Glossary

501(c)(3)
A particular type or designation of organizations created by the United States Internal Revenue Service (IRS). It is the most common type of the 28 categories of tax-exempt organizations listed in the Internal Revenue Code. Charitable organizations are listed in section 501(c)(3) of the code. Other organizations that are listed include certain types of social welfare organizations [section 501(c)(4)] or social clubs [section 501(c)(7)].

ACCOUNTING
A record or interpretation of financial data or transactions.

ADJUDICATION
The dispute is resolved after a trial by the decision of a judge or a judge and jury. In court, both sides have a chance to offer facts and talk about the current laws they think will prove their side.

ADVOCACY
The act of speaking or writing in support of something, often used in reference to "lobbying."

ALTERNATIVE DISPUTE RESOLUTION
The dispute is resolved in a different way than going to court or by initiating legal proceedings. Mediation and arbitration are common methods of Alterative Dispute Resolution.

ARBITRATION
The dispute and evidence are presented to a person or a group of people who are not on either side of the disagreement (neutral) for a decision, which is called an award. An arbitration awarded may be either binding or non-binding (see definitions below). The people involved must accept the award because they agreed to do so before the arbitration or because of current laws.

ARTICLES OF INCORPORATION (ARTICLES)
Articles of Incorporation are legal documents that create a specific type of organization/ nonprofit corporation, under the laws of a particular state. State law requires the specific statements that must be included in the Articles of Incorporation and nonprofit corporations in particular must meet certain requirements in order to qualify as a nonprofit.

ASSETS
All money and property owned by the corporation or organization.

AUDIT
An independent inspection and verification of records or accounts by a certified financial specialist (such as a CPA) to assure accuracy and compliance with applicable rules and laws.

AUTHORIZED REPRESENTATIVE
Someone who has been granted the power to legally serve as a delegate or agent for another person or organization. The Representative is generally in charge of taking care of specific matters arising in the ordinary course of business.

BACKGROUND CHECKS
Research conducted by the organization or by an independent contractor hired by the organization in order to learn more about the background and/or history of an individual (most often a prospective employee).

Most commonly, a background check will examine:

• Employment history
• Criminal record
• Driving record
• Education record
• Military record
• Professional licensing record
• Worker's Compensation claim
• Drug test result
• Credit report

BINDING
A decision (resolution) of a dispute because of current laws that cannot be challenged or appealed. Arbitration can be binding or non-binding. Mediation is never binding.

BOARD OF DIRECTORS
The group of volunteers with the responsibility for governing and supervising the policies and affairs of the organization, its committees and its officers. The Board of Directors carries out the mission and purpose of the nonprofit.

BYLAWS
Bylaws define the basic day-to-day rules which are to be followed by the entire corporation. Bylaws are approved and adopted by the corporation's board of directors. Bylaws define things like the duties of the officers, election procedures, financial procedures, membership requirements and corporate operations.

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CHAIRPUERSON
This member of the Board of Directors runs board meetings, provides leadership in fundraising, monitors financial planning and reports, encourages the board's role in strategic planning and appoints committee chairs with input from other board members.

CHARITIY
In a traditional sense, the word "charity" includes religion, education and assistance to the government, promotion of health, relief of poverty or distress and other purposes that benefit the community.

Also a community service organization that advances a particular mission (to gather money to help house homeless people).

CODE OF REGULATIONS
The code lists the rules, regulations and conduct of the nonprofit's affairs and management of assets. It may include rules such as membership requirements, officers terms and elections, etc.

CONCILIATION
A neutral person works informally with the disputing individuals, separately or together, when they are having trouble discussing the dispute alone. The neutral person tries to lower emotions and tension, improve communications so the disputing individuals understand each other's point of view and explore possible solutions.

CONFLICT OF INTEREST
A situation in which the personal or professional concerns of a board member or a staff member affect his/her ability to place the welfare of the organization before personal benefit.

