Reference
Nonprofit & Ministry Glossary
Plain-language definitions of fiscal sponsorship, fund accounting, compliance, and other nonprofit terms you will encounter as a ministry leader.
#
501(c)(3)
A section of the U.S. Internal Revenue Code that grants tax-exempt status to nonprofit organizations organized for charitable, religious, educational, or scientific purposes. Donations to 501(c)(3) organizations are tax-deductible for donors. InFocus Ministries is a 501(c)(3) organization.
501(c)(4)
A tax-exempt organization focused on social welfare, civic improvement, or lobbying. Unlike 501(c)(3) organizations, donations to 501(c)(4)s are generally not tax-deductible, and they may engage in political activities.
A
Advisory Committee
A group of trusted supporters who provide guidance, accountability, and practical support to a ministry. InFocus requires each ministry to have at least three Advisory Committee members. Unlike a board of directors, advisory committees typically do not have legal fiduciary responsibility.
Articles of Incorporation
The legal document filed with a state's Secretary of State to formally create a nonprofit corporation. It includes the organization's name, purpose, registered agent, and initial directors.
B
Bylaws
The internal rules that govern how a nonprofit operates — including board structure, officer roles, meeting procedures, voting requirements, and amendment processes. Bylaws are not filed publicly but must be maintained by the organization.
C
Charitable Solicitation Registration
A state-level registration required before a nonprofit can legally solicit donations from residents of that state. Requirements, fees, and renewal schedules vary by state. Washington State requires registration through the Secretary of State's Charities Program.
D
D&O Insurance
Directors and Officers insurance protects board members and officers from personal liability for decisions made on behalf of the organization. It covers legal defense costs and settlements if a board member is sued for actions taken in their official capacity.
Designated Fund
A donation that a donor has directed toward a specific ministry, program, or purpose within a fiscal sponsor's umbrella. Under Model A fiscal sponsorship, InFocus accepts donations designated for specific ministries and tracks them separately.
Donor Acknowledgment Letter
A written receipt provided to donors for their tax-deductible contributions. The IRS requires written acknowledgment for any single donation of $250 or more, including the date, amount, and a statement about whether goods or services were provided in exchange.
E
EIN (Employer Identification Number)
A unique nine-digit number assigned by the IRS to identify a business or nonprofit for tax purposes. Also called a Federal Tax Identification Number. Required for filing tax returns, opening bank accounts, and hiring employees.
F
Fiscal Sponsorship
A formal arrangement where an established 501(c)(3) nonprofit (the fiscal sponsor) provides its tax-exempt status and administrative infrastructure to a project or ministry that does not have its own nonprofit status. The sponsor handles legal compliance, financial management, and IRS reporting while the project focuses on its mission. InFocus Ministries operates as a fiscal sponsor for 30+ ministries.
Fiscal Sponsor Fee
The percentage of donations retained by a fiscal sponsor to cover administrative costs. Industry standard ranges from 5-15% of revenue. InFocus Ministries retains 7.5% to cover bookkeeping, IRS reporting, insurance, technology, and organizational support.
Form 990
The annual information return that most 501(c)(3) organizations must file with the IRS. It reports the organization's finances, governance, and activities. Variants include Form 990 (full), Form 990-EZ (simplified), and Form 990-N (e-Postcard for small organizations). Failure to file for three consecutive years results in automatic revocation of tax-exempt status.
Form 1023
The IRS application form used to apply for 501(c)(3) tax-exempt status. Form 1023 is the full application; Form 1023-EZ is a simplified version for smaller organizations (gross receipts under $50,000 and assets under $250,000). The filing fee ranges from $275 to $600.
Fund Accounting
An accounting system used by nonprofits that tracks money by its intended purpose (fund) rather than by profit and loss. Fund accounting ensures restricted donations are spent only on their designated purpose and provides the financial transparency donors and grantmakers expect.
G
General Liability Insurance
Insurance that protects an organization against third-party claims for bodily injury, property damage, and personal injury. Essential for any ministry that interacts with the public, hosts events, or operates physical programs.
GuideStar (Candid)
A platform (now part of Candid) that provides information about nonprofit organizations, including financial data, leadership, and mission. GuideStar's Platinum Seal of Transparency is the highest level of nonprofit transparency recognition. InFocus Ministries has earned the GuideStar Platinum Seal.
M
Model A Fiscal Sponsorship
Also called "Direct Project" or "Comprehensive" fiscal sponsorship. Under Model A, the sponsored project operates as a program of the fiscal sponsor. The sponsor has legal and fiduciary responsibility for the project's finances and activities. This is the most common type of fiscal sponsorship and the model InFocus Ministries uses.
Model C Fiscal Sponsorship
Also called "Pre-Approved Grant Relationship." Under Model C, the fiscal sponsor makes grants to the sponsored project, which operates more independently. The project may have its own legal entity. Model C offers more autonomy but less administrative support than Model A.
N
Nonprofit Parent Organization
An established nonprofit that provides administrative infrastructure, governance, and support services to multiple subsidiary ministries or projects. InFocus Ministries is a nonprofit parent organization that serves as a fiscal sponsor for 30+ ministries.
P
Private Inurement
When a nonprofit's income or assets benefit a private individual (such as a board member or officer) beyond reasonable compensation. Private inurement is strictly prohibited for 501(c)(3) organizations and can result in loss of tax-exempt status.
R
Restricted Funds
Donations that a donor has specified must be used for a particular purpose, program, or project. Nonprofits are legally obligated to use restricted funds only for their designated purpose. Proper fund accounting is essential for tracking restricted gifts.
T
Tax-Deductible Donation
A contribution to a qualified 501(c)(3) organization that donors can deduct from their taxable income on their federal tax return. Donations to ministries operating under InFocus Ministries are tax-deductible because InFocus holds 501(c)(3) status.
U
Umbrella Organization
A larger nonprofit that provides shared infrastructure, governance, and services to multiple smaller organizations or projects operating under its structure. InFocus Ministries functions as an umbrella organization for 30+ ministries.
Unrestricted Funds
Donations given without specific conditions on how they may be used. The organization's leadership can allocate unrestricted funds according to operational priorities and organizational needs.
Y
Year-End Giving Statement
A summary of all charitable contributions made by a donor during the calendar year. While the IRS does not mandate year-end summaries (only per-gift acknowledgments for $250+), providing annual statements is a best practice that donors expect and appreciate.
Have a Question About a Term?
We are here to help you understand the nonprofit landscape. Reach out any time.