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Grant Writing Glossary

Plain-language definitions of the terms U.S. grant writers and nonprofits encounter most. Written for accuracy, not jargon.

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Letter of Inquiry

(LOI)
A 1–2 page letter many private foundations require before they'll accept a full proposal. The LOI summarizes who you are, what problem you're solving, what you'll do with the money, and how much you're asking for. Foundations use it to screen out misaligned requests cheaply, so a strong LOI is gating: get past it and you're invited to apply formally.

Notice of Funding Opportunity

(NOFO)
The federal government's official posting that a grant program is open. A NOFO spells out who is eligible, what activities can be funded, how much money is available, the application instructions, the review criteria, and the deadline. Federal NOFOs are published on Grants.gov; the term replaced the older 'Funding Opportunity Announcement' (FOA) at most agencies.

Request for Proposals

(RFP)
A formal solicitation, used by both government and private funders, asking organizations to submit a proposal to do specific work. An RFP describes the funder's priorities, the scope of work, the eligibility rules, the budget range, and the evaluation criteria. RFPs are competitive: multiple applicants submit and the funder picks one (or a small number) to fund.

501(c)(3)

(Five-oh-one-cee-three)
The section of the U.S. tax code that defines federally tax-exempt charitable nonprofits. To be a 501(c)(3) you must be organized for charitable, religious, educational, scientific, or similar public-benefit purposes; donations to you are tax-deductible. Most foundation and federal grants require 501(c)(3) status (or a fiscal sponsor that has it) as a baseline eligibility condition.

Form 990

The annual information return that most U.S. tax-exempt organizations must file with the IRS. The 990 is public — anyone can read it on ProPublica's Nonprofit Explorer or the IRS site — and it shows revenue, expenses, top-paid staff, board members, program accomplishments, and grants the organization made or received. Funders read 990s to assess financial health and credibility before awarding.

Fiscal sponsor

An established 501(c)(3) that accepts and administers grant funds on behalf of a project or organization that doesn't have its own tax-exempt status yet. The fiscal sponsor takes legal and financial responsibility, usually charges an administrative fee (5–10% is common), and lets the sponsored project pursue grants restricted to charitable nonprofits.

Indirect costs

(F&A, overhead)
Costs that support an organization's overall operation but can't be tied to one specific project — rent, utilities, accounting, IT, executive salaries. Federal grants let you recover indirect costs at a negotiated rate (NICRA) or at the 10% de minimis rate if you've never had a federal indirect rate. Many foundations cap indirect cost recovery far lower, sometimes at zero.

Direct costs

Costs that can be specifically and clearly tied to a single project — the program staff salaries, project supplies, participant stipends, travel for the project, contracted services for the project. Direct costs are listed line-by-line in a grant budget and contrast with indirect costs (overhead) that support the organization broadly.

Match

(cost share, matching funds)
Money or resources the grantee must contribute alongside the grant, expressed as a ratio (e.g. 1:1 means $1 of match for every $1 of grant) or a percentage. Match can be cash from other sources or in-kind (donated goods, volunteer hours, donated space). Federal grants often require non-federal match; check the NOFO carefully because what counts as match is rule-bound.

In-kind contribution

Non-cash support recorded at fair market value: donated goods, donated professional services, volunteer hours valued at a reasonable hourly rate, free use of facilities. In-kind contributions are commonly used to satisfy match requirements on grants. They must be documented (who, what, when, value, source) to count toward a federal match.

Grants.gov

The single federal portal where all U.S. federal grant opportunities are posted and where applications are submitted. To apply you need a SAM.gov registration and a UEI (Unique Entity Identifier). Grants.gov also publishes forecasted opportunities — grants that aren't open yet but are expected to be — so you can plan ahead.

SAM.gov / UEI

(Unique Entity Identifier)
SAM.gov is the System for Award Management — the federal government's vendor and grantee registration system. Every organization applying for a federal grant or contract must register in SAM.gov and is issued a UEI, a 12-character alphanumeric identifier. The UEI replaced the older DUNS number in 2022. SAM.gov registration must be renewed annually.

Logic model

A one-page diagram that shows how a program is supposed to work: Inputs (resources) → Activities (what you do) → Outputs (what you produce) → Outcomes (the changes you cause). Funders frequently ask for a logic model in the proposal because it forces applicants to be explicit about cause and effect rather than just listing activities.

Theory of change

A narrative that explains how and why a program is expected to lead to long-term impact, including the assumptions and conditions required for it to work. A theory of change is broader than a logic model: the logic model tracks 'what we'll do and what we'll produce,' the theory of change explains 'why we believe doing those things will actually change the world we care about.'

Operating support

(general operating support, GOS)
Unrestricted grant funding the recipient can spend on anything that advances the mission — rent, salaries, technology, fundraising, programs. Operating support is the most flexible and most coveted form of grant: it lets nonprofits invest where they actually need to, instead of fitting work into program-specific buckets. It's also the rarest, since most funders prefer to fund specific projects.

Capacity-building grant

A grant that funds organizational improvements rather than direct program delivery: hiring a development director, upgrading a database, paying for strategic planning, board training, financial systems. Funders make these grants to strengthen the organization itself so it can do more or better program work in the future.

Restricted vs. unrestricted funds

Restricted funds must be spent on what the donor or funder specified (a particular program, a particular line item, a particular time period). Unrestricted funds can be used for any mission-related purpose. Most grant funding is restricted; most individual donations are unrestricted. Tracking restricted-vs-unrestricted correctly is a baseline expectation in nonprofit accounting.

