A glossary of philanthropic terms

Do you find language used by people working in the philanthropy and nonprofit space confusing? Do you really know what a Theory of Change is? What is the true definition of an impact investment? And are you intimidated by all the acronyms?

This list, produced by the Charities Aid Foundation (CAF), is a good starting point for understanding some of the sector’s niche terms and overcoming confusing explanations and contradictory advice relating to impact practice.

Key Actors


Donor A person or organisation who decides to donate something, particularly to charity
A person or entity that receives a grant
Charity A nonprofit organisation whose main goal is to improve social or environmental welfare
Social Enterprise A forprofit organisation whose main goal is promoting social or environmental welfare rather than making or maximising profits. In some jurisdictions, this may include limited companies, community interest companies and other structures.

Philanthropic Philosophies 

Participatory grantmaking  The practice of ceding grantmaking power to affected community members and constituencies. In practice, it means placing affected communities at the centre of grantmaking by giving them the power to decide who and what to fund.
 Effective altruism  A philosophical and social movement that uses utilitarian principles to prioritise cause areas and interventions and takes a data-focused approach to comparing giving decisions. People who pursue the goals of effective altruism are labelled effective altruists
Venture philanthropy  A type of social impact investment that takes concepts and techniques from venture capital finance and business management and applies them to achieving philanthropic goals. Venture philanthropy includes loans, grants and a hybrid approach and may also include advisory support from donors for charities
Community led/grassroots philanthropy  Community led/ grassroots philanthropy is initiated from within and acts for the benefit of the community
 Philanthropic risk  The certainty of achieving a result or impact. In other words, if you support the pilot of a new initiative, it would be considered higher risk as it has not been tested before. If you are supporting a well evidenced approach, it would be considered lower risk. Certain categories of philanthropy activity are inherently risky, e.g. advocacy and systems change. These activities, however, often offer potentially higher rewards, due to the opportunities for leverage 
Decolonising approach This refers to shifting the power from actors and narratives in the global north to those nations in the global south and/or other exploited groups
Intersectional philanthropy Intersectionality considers multiple types of vulnerabilities that people experience and incorporates lived experience of beneficiaries into programme design

Grant Types 

Direct level work Interventions that deliver benefits, goods, and/or services to a specific group of beneficiaries. For instance, the provision of malaria nets.
Systems change  The attempt to make structural changes to societal systems, to create wide reaching benefits, for example influencing government policy on issues such as healthcare.
Philanthropic leverage Using a donation to unlock or influence a larger pot of funds. This is usually achieved by influencing the ways others fund or tackle social issues/good causes e.g. lobbying government to increase their funding for a particular issue.
Restricted funding  A donation that is limited for use on a specific programme or project by the donor. This is a strict definition, governed by charity accounting rules
Unrestricted funding A donation that may be spent at the discretion of the charity (i.e. not on a specific or named project
Giving circles Collective decision-making set-up for grant making. A giving circle is a group of people with shared goals or interests that collectively discuss and decide where to make a pooled gift. Giving circles may also build awareness, volunteer, become board members and more

Investment for good approaches

 ESG ESG stands for Environmental, Social, and Governance factors. The acronym is often used in sustainable and ethical investment strategies. It may also include setting exclusion criteria for investment to avoid investing in companies involved in specific industries (e.g. tobacco or fossil fuels)
Social investment Supporting charities or social enterprises with repayable finance. Social investment generally includes interest, but the aim is to recycle the philanthropic funds, rather than to generate meaningful financial returns
Impact investment  An investment designed to deliberately generate both a positive financial and social return


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