CNP key terms

The legal obligation of board members to act in the organization's best interest, managing its money and assets with care, loyalty, and obedience to its stated mission rather than personal gain.

A board member's responsibility to stay informed, attend meetings, read financial reports, and make decisions with the same diligence a reasonable prudent person would apply in similar circumstances.

The obligation to put the nonprofit's interests ahead of personal, family, or business interests, and to disclose and step back from any situation where those interests could conflict.

The requirement that board members remain faithful to the organization's mission and governing documents, ensuring activities stay within the purposes approved in the articles of incorporation and bylaws.

The document filed with a state to legally create a nonprofit corporation, stating its name, purpose, and structure. It is a public record and the organization's founding legal charter.

The internal rulebook adopted by a nonprofit that sets out governance mechanics such as board size, terms, officer roles, meeting procedures, quorum, and how amendments are made.

The minimum number of board members who must be present for a meeting to conduct official business and pass binding votes, as specified in the bylaws.

A formal written record of a decision adopted by the board through a vote, documenting who approved it and when, and serving as evidence of authorized organizational action.

A written rule requiring board members, staff, and volunteers to disclose outside interests that could bias their judgment and to recuse themselves from related decisions.

An arrangement in which an insider, such as a director or officer, receives more value from the nonprofit than they give back, exposing the organization and recipients to IRS penalties.

Written IRS confirmation that an organization qualifies as a tax-exempt charitable entity, which donors and funders commonly require before making grants or claiming deductions.

A tax-exempt organization that meets a public support test, receiving a substantial share of income from many donors or governmental sources rather than a single family or founder.

A tax-exempt entity typically funded by one source or family that makes grants rather than running broad public programs, and is subject to stricter payout and self-dealing rules.

A prohibited transaction in which a private foundation's leaders use its assets to benefit themselves, such as selling property to the foundation or charging it for personal services.

Governance safeguards many nonprofits voluntarily adopt, including a whistleblower protection policy, document retention schedule, and independent audit committee, mirroring corporate accountability reforms.

A procedure that lets staff and volunteers report suspected fraud, misuse, or illegal conduct without fear of retaliation, and that explains how reports are received and investigated.

A structured fundraising effort focused on a limited number of donors capable of large contributions, built on research, personal cultivation, tailored solicitation, and steady stewardship over years.

A systematic process for guiding prospective donors through stages of identification, qualification, cultivation, solicitation, and stewardship, with recorded goals and next steps for each relationship.

The recurring campaign that raises unrestricted or lightly restricted money each year for ongoing operating costs, typically through direct mail, email, events, and personal outreach.

The ongoing practice of thanking donors, reporting how their money was used, and involving them in the mission so they feel valued and are likely to give again.

The percentage of donors from one period who give again in the next, calculated by dividing repeat donors by prior-year donors; a key indicator of fundraising relationship health.

Money a donor gives with stated conditions on its use, such as a specific program or time period, requiring the organization to honor those limits and track the funds separately.

Contributions given without donor-imposed conditions, which the board may allocate to any mission-related purpose, including overhead, reserves, and emerging needs.

A gift of goods, services, or use of property rather than cash, such as equipment, professional expertise, or meeting space, which must be valued and recorded appropriately.

Written guidelines that set who may accept which types of gifts, how unusual or risky assets are reviewed, and when the organization may decline a contribution.

Fundraising that arranges charitable gifts through estate plans or financial instruments, such as bequests, charitable trusts, and gift annuities, often realized years after the commitment.

A gift of money or property left to a nonprofit in a donor's will or trust, usually unrestricted unless the document specifies a purpose, and often the simplest form of planned gift.

The share of fundraising expenses relative to funds raised, used by watchdogs and donors to gauge efficiency, though it says little about long-term relationship building or mission impact.

The annual information return most tax-exempt organizations file with the IRS, disclosing revenue, expenses, compensation, governance practices, and program accomplishments; it is publicly available.

Financial reports examined by an independent CPA firm that issues an opinion on whether the statements fairly present the organization's financial position under accepted accounting standards.

The policies and procedures, such as segregation of duties and required approvals, that safeguard assets, prevent and detect errors or fraud, and keep financial records reliable.

An internal control practice that divides financial tasks among different people, so no single person both authorizes a payment, records it, and reconciles the bank account.

A small group of board members, ideally including someone with financial expertise, that oversees the audit process, reviews findings, and monitors management's response to recommendations.

A financial statement that breaks total spending into program, management and general, and fundraising categories, showing how costs support mission work versus administration.

The portion of total expenses spent on programs and services rather than administration or fundraising, often used by donors and rating agencies as a rough efficiency measure.

Unrestricted funds set aside to cover a set number of months of expenses, protecting the organization against revenue shortfalls, delayed grants, or unexpected costs.

A forward-looking schedule estimating when cash will come in and go out over coming weeks or months, helping managers time payments and anticipate shortfalls.

A one-page diagram linking the resources and activities of a program to its outputs and intended outcomes, clarifying assumptions and external factors that shape results.

A narrative and visual explanation of how and why a set of activities is expected to produce desired long-term change, including the evidence and assumptions behind each link.

The systematic collection of data about changes in participants' knowledge, behavior, or conditions that result from a program, as distinct from simply counting activities delivered.

A direct, countable product of program activity, such as classes taught or meals served, which shows effort but not whether participants benefited.

A specific, measurable variable used to track progress toward a goal, chosen so that data can be collected reliably and compared over time.

The measurement of conditions before a program begins, providing the reference point against which later change and program effectiveness are judged.

A structured process of gathering data on a community's gaps, assets, and priorities to justify program design and target services where need is greatest.

Evaluation conducted while a program is running to improve implementation, checking whether activities reach the intended participants and whether delivery is working as planned.

Evaluation carried out at or after a program's end to judge overall merit and worth, typically answering whether intended outcomes were achieved and at what cost.

An ongoing cycle of measuring performance, identifying small changes, testing them, and adopting what works, so services get better incrementally rather than only at final review.

A written statement of the values and behavioral expectations for board, staff, and volunteers, covering honesty, confidentiality, respectful treatment, and avoidance of improper gifts.

Attempting to influence legislation through direct contact with lawmakers or urging the public to do so; permitted in limited amounts for charities but subject to tax rules and reporting.

Speaking out on issues and educating the public or officials about a cause without necessarily supporting a specific bill; broader than lobbying and generally unrestricted for charities.

Any activity that supports or opposes a candidate for public office, which is prohibited for charitable organizations and can jeopardize their tax-exempt status.

Tax penalties the IRS may impose on insiders who receive excessive benefits from a charity and on board members who approved the arrangement without reasonable justification.

The deliberate process of building ongoing relationships with residents, partners, and constituents so programs reflect local priorities and the organization earns trust and legitimacy.

The ability to understand and respond respectfully to people of different backgrounds, adapting services, communication, and staffing to the communities being served.

The practices of recruiting, screening, training, supporting, recognizing, and retaining volunteers, including clear role descriptions and protection against risk.

A formula measuring the share of a charity's revenue from broad public sources versus a few large donors, used to determine whether it qualifies as a public charity.

The official written summary of a board or committee meeting recording attendance, decisions, and votes, which serves as the legal record of governance actions.

The accounting event when a donor-imposed condition or time restriction is satisfied, allowing those funds to be recognized as available for general use.

Volunteer time or professional expertise donated to a nonprofit, recognized in financial statements only when the service creates or enhances nonfinancial assets or requires specialized skills.