Glossary of Terms

Your everyday, plain-language guide to Planned Giving terminology.

Here are some industry terms you should be familiar with so that you can have a meaningful conversation with your donors, attorneys and financial advisors.


A defined-contribution, tax-advantaged retirement investment account offered by employers to employees.


As used in planned giving, refers to the factors used to calculate the value of lifetime payments based on the life expectancies of income beneficiaries or the term of years for a trust.

Adjusted Gross Income (AGI)

Your total gross income adjusted downward by specific deductions allowed by the tax code, before taking your standard or itemized deductions. AGI is the number you write at the bottom of page 1 of your 1040. Individuals may deduct charitable cash contributions up to 50% of AGI in any given tax year. For gifts of appreciated property the deductible limit is 30% of AGI in any given tax year.


A person appointed by the probate court to manage an estate when someone dies without a will. An administrator has the same role as an executor.

Annual Gift

An annual gift is an unrestricted donation that’s made to a nonprofit organization on a regular basis (i.e., daily, weekly, monthly, quarterly, yearly). Annual gift amounts are usually much smaller than planned gifts.


A contractual arrangement to pay a fixed sum of money to an individual at regular intervals. The charitable gift annuity is a gift that secures fixed lifetime payments to the benefactor and/or another individual.

Appreciated Property

Securities, real estate, or any other property that has risen in value since the benefactor acquired it. Generally, appreciated property held by the donor for more than a year may be donated at full fair market value with no capital gains cost.

Appreciated Securities

Investments that have increased in value since they were purchased. These can be publicly traded stock, exchange-traded funds (ETFs), closely held stock, or mutual funds. They can be gifted to a nonprofit organization, which sells them and keeps the proceeds. The donor gets a tax deduction.


A professional assessment of the value of a piece of property. Generally, benefactors contributing real or tangible personal property (books, collectibles, etc.) worth $5,000 or more must secure an independent appraisal of the property to substantiate the value they claim as a charitable deduction.

Appreciated Property

Securities, real estate, or any other property that has risen in value since the benefactor acquired it. Generally, appreciated property held by the donor for more than a year may be donated at full fair market value with no capital gains cost.


An item of economic value owned by an individual or corporation. Cash is the most liquid (easily usable) type of asset. Other assets could include stocks, bonds, real estate or collectibles.


The benefactor’s purchase price for an asset, possibly adjusted to reflect subsequent costs or depreciation. If Mrs. Quinn bought stock for $100 per share and sold it for $175, her cost basis in the stock is $100 per share.


The recipient of a bequest from a will or a distribution from a trust, retirement plan, or life insurance policy.


A transfer of property or cash to an individual or organization under a will.

Bequest Expectancy

The estimated value of future planned gifts, based on past planned gifts. Sometimes called planned gift expectancy . It helps organizations plan campaigns and budget for planned giving marketing.  Nonprofits calculate bequest expectancies differently.

Bequest Information

A donor’s indication of their intent to leave a planned gift. An intention is NOT a legal or binding commitment upon an estate.

Capital Gains Tax

A federal tax on the appreciation in an asset between its purchase and sale prices.


The Coronavirus Aid, Relief, and Economic Security Act  is a $2.2 trillion economic stimulus bill passed by the 116th U.S. Congress and signed into law on March 27, 2020, that aims to help those affected by the COVID-19 pandemic. It is the largest economic stimulus package in U.S. history. Among other things, the CARES Act temporarily increased the limitation on itemized deductions for outright cash gifts to public charities to 100 percent of adjusted gross income.


The Certified Fundraising Executive credential is a voluntary, professional accreditation that demonstrates a fundraiser’s achievement and commitment to the fundraising profession. It is the world’s only accredited certification for philanthropic fundraising professionals.

Charitable Bargain Sale

This is when a donor sells property to a nonprofit for an amount less than the property’s fair market value, and receives a charitable tax deduction equal to the difference between the market value and the sale price. This can sometimes be more financially advantageous to the donor than selling the property, paying taxes, and then making an outright charitable gift from the proceeds of the sale.

Charitable Bequest

A charitable bequest is a gift from your will or trust to a certified nonprofit organization. Bequests generally come with tax benefits for the donor.

