What’s an FAC? What about ABCD? In the NCF (that’s Nebraska Community Foundation) network, you’re likely to hear a few unfamiliar terms, concepts, and acronyms. Luckily our friends at the Nebraska City Community Foundation Fund compiled this helpful NCF vocabulary list that is sure to help. Don’t worry, there won’t be a quiz.
501(C)(3)
Refers to the section of the Internal Revenue Code (IRS) that designates an organization as charitable and exempt from federal income tax. This designation is granted to qualified non-profit entities that are organized to perform and support qualified charitable purposes including support of religion, promotion of education, assistance to governments, promotion of health, relief of poverty or human distress, and projects and programs that benefit the community in general. Individuals donating to an approved 501(c)(3) organization are eligible to claim a deduction for their contribution on their federal income tax return.
AFFILIATION
The formal relationship between Nebraska Community Foundation (NCF) a 501(c)(3) organization and more than 245 funds (and volunteer groups) across Nebraska. Affiliation allows funds across the state to operate under NCF’s 501(c)(3) organizational umbrella. The affiliated fund enjoys the benefits of the tax-free status without having to apply to the IRS, plus lots of other perks including training, leadership development, and marketing services.
ASSETS
The useful or valuable things, people, or qualities a community possesses. Assets are not strictly financial. They can be natural, historical, cultural, intellectual, social, and so much more. ALL communities have assets.
ASSET-BASED COMMUNITY DEVELOPMENT (a.k.a. ABCD)
ABCD is a community development practice rooted abundance. Instead of the common deficit-based approach often embraced by nonprofits, ABCD focuses on the strengths communities already possess. NCF’s premise is that every community has more potential resources than anyone person knows. Another way to think of asset-based community development is “Using what’s strong to fix what’s wrong.” For more on ABCD, check out this NCF Classroom post!
COMMUNITY FOUNDATION
A tax-exempt, nonprofit, autonomous, publicly supported, philanthropic institution composed primarily of permanent funds and non-permanent funds established by many separate donors. A community foundation raises money and makes grants for charitable purposes in a specified community or region. Typically, a community foundation serves an area no larger than a state. Most community foundations are classified by the IRS as public charities and are thus eligible for the maximum tax-deductible contributions from the general public.
ENDOWMENT
A permanent fund owned by a nonprofit organization, such as a community foundation, for which the principal amount of gifts and bequests are accepted subject to a requirement that the principal be maintained intact and invested to create an annual source of income for the organization. Endowed money is invested and earns interest. The charity spends only the interest and keeps the original sum untouched. Endowments are commonly found with entities such as hospitals, colleges, schools, libraries, etc.
FOUNDATION
A tax-exempt, nonprofit, autonomous, philanthropic organization, supporting charitable causes of religion, promotion of education, assistance to the government, promotion of health, relief of poverty or distress of humans, and other charitable purposes which benefit the community as a whole. Foundations which have 501(c)(3) status are exempt from federal income tax and are eligible to receive tax-deductible charitable gifts. Foundations are designated by the IRS as “public” or “private” based on their mission.
FUND ADVISORY COMMITTEE (a.k.a. FAC)
A group of local volunteer leaders who dedicate their time, talent, and treasure to an NCF affiliated fund. They are not referred to as board members because affiliated funds are not independent 501(c)(3)s. NCF is governed by a statewide Board of Directors. An affiliated fund is led by a local Fund Advisory Committee (commonly referred to as an FAC). FACs determine how an affiliated fund’s grant dollars are allocated to local charitable causes.
NONPROFIT (a.k.a. non-profit or not-for-profit)
An organization whose income is used for the benefit of others or for the community in general. Various categories of non-profits are designated by the Internal Revenue Service. Funds received by a nonprofit must be used only in support of its stated mission and purpose. Note: a majority of nonprofit organizations in rural communities have not received “charitable” tax status from the IRS. For example, Chambers of Commerce, Community Clubs, Golf Courses, American Legions, Cemetery Associations are all non-profit, but are organized primarily to benefit their members so are therefore not considered charitable or tax-exempt in the eyes of the IRS.
PHILANTHROPY
The word is derived from the Greek language, translated to be “love for mankind.” Modern definitions include the concept of voluntary giving by an individual or group to promote the common good and improve the quality of life. Philanthropy includes gifts of time, talent, and treasure.
UNRESTRICTED ENDOWMENT
Assets or income that have not been designated to any specific use by the donor or donors. The Fund Advisory Committee overseeing an unrestricted endowment account has the freedom to spend the funds in ways that they determine will fulfill the mission of the organization to which the funds have been given.
