use of the asset is delayed to some future time.
with reference to property, the process of being worn out or becoming obsolete. Certain types of property qualify for depreciation deductions.
the assumed interest rate when computing present or future value. It is used to determine the donation receipt for establishing a charitable remainder trust, or for giving a residual interest in property.
the recipient of a gift.
a person, corporation, foundation, or other organization that makes a gift.
donor-advised fund (DAF)
A Donor-advised Fund, established within a community foundation, enables individuals with philanthropic interests to plan their charitable giving, as well as maximize its impact. Donors can recommend grants to a charity requesting that funds be disbursed to support other charities and worthwhile projects of their choice, based on their own preferences and timetable. Generally, donors cannot make recommendations on how gift contributions should be invested to increase the charitable giving power of the fund, as this task is usually the responsibility of the foundation’s Investment Committee, as delegated by the Board of Directors.
endowed fund agreement
a document describing the name, purpose, funding and administration of an endowment, normally negotiated between and signed by the donor and the charity.
a principal sum, permanently set aside and invested by a charity, with only the income/distribution used for charitable purposes.
everything that a person owns or has an interest in.
another name for executor/trix.
executor / executrix
the person or institution named in a will to carry out the terms of the will.
fair market value (FMV)
the price at which a fully-informed seller, who is under no compulsion to sell, would be willing to sell an asset to a fully-informed buyer, who is under no compulsion to buy.
inter vivos gift
a gift made during a donor’s lifetime.
inter vivos trust
a trust created by an individual during his or her lifetime.
to die without having executed a valid will.
a trust that cannot be terminated or changed by the person creating it.
a designation of property under a will. Also called a bequest.
the right to use property or receive income from a trust for the duration of one’s lifetime.
a large donation, often given for a designated purpose in response to a special solicitation. The amount required to qualify as a major gift varies by organization.
an endowed fund, named for the donor or another person the donor chooses to honor, the income from which is usually used for a designated purpose. Named endowments are normally commingled with the funds of other endowments for investment purposes, but accounted for separately in the charity’s financial records.
a gift in which the donor retains no interest and which may be used by the charity now.
power to vary clause
language in an endowment or other gift agreement that permits the stated purpose of a gift to be amended if circumstances change.
a gift which is available for the charity to use now. Also called an outright gift.
present value (PV)
the sum of money which, if invested at a certain rate of compound interest, will accumulate to a certain value by a specified date. In the case of a charitable remainder trust or a gift of residual interest, the amount for which a donation receipt may be issued.
a foundation which receives most of its funds from a single source, and which makes grants to registered charities.
the court-supervised process of validating a will and administering an estate in accordance with the terms of the will.
the various ways a charity expresses appreciation for a gift.
the right to receive the remaining property when a trust terminates.
a testamentary gift of all or a percentage of what remains of the estate after paying other bequests and expenses.
the right to receive property when the rights of one or more persons to use the property have expired.
the amount of the original contribution retained by the charity after satisfying all gift annuity payment obligations.
a trust that can be terminated or changed by the person creating it.
a testamentary gift of a specific amount of money or of particular property.
a trust established by one spouse to provide income for another. Taxation of gain in property transferred to a spousal trust is deferred until the disposition of the property or termination of the trust.
the process by which a charitable institution acknowledges gifts, recognizes donors, honors donor intent, and invests and uses gifts prudently. It also conveys the sense of ongoing “nurturing” of the donor relationship over time.
tangible property (also “tangible personal property”)
property other than cash, securities and real estate. Examples are automobiles, paintings, musical instruments and furniture.
the act of directing a concerted marketing effort to a group of potential donors who have certain characteristics in common.
the amount that may be subtracted from the tax otherwise due.
the amount that may be subtracted from income when calculating income tax, or from the adjusted gross estate when calculating estate tax or from the amount of the gift when calculating the gift tax.
percentage of tax to be paid on a certain level of income. Tax rates depend on the amount of taxable income.
written for a specific period and pays a death benefit if the insured dies within that time period.
terminal income tax return
the income tax return filed by an executor for the year of a decedent’s death, including income from January 1 to the date of death plus taxable gain recognized at the time of death.
a gift made under the will of a donor. Also called a bequest.
a trust created under the will of an individual, which begins at the death of that individual.
to die having executed a valid will.
a person who has died with a valid will.
an arrangement under which an individual (the settlor) transfers property to a person or institution (the trustee) to be managed for the benefit of one or more beneficiaries.
the person or institution that holds legal title to property in a trust and has responsibility for managing it.
the person who creates a trust.
universal life insurance
a combination of yearly renewable term insurance and a tax-deferred investment account. It pays a death benefit and builds up cash value, but the amount of cash value depends on the performance of investments that have been selected by the policy owner. Offers less guarantees than traditional whole life insurance policies.
one who works without compensation for a charitable organization.
whole life insurance
a policy that remains in force for the entire life of the insured so long as premiums (usually level) are paid. A whole life insurance policy builds up cash value, usually with minimum guarantees.
a legal declaration of how a person’s property is to be distributed at death.
a challenge to the validity of a will based on various grounds (i.e., competency of executor, etc.)