Charitable Gift Annuity

Allows the donor to transfer an irrevocable gift of cash or securities to a nonprofit in exchange for a fixed income payment for life. This gift entitles the donor to an immediate charitable income tax deduction. At the end of its term, the CGA balance goes to the nonprofit.

Charitable Lead Trust

After a donor makes a gift, the Charitable Lead Trust pays income to the donor’s designated charity first, for a term of years or for the donor’s lifetime. After that, the trust assets are passed back to the donor or designated beneficiaries.

Charitable Midterm Federal Rate

A figure used to determine the value of an annuity; an interest rate; a remainder; or a reversionary interest as applied to a planned gift. The Treasury Department publishes the rate monthly as described under Code Section 7520.

Charitable Remainder Annuity Trust

Allows a donor to contribute appreciated assets to a trust, generate a fixed income stream, defer or eliminate gains, and reduce estate taxes. A CRAT pays beneficiaries a fixed amount based on the percentage of the initial value of the assets used to fund the trust. Payments can be made for the beneficiaries’ lifetimes, or for a term of up to 20 years, or for a combination of both. No upfront capital gains tax is applied to contributions of appreciated property to an annuity trust. After the annuity trust terminates the balance or “remainder interest” goes to the nonprofit to be used as the donor designated.

Charitable Remainder Unitrust

A charitable trust that pays a percentage of its principal to the donor and/or other income beneficiaries the donor names for life, for a term of up to 20 years, or for a combination of both. Because it is revalued annually, payments may increase over time. The donor receives a charitable income tax deduction for a portion of the value of the assets placed in the trust. After the Charitable Remainder Unitrust terminates, the balance goes to the nonprofit.


Cryptocurrency is a form of digital payment that can be exchanged for goods and services. Usually a donor gives an outright gift of cryptocurrency that the nonprofit sells for cash, but other gifting strategies have emerged that can be more beneficial to both the donor and the nonprofit.


A document that amends, rather than replaces, a previously executed will. Amendments made by a codicil may add or revoke a few small provisions (e.g., changing executors), or they may completely change the majority or all of the gifts under the will. Each codicil must conform to the same legal requirements as the original will, such as the signatures of the testator and, typically, two or three (depending on jurisdiction) disinterested witnesses.

Community Foundation

A grantmaking public charity that focuses on improving the lives of people in a defined local geographic area. Community foundations often work with other charities, and can greatly expand a nonprofit’s fundraising power.

Contingent Bequest

A specific gift made to a nonprofit only if a certain condition or conditions are met.

Cost Basis

See Basis, above.

Cost Per Dollar Raised

A key performance indicator: how much money is spent for every dollar that is brought in.

Donor Advised Fund (DAF)

A charitable investment account maintained and operated by a 501(c)(3) organization. The assets placed in a donor advised fund become the property of the sponsoring charity; the donor, (or their representative), gets to offer advice with respect to the distribution of funds. Portions of a fund may be allocated to more than one organization.

Durable Power of Attorney

A legal document that gives a person of your choice the power to handle important matters if you become incapacitated or unable to act on your own behalf. The trusted person you list can do things like pay your bills or make medical decisions for you, depending on the details included in the document.

Endowment Fund

An invested fund owned by a charity, from which the capital appreciation and/or income is used to support the general or specific objectives of that charity’s mission.


Everything owned by an individual, including (but not limited to) real estate; personal possessions; securities and retirement accounts; cash; and any other assets a person owns or has a controlling interest in.

Estate Planning/ Estate Plan

A comprehensive plan to manage a person’s estate after their death. It allows for the distribution of assets to heirs; the fulfillment of philanthropic intentions; and the fulfillment of any financial obligations, including taxes. 

Estate Tax

A federal tax on the value of the property held by an individual at his or her death (paid by the individual estate, not the heirs or recipients of bequests). In contrast, state inheritance tax is applied to the value of bequests passing to beneficiaries; it is also paid by the estate before the distributions are made.


The person named in a will to administer the estate (known in some states as the “personal representative”).

Fair Market Value

The price that an asset would bring on the open market.

Gift Annuity

A charitable gift annuity (CGA) is a contract under which a 501(c)(3) public charity receives an irrevocable transfer of cash or other property in exchange for a commitment to pay a fixed annuity to one or two individuals for life.


The individual transferring property into a trust.


