Financial Glossary

Question 0

Account Receivable

Answer 0

Unpaid money owed to the organization from outside sources for services rendered.

Question 1

Accounts Payable

Answer 1

The amount owed by the organization to outside sources for items and services.

Question 2

Audited Statements

Answer 2

An evaluation by an independent auditing firm of a nonprofit organization’s financial position.

Question 3

BMF

Answer 3

Business Master File, the Internal Revenue Services’s list of more than 1.5 million nonprofits registered with the IRS as tax-exempt organizations.

Question 4

Charitable Trust Number (CT Number)

Answer 4

A Charitable Trust Number is assigned to each nonprofit organization that registers with the Attorney General’s Registry of Charitable Trusts to operate in California.

Question 5

D.B.A. (Doing Business As)

Answer 5

An alternative name or trade name used by a business. For example, GuideStar USA, Inc. does business as “GuideStar.”

Question 6

Deferred Revenue

Answer 6

Money that the organization has received, but has not yet earned as of the closing date on the balance sheet. The amount is carried as a liability until the organization provides the goods or services for which the money was received.

Question 7

Direct Public Support

Answer 7

Contributions, gifts, grants, and bequests received directly from the public. Includes amounts received from individuals, trusts, corporations, estates, foundations, public charities, or raised by an outside professional fundraiser.

Question 8

Donor-Advised Fund

Answer 8

A donor-advised fund is a charitable giving vehicle administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family, or individual. It offers the opportunity to create an easy to establish, low cost, flexible vehicle for charitable giving as an alternative to direct giving or creating a private foundation.

Question 9

Employer Identification Number (EIN)

Answer 9

A nine-digit number assigned by the Internal Revenue Service. Every IRS-designated tax-exempt nonprofit organization has its own EIN.

Question 10

Expenses

Answer 10

The organization’s financial outlay for the tax period.

Question 11

Fiscal Year

Answer 11

A 12-month period for which an organization plans the use of its funds. This period may be a calendar year but can be any 12-month period. A fiscal year accounting period should normally coincide with the natural operating cycle of the organization. If an organization files an IRS Form 990, it is required to define its accounting period on Line A at the top of the form.

Question 12

Fixed Assets

Answer 12

Estimated value of land, buildings, equipment, and other tangible items owned by the organization.

Question 13

Form 990

Answer 13

IRS Form 990 is an annual document used by approximately one-third of all public charities to report information about their finances and operations to the federal government. GuideStar uses data from Form 990 to populate its database with financial information about nonprofit organizations. Posting Form 990 images on the GuideStar Web site is an ongoing process.

Question 14

Fundraising Expense

Answer 14

Total expenses incurred in soliciting contributions, gifts, grants, etc.

Question 15

Government Grants

Answer 15

Payments from the government to a nonprofit organization to further the organization’s public programs.

Question 16

Grants Payable

Answer 16

Unpaid amount of grants or awards that an organization plans to pay other organizations or individuals.

Question 17

Gross Profit from Inventory Sales

Answer 17

Gross sales, less returns and allowances, from the sales of items the organization either makes to sell or buys for resale.

Question 18

Income

Answer 18

Money that the organization has received from contributions, grants, the performance of services, etc. GuideStar takes this figure from line 12 of IRS Form 990. These are net figures from which rental expenses, costs, sales expenses, direct expenses, and costs of goods sold have been deducted.

Question 19

Indirect Public Support

Answer 19

Contributions received indirectly from the public through solicitation campaigns conducted by federated fundraising agencies or organizations such as the United Way; from a parent organization or another organization with the same parent; or from a subordinate organization.

Question 20

Inventories for Sale or Use

Answer 20

Estimated value of materials, goods, and supplies purchased or manufactured by an organization and held for sale or use at some time in the future.

Question 21

IRS Publication 78

Answer 21

Also known as the Cumulative List of Organizations, IRS Publication 78 lists all organizations to which charitable contributions are tax deductible. The Publication 78 record for each organization includes the organization’s name, its city, and its current tax-exempt status, including what percentage of contributions to it are tax deductible.

Question 22

IRS Subsection Code

Answer 22

The portions of the United States tax code that define the type of exempt organization a nonprofit is.

Question 23

Letter of Determination

Answer 23

A letter from the IRS to a nonprofit organization stating that the organization has successfully applied for tax-exempt status. In this document that IRS indicates under which section of the Internal Revenue Code an organization is qualified.

Question 24

Liabilities

Answer 24

An organization’s pecuniary obligation or debt.

Question 25

Management and General Expense

Answer 25

Expenses for the general functioning of the organization but not related to fundraising or programs. Such expenses include the salaries of the chief officer and the chief officer’s staff for activities not related to fundraising or programs. Other costs include those associated with meetings of the board of directors or similar governing group; legal services; accounting; liability insurance; office management; auditing; personnel; preparation, publication, and distribution of an annual report; and investment expenses not related to programs or rental income.

Question 26

Membership Dues and Fees

Answer 26

Member’s and affiliates’ dues or fees that are not contributions.

Question 27

Mission

Answer 27

The main purpose for which an organization exists.

Question 28

Net Gains from Non-Inventory Sales

Answer 28

Securities, real estate, royalty interest, partnership interest, all other non-inventory assets (such as program-related investments and fixed assets used by the organization in its related and unrelated activities), less costs, depreciation, and selling expenses.

Question 29

Net Income from Special Events

Answer 29

Income earned from all special fundraising events and activities, less costs.

Question 30

Net Rental Income

Answer 30

Rental income earned from all non-program-related property, less costs.

Question 31

NTEE Code

Answer 31

National Taxonomy of Exempt Entities Code, created by the National Center for Charitable Statistics; A classification system for nonprofits that divides the nonprofit world into categories.

Question 32

Operating Programs

Answer 32

Programs and activities by which the organization accomplishes its mission.

Question 33

Pledges and Grants Receivable

Answer 33

Funds promised to an organization from grantmakers, individual donors, etc., but not yet received.

Question 34

Private Foundation

Answer 34

A private foundation is a legal entity set up by an individual, a family or a group of individuals, for a purpose such as philanthropy. Unlike a charitable foundation, a private foundation does not solicit funds from the public.

Question 35

Program Services Revenue

Answer 35

Fees and other monies received by an organization for services rendered. These services must relate directly to the primary purpose for which the organization received its tax-exempt status.

Question 36

Public Charity

Answer 36

A public charity normally receives a substantial part of its income, directly or indirectly, from the general public or from the government. The public support must be fairly broad, not limited to a few individuals or families.

Question 37

Revenue

Answer 37

The total yield of sources of income for the organization for the tax period.

Question 38

Ruling Year

Answer 38

The year that the IRS granted an organization 501(c)(3) status.

Question 39

Tax-Exempt Bond Liabililties

Answer 39

The amount of tax-exempt bonds (or other obligations) issued by an organization on behalf of a state or local government unit, or by a state or local governmental unit on behalf of an organization, and for which an organization has a direct or indirect liability. Tax-exempt bonds include state and local bonds and any obligations, including direct borrowing from a lender, or certificates of participation.

Question 40

Total Assets

Answer 40

All Income received and property owned by the organization.

Question 41

Total Liabilities

Answer 41

All expenditures paid and debts owed by the organization.

Question 42

Current Ratio

Answer 42

Answers how well an organization can meet its short-term debt obligations. Total current assets divided by total current liabilities. A ratio greater than 1 is desirable.

Question 43

Debt to Equity Ratio

Answer 43

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Question 44

Financial Flexibility Ratio

Answer 44

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Question 45

Profitability Ratio

Answer 45

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