Charitable Giving Glossary
Section 501 subsection (c) paragraph (3). An Internal Revenue Code section designating a tax-exempt, charitable, nonprofit organization. All organizations with this designation are eligible to receive grants from a donor-advised fund.
Account advisor. An individual authorized to recommend grants from a donor-advised fund account. An advisor is named to a fund account by the account's donor.
Capital gain or loss. Net profits or losses from the sale of securities. Short-term gains or losses are generated on securities held one year or less; long-term gains or losses pertain to securities held for more than one year.
Cash contribution. A contribution consisting of cash, paid by check or electronic transfer, made by donors to their donor-advised fund account.
Charitable beneficiary. A charitable beneficiary is a charitable organization identified by the donor to receive either all the remaining assets of the account or 5% of the account annually upon the death of all the original donors.
Charitable organization. An institution established for the public good or to help the needy. Most charitable organizations are considered exempt organizations by the Internal Revenue Service.
Contribution. A contribution of cash or securities made by donors to their donor-advised fund account. A contribution is irrevocable and immediately tax deductible, subject to any applicable limitations on charitable contributions and itemized deductions. To open a Franklin Templeton Charitable Giving Fund account, the donor must make an initial contribution of at least $5,000. Subsequent contributions must be for at least $1,000.
Donor. An individual or organization making a contribution to a charity. In the case of Franklin Templeton Charitable Giving Fund, donors open an account by making an irrevocable contribution to the Renaissance Charitable Foundation, Inc.. An account can have one donor or two, if the contributed assets are jointly held.
Donor-advised fund (DAF). A charitable investment vehicle administered by a nonprofit organization. Franklin Templeton Charitable Giving Fund is a donor-advised fund administered by Renaissance Charitable Foundation, Inc.. Donors can open an account in a donor-advised fund by making a contribution to the fund. The contribution is irrevocable and becomes controlled by the nonprofit administrator, who invests the funds in investment vehicles recommended by the donor. Although donors no longer control the funds once contributed, they can advise the administrator regarding grants to other charitable organizations.
Grant. An award of funds to a charitable organization. In a donor-advised fund, such as Franklin Templeton Charitable Giving Fund, donors can recommend that a grant be awarded to a nonprofit of their choice. Renaissance Charitable Foundation, Inc. then reviews the recommendation and, if approved, awards the grant to the recipient nonprofit.
Nonprofit. An organization whose income is not used for the benefit of persons who would otherwise benefit from an interest in the organization. Funds received by a nonprofit organization must be used only in support of its mission and operations.
Private foundation. A nonprofit organization established and supported primarily by private funds. A private operating foundation conducts its own programs, paying out funds directly for charitable activities. A private non-operating foundation supports charitable activities by making grants to other nonprofit organizations. A donor-advised fund can make grants to private operating foundations, but not to private non-operating foundations.
Recipient. A nonprofit or exempt organization recommended to receive a grant by a donor of a donor-advised fund.
Security. A document identifying ownership of stocks, bonds or other investments. Publicly traded securities can be contributed to a donor-advised fund.
Successor. An individual named by the donor to succeed the donor in advising a donor-advised fund account in the event of the donor's death. A successor has no authority over the account until the donor's death, at which time the successor takes on all the responsibilities of the donor, with the ability to recommend grants, and name advisors and successors. A donor may name more than one successor and can declare that the successors will share responsibility for the account, or that the account funds will be split with each successor becoming responsible for a portion.
For U.S. residents only.