An individual who takes care of and is legally responsible for someone who is unable to manage their own affairs. A guardian may be appointed to care for a child, or for an adult who is unable to care for themselves.

Health Savings Account

A savings account that allows the owner to set aside money on a pre-tax basis to pay for medical expenses. If the owner and spouse don’t deplete the HSA during their lifetimes, what’s left becomes taxable income to the beneficiaries. However, the owner can bequeath leftover HSA balances to charity and eliminate the tax issue.

Income Interest

In a trust, the right to receive payments from the trust for the recipients lifetime or a term of years.

Inter Vivos Trust

A trust that is created by an individual while he or she is still living as opposed to a testamentary trust, which is created by a will after someone’s passing.


Dying without a legal current will or living trust.


An account that allows an individual to make tax-deferred investments to provide financial security for retirement.

IRA Rollover

Also referred to as a QCD: qualified charitable distribution. Allows donors 70½ or older to make tax-free IRA charitable rollover gifts of up to $100,000 per year directly from their Individual Retirement Accounts to eligible nonprofits. The funds must be transferred directly to the charity; withdrawing them first will result in a tax penalty.


Something that cannot be changed or reversed.

Joint Ownership

Ownership of a property or business by two or more individuals or entities.

Joint Tenancy with Right of Survivorship

A property or estate held jointly by two or more parties. When a party dies, their share goes to the surviving party/parties.

K-1 (also 1099-R)

The IRS forms sent to life-income gift participants detailing how payments they received from their gifts during the year will be taxed.

K-1 Form

An annual IRS form to report an investment in a partnership or subchapter S corporation. For instance, a partner’s losses, earnings, deductions, etc.

Lead Trust

See Charitable Lead Trust .

Legacy Gift

Another term for a Planned Gift.

Life Expectancy

A statistical measure of the average length of an individual’s life.

Life Income Gift

A planned gift that makes payments to the benefactor and/or other beneficiaries for life or a term of years, then distributes the remainder to charity.

Life Expectancy

A statistical measure of the average length of an individual’s life.

Life Income Gift

A planned gift that makes payments to the benefactor and/or other beneficiaries for life or a term of years, then distributes the remainder to charity.

Life Insurance

A donor can designate a charity as a policy beneficiary. When the time comes, the nonprofit receives the proceeds. This allows the donor to provide a large gift to benefit a nonprofit — often more than they’d be able to donate outright. The donor’s heirs benefit as well, because policy proceeds distributed to a nonprofit are exempt from estate tax.

Living Will

Also called a health-care directive, this is a legal document that states a person’s wishes about medical care in the event that person is unable to speak for themselves.

Major Gift

It depends on the size of the organization and how they value it. If the gift makes a significant impact on the mission, it’s a major gift . A planned gift  can also be a major gift.

Non-Cash Asset

An asset that can’t be easily converted into cash. I.e., real estate; investment and retirement accounts; ownership in a family business; insurance policies.  

Personal Property

Gifts of items such as artwork, collectibles, books, equipment, or other items of tangible personal property. Most times, a gift yields the donor a charitable deduction for the items’ fair market value (it must be professionally appraised), with no capital gains liability to the donor or organization. The nonprofit can either keep the property, display it, or sell it and use the proceeds.

Personal Representative

See Executor, above.

Planned Gift

A method of supporting charities that enables generous individuals to make larger gifts than they could make from their income. While some planned gifts provide a lifelong income to the donor, others use estate- and tax-planning techniques to provide for charity and other heirs in ways that maximize the gift and/or minimize its impact on the donor’s estate.

Planned Gift Expectancy

The estimated value of future planned gifts, based on past planned gifts . Sometimes called a bequest expectancy. It helps organizations plan campaigns and budget for planned giving marketing.

Pooled Income Fund

A donor’s gift is pooled with gifts from other donors who support the same nonprofit, and then invested to pay each donor a quarterly income calculated from their share of the fund. As each participant passes away, the nonprofit receives a gift in the amount of that donor’s share of the fund. Donors can avoid capital gains tax by using appreciated assets for their gift.

Power of Attorney (POA)

A legal document that allows one person to act as an agent for another. The powers and duties are outlined in the document. A “durable” power of attorney continues in effect even if the principal becomes incapacitated.

Present Value

The value on a given date of a future payment or of a series of future payments, discounted to reflect the time value of money based on various factors such as investment risk and inflation.


  1. Individual with most authority
  2. The original sum of money invested or owed.


The review or testing of a will before a court to ensure that the will is authentic and the estate is distributed properly. A good estate plan minimizes the cost and time needed for probate.


A qualified charitable distribution is a direct contribution of funds from an IRA to a qualified charity.

Qualified Appraisal

An appraisal that meets IRS requirements , that was performed by a Qualified Appraiser .

Qualified Appraiser

 An appraiser who meets certain IRS Requirements  for competence in their field.

Real Property

Essentially, the rights of real estate  (the land and everything permanently attached) but also includes certain other usage and ownership rights.

Remainder Interest

In a trust, the portion of the principal left after the income interest has been paid to the beneficiary(ies). A charitable remainder trust pays income to the benefactor or other individuals and then passes its remainder to charity.


The beneficiary of a property after the property owner or life tenant dies.

Real Estate

A donor can gift real estate to a nonprofit, removing a large taxable asset from their estate and benefiting by receiving an income tax deduction equal to the appraised fair market value of the property, with no capital gains tax due on the transfer. The nonprofit can then sell the real estate or keep it for its own use.

Required Minimum Distribution (RMD)

The required minimum distribution is the sum of money that, once an individual reaches 72, must be withdrawn from retirement plans and IRAs annually to avoid severe penalties.


See above.

Retained Life Estate

A donor transfers a property deed — residence, vacation home, farm, etc. — to charity, but retains the right to use (including rent out) or live in the property for life or a term of years. In exchange, the donor receives an immediate income tax deduction based on the fair market value of the property minus the present value of the retained life estate. The donor must cover any expenses and maintenance costs associated with the property during their lifetime.

Retirement plans

A donor can name a nonprofit as the beneficiary of a portion or all of his/her IRA, 401(k), or other Retirement Plans. When the donor’s estate is settled, the amount designated passes to the nonprofit and the donor’s heirs avoid income and estate tax.

Return on Investment / ROI

A measurement to calculate the efficiency and value of an investment or outlay. The benefit (return) is divided by the cost. For instance, the cost of an advertising program, vs. the cost of doing nothing.  


Something that can be changed or reversed.

Revocable Living Trust

A trust you create during your life, titling all or selected assets to the trust, which will be managed by a trustee. It is called “revocable” because you can terminate the trust at any time during your life. You can serve as the trustee during your life if you wish. When you pass away, the trust will distribute or continue to manage the assets in accordance with your wishes.

ROTH 401k

An employer-sponsored investment savings account funded with after-tax dollars up to a certain contribution limit. Future withdrawals are tax-free.

Secondary Beneficiary

A person or organization that inherits assets under a will, trust, insurance policy, etc., when the primary beneficiary dies before the grantor.

Secure Act

Legislation that created changes for retirement savings, and aims to help Americans at every age save for and manage their retirement.


Securities are interchangeable and tradable financial instruments used to raise capital. There are primarily three types: equity; debt; and hybrids.

Split Interest Gift

A gift in which a portion benefits the nonprofit organization, and another portion benefits the donor or their beneficiaries.  E.g., a charitable lead or remainder trust, a pooled income fund, or the gift of a remainder after a retained life estate in a residence or farm.

Taxable Estate

The portion of a decedent’s assets that are subject to taxation. The decedent’s gross estate minus allowable deductions.

Testamentary Trust

Refers to a trust that is created in a will after someone’s passing as opposed to a living or inter vivos trust, which is created by a living grantor.

Testator or Testatrix

A person who has created an estate plan or will.


A legal entity created by a written agreement by a grantor to hold and invest property for the benefit of the grantor and/or other beneficiaries.


An individual or organization carrying out the wishes of the person who established the trust (the grantor), paying income to the beneficiaries, and preserving the principal for ultimate distribution.

Trust Property

Assets including cash, real estate, life insurance and more, placed in a fiduciary relationship between a trustor or settlor and a trustee for the benefit of designated beneficiaries.

Variable Income

Earned or unearned income that changes each month.


A legal document detailing an individual’s wishes regarding the care of their children and the distribution of their assets after their death. A will does not control the disposition of property that is subject to beneficiary designations, or property the decedent has transferred to trust during life.