CONSTITUTION
The important laws and principles that direct the nature, functions and limits of a corporation.

CORE OF VALUES
The essential and enduring beliefs of an organization - the very small set of guiding principles that have a profound impact on how everyone in the organization thinks and acts. Core values are significantly important to those inside the organization. They are the few extremely powerful guiding principles; the soul of the organization - the values that guide all actions.

CORPORATION
A form of legal entity created under state law that exists until it is dissolved. A corporation is governed by its articles of incorporation and bylaws.

A corporation is a complete legal unit. It is not the people who create it or run it. For example, a corporation can own property, make contracts, conduct business, sue and be sued in court and file tax documents.

CPA
Certified Public Accountant. An individual who has received state certification to practice accounting.

DEDUCTIBLE
An amount allowed to be deducted in computing income tax.

DIRECTORS
Individuals selected to establish policy and make decisions on behalf of the corporation. Directors are required by Ohio law to perform his/her duties in good faith and in a way s/he believes is in the best interests of the corporation.

DONATIONS
A gift or contribution of cash, property or non-cash items.

DISQUALIFIED PERSONS
This term, as it applies to public charities, includes organization managers; any person who, within the last five years, was in a position to influence the affairs of the organization; family members of the above; and corporations or businesses controlled by any of the above.

DISSOLUTION
When the people involved in a nonprofit corporation decide they want to end or close it. Dissolution is the formal procedure by which a nonprofit ceases to operate or exist and generally involves filing with the state and distribution of all assets.

EMPLOYEE
A person hired by the corporation to work for wages or salary on a regular basis, different from an independent contractor.

ETHICS
Standards of conduct and moral judgment.

EXEMPT PURPOSE
A charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competitions, and/or the prevention of the cruelty to children or animals.

EVALUATION
A review of performance that compares actual performance with what was planned or projected in terms of how resources were used or whether goals were achieved. The most common evaluations in the nonprofit arena involve employee performance and program performance.

EXECUTIVE DIRECTOR
The person in a nonprofit corporation ordinarily responsible for management of the day-to-day affairs of the organization and responsible for implementation of policies set by the board of directors.

EXCISE TAX
May be a mandatory tax for people who receive excess benefits from a nonprofit. An example would be an executive of the organization who receives too much compensation/benefits. Other types of excise taxes could be on investment income (section 4940 of the Internal Revenue Code), for the failure to distribute income (section 4942), an excise tax on investments that jeopardize charitable purpose (section 4944) and others.

EXECUTIVE COMMITTEE
A committee that has specific powers, outlined in the bylaws, which allow it to act on the board's behalf when a full board meeting is not possible or necessary.

EXECUTIVE SESSION
A meeting of the board at which no staff are present.

FIDUCIARY DUTIES
A duty of good faith, trust, confidence and honesty given by a fiduciary (such as a lawyer or Board of Directors) to the organization or corporation. A duty to act with the highest degree of honesty and loyalty related to all matters and persons involved in the operations of the organization or corporation.

FILING OBLIGATIONS
Statutory or administrative obligations related to filing records and/or documents related to the formation and on-going operations of the organization /nonprofit corporation. The most common filing requirements involve the Internal Revenue Service, State Attorney General and Secretary of State.

FINANCIAL RECORDS
Data referring to the money resources, income, expenditures and related activity of an organization.

FOUNDATION
A fund established for charitable, educational, religious, research or other benevolent purpose, which is governed by state and federal law.

FUNDRAISING
The act of raising money to support charitable causes.

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GAMBLING
The use of games of chance such as raffles, bingo, etc. for the purpose of charitable fundraising is strictly regulated.

GRANTS
Assets (generally money) given by an individual or organization with a legal restriction, sometimes quite specific, imposed upon its use.

INCORPORATOR
The individual who creates a corporation of any type. The incorporator signs the documents and delivers said records to the Ohio Secretary of State.