Mission fit

How well a particular grant opportunity matches what your organization actually does and the populations you actually serve. High mission-fit grants are worth pursuing because the funder is looking for someone like you; low mission-fit grants waste hours of writing time and rarely win. Honestly assessing mission fit before drafting is the single biggest leverage point in grant strategy.

Budget narrative

A written explanation of every line in the project budget: what each cost is for, how it was calculated (e.g. '0.5 FTE program coordinator at $52,000/yr'), and why it's necessary to achieve the project's outcomes. Reviewers use the budget narrative to confirm that costs are reasonable, allowable under the funder's rules, and clearly tied to the work proposed.

Modified Total Direct Costs

(MTDC, MTDC base)
The base on which an organization's federal indirect cost rate is applied. MTDC excludes equipment over $5,000, capital expenditures, patient-care charges, rental costs, scholarship payments, participant support costs, and the portion of any subaward over $25,000. If you have a 25% indirect rate on a $200,000 award with $50,000 in equipment, you can only charge indirect on $150,000 of MTDC — $37,500, not $50,000.

Negotiated Indirect Cost Rate Agreement

(NICRA, indirect rate agreement)
A formal agreement between a nonprofit and its federal cognizant agency setting the percentage that nonprofit can charge as indirect cost on federal awards. Negotiating one requires submitting a cost proposal documenting actual indirect costs against the MTDC base. Most established nonprofits land between 10% and 35%; rates higher than that need strong justification. NICRAs are renegotiated every few years and apply across all federal grants.

De minimis indirect cost rate

The 10% indirect cost rate any nonprofit can charge on federal awards without negotiating a NICRA. The OMB Uniform Guidance created it to spare smaller organizations the paperwork. To use it, you must (a) never have had a federally negotiated rate, (b) apply it consistently across all federal awards, and (c) calculate it on the MTDC base. Once elected, you must use it until you negotiate a formal rate.

OMB Uniform Guidance

(2 CFR 200)
The single set of federal rules governing how grant recipients spend, document, and report on federal awards. Codified at 2 CFR 200, it covers cost principles (what's allowable), administrative requirements (procurement, recordkeeping, reporting), and audit requirements (the Single Audit). If a federal NOFO references compliance, it's almost always pointing to Uniform Guidance. Read the relevant sections before submitting your first federal proposal.

Single Audit

(A-133 audit, OMB Uniform Guidance audit)
An organization-wide audit required of any nonprofit that spends $750,000 or more in federal awards in a single fiscal year. The Single Audit examines internal controls, compliance with federal rules, and the financial statements as a whole. The auditor's report goes to the Federal Audit Clearinghouse and is public. Findings — especially questioned costs — can affect future federal eligibility.

Period of performance

The window of time during which grant-funded work can occur and grant funds can be spent. Costs incurred before the start date or after the end date are generally unallowable. Federal awards specify a budget period (the part funded right now, often one year) and a project period (the total length, often multiple years subject to renewal).

Drawdown

The act of pulling federal grant funds into the recipient's bank account, typically through the Payment Management System (PMS) or Automated Standard Application for Payments (ASAP). Federal grants are paid on a reimbursement or advance-as-needed basis, so the recipient initiates each drawdown when costs have been incurred or are about to be. Inappropriate drawdowns are a common Single Audit finding.

Carryforward

(carryover)
Unspent grant funds at the end of a budget period that the funder allows the recipient to use in the next budget period. Federal carryforward usually requires an explicit request and a justification — it's not automatic. Many private funders disallow carryforward entirely; check the award letter. A pattern of large carryforwards signals to funders that the original budget may not have been realistic.

Subaward

(subgrant, sub-recipient agreement)
A formal pass-through of grant funds from a primary recipient to another organization (the sub-recipient) to carry out part of the work. Subawards differ from contracts: a sub-recipient is held to the same federal compliance rules as the prime, while a contractor just provides goods or services. Federal Uniform Guidance has specific rules about how to assess and monitor sub-recipients.

Pass-through entity

An organization that receives a federal grant and then disburses some of it to sub-recipients. Pass-through entities are responsible for monitoring sub-recipients, ensuring they comply with federal rules, and including the subaward in their own Single Audit. State agencies passing federal dollars to local nonprofits are common pass-throughs.

Allowable costs

Costs that a federal grant will actually pay for, as defined by Uniform Guidance and the specific NOFO. To be allowable, a cost must be (a) necessary and reasonable for the project, (b) allocable — clearly tied to the work funded, (c) consistent with the organization's other accounting practices, and (d) not specifically prohibited (alcohol, lobbying, fundraising costs, fines, and most entertainment are typical exclusions).

Pre-award costs

Costs incurred before the official start date of a grant. Federal awards generally allow up to 90 days of pre-award costs at the recipient's risk if those costs were necessary to begin the project on schedule. The recipient eats the cost if the award is never finalized. Always check the NOFO and the award notice — many private funders prohibit pre-award costs entirely.

Cooperative agreement

A type of federal funding instrument similar to a grant but with substantial federal involvement in the work itself. Where a grant is largely hands-off after award, a cooperative agreement involves the federal agency in decisions, reviews, and sometimes day-to-day operations. NIH and CDC use cooperative agreements heavily for multi-site research. Treat the federal program officer as a real partner, not just a check-writer.

Closeout

The administrative process of finalizing a grant after the period of performance ends. Federal closeout requires a final financial report, a final program report, return of unobligated funds, and resolution of any audit findings — typically within 120 days of the end date. Late closeout reports can put your organization on the federal Do-Not-Fund list, so this is not a step to skip.

Donor advised fund

(DAF)
A charitable giving account held at a sponsor (Fidelity Charitable, Schwab Charitable, a community foundation) where the donor has advisory control over which nonprofits receive grants. DAFs