INDEPENDENT CONTRACTOR
A person, organization or business that provides goods or services to the nonprofit with a contract that has specific terms/agreements for a specific amount of time. An independent contractor is not subject to the same level of supervision as an employee.

IN-KIND CONTRIBUTIONS
A donation of goods or services rather than cash or property.

INUREMENT
A benefit, something that is useful or beneficial. Often referred to in the context of tax liabilities and requirements.

INTERNAL REVENUE CODE
This contains all federal tax laws of the United States.

INTERNAL REVENUE SERVICE (IRS)
The branch of the U.S. Treasury Department responsible for administering the Internal Revenue Code and for providing taxpayer education.

LEASE
A contract for the use and possession of property for a specified time and for fixed payments.

LIABILITY INSURANCE
Insurance purchased by the nonprofit organization/corporation to limit damages caused by actions of the board of directors, employees and/ or volunteers that have caused harm to others.

LOBBYING
The practice of trying to persuade lawmakers to support an organization's cause. Charitable organizations listed in section 501(c)(3) of the Internal Revenue Code are not permitted to lobby or to support candidates for public office.

MANDATORY PARTY
A person is legally forced to take part in an alternative dispute resolution process because of a contract, a court order or a court rule.

MEDIATION
A neutral person attempts to help two or more sides in a dispute reach an agreement.

MERGING
Combining two or more nonprofit corporations.

MINUTES (minute books)
A legal written record of what occurs at meetings of the nonprofit corporation. The minutes often include a summary of the discussions, votes and decisions that happened at the meeting. Minutes are maintained as a permanent record of the nonprofit corporation.

MISSION STATEMENT
A mission statement defines the main purpose of the organization-why it exists. Effective mission statements are inspiring, long-term in nature and easily understood and communicated.

NEGOTIATION
The reaching of an agreement through discussion and compromise.

NEUTRAL
An individual who is not affected by the outcome of a dispute and does not agree with either side of the disagreement. Mediators and arbitrators are neutral.

NON-BINDING
A legal decision (resolution) of a dispute. The decision is not mandatory and can be appealed. The decision in a non-binding process is recommended to both sides. Arbitration can be binding or non-binding. Mediation is never binding.

NONPROFIT CORPORATION
An incorporated nonprofit organization that is not intended to operate for profit. In fact, a nonprofit is legally prohibited from making a profit. The nonprofit exists not to earn revenue but to promote a mission that typically (but not necessarily) enhances the public welfare.

OFFICERS
Board leadership positions, typically the President, Vice-President, Secretary and Treasurer.

OHIO ATTORNEY GENERAL
The chief law officer of the State of Ohio. The Attorney General is responsible for advising the government on legal matters and representing the State of Ohio in legal proceedings.

OHIO CHARITABLE TRUST ACT
A law in the State of Ohio that requires nonprofit organizations to register with the Ohio Attorney General within six months from the date of their creation.

OHIO REVISED CODE
The governing laws of the state of Ohio.

OHIO SECRETARY OF STATE
Elected official in Ohio that oversees corporation laws, nonprofit registration and maintains the legal paper work filed by nonprofit corporations. The Secretary of State also sends updates to registered nonprofit corporations when changes occur in reporting and filing requirements.

PERSONAL PROPERTY
Property that is movable and not attached to the land.

POLICIES AND PROCEDURES
The general principles (rules) that guide a corporation's management, delivery of goods or services and what is expected by each position, which is used to evaluate the performance of duties by the directors and staff.

PRESIDENT
Board officer responsible for chairing board meetings, providing leadership in fundraising, monitoring financial planning and reports, appointing committee chairs and providing general quality oversight to the organization/non-profit corporation.

PRIVATE FOUNDATIONS
A non-governmental, nonprofit organization with funds and
program(s) managed by its own trustees or directors, that is established to maintain or aid social, religious, educational or other charitable activities. Usually the funds are from a single source, such as an individual, family or corporation. The main purpose of the private foundation is often to give money away to other charitable organizations.

PRIVATE INUREMENT
Profits of an organization that benefit an individual.

PRIVATE JUDGING
Disputing individuals may decide to hire a retired judge to perform a private trial and give a binding decision on the dispute. The private judge handles a non-jury trial as if s/he was an active judge of the court. Decisions made by the private judge may be appealed to higher courts.

PUBLIC CHARITY
Is an organization that must be listed in section 509(a)(1)-(4) of the Internal Revenue Code. Basically the four basic categories of public charities are

• 509(a)(1) This category includes churches, schools, hospitals and medical research organizations and governmental units. Another category is called publicly supported organizations, which receives contributions from many persons (individuals, businesses and other exempt organization).
• 509(a)(2) This category includes organizations that usually receive more than one third of its income from gifts, contributions, membership dues and its nonprofit activities and less than one third of its income from investments and unrelated business activities.
• 509(a)(3) This category is known as "supporting organizations" and are usually set up to support an existing charitable organization.
• 509(a)(4) The only organizations in this category are those that do testing for public safety.

PURPOSE
The purpose of a nonprofit corporation is the "good works" which the organization is formed to achieve. Purpose is the reason that something exists or the goal or intended outcome of something.

QUORUM
A minimum number of board members required at a meeting in order for business to be conducted and voting to take place, as described in the bylaws.

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REAL PROPERTY
A specific piece of land or real estate.

RENT
Income from the temporary possession or use of property.

REPORTING REQUIREMENTS
The administrative and legal requirements to submit data or to provide detailed information related to the creation and/or on-going management of an organization/nonprofit corporation.

ROBERT'S RULES OF ORDER
A parliamentary procedure used to conduct meetings.

SECRETARY
The board officer position of Secretary is generally responsible for keeping records of meetings, preparing legal paperwork and drafting communications for the nonprofit corporation.

SECTION 501(c) OF THE INTERNAL REVENUE CODE
Lists 28 categories of tax-exempt organizations one of which is section 501(c)(3).

SECTION 501(c)(3) OF THE INTERNAL REVENUE CODE
Defines one type of charitable organization that is tax-exempt.

SOLICITATION
The work of calling on potential donors during a fundraising campaign.

STATUTORY AGENT
Under Ohio law, a corporation needs to decide on a person (statutory agent) to be the "contact person" for all legal matters. A statutory agent is the person who receives legal notices and documents. A statutory agent does not have to be an attorney.

TANGIBLES
Stocks and investments that are owned by the corporation.

TAX
A compulsory payment, usually a percentage, levied on income, property value, sales price, etc. for the support of government.

TAXABLE
A transaction that is subject to being taxed.

TAX-EXEMPT
Refers to organizations that do not have to pay taxes such as federal, state, corporate or state sales tax. In addition, individuals that make donations to such organizations can often deduct these contributions from their income tax.

TREASURER
The board officer position directly responsible for the upkeep of accurate financial records for the organization. This person may work with the bookkeeper to develop financial procedures. The Board Treasurer often chairs the Finance Committee and prepares reports and agendas for meetings in order to keep the board aware of key financial events, trends or concerns. In many nonprofit corporations this work is given to the Executive Director, but the Treasurer provides quality oversight and review.

TRUST
A legal method used to let one person set aside money or property for the benefit of one or more people or organizations.

TRUSTEE
A member of an organization's governing board who directs the funds and policy of an institution. Also may be know as a Director.

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UNINCORPORATED
An entity that is not organized into a corporation and has decided not to seek incorporation by the state.

VICE PRESIDENT
The board officer position responsible for standing in for the President, when s/he is absent.

VOLUNTARY DISSOLUTION
The decision of the directors of a nonprofit corporation to end or close the corporation.

VOLUNTEER
A person working without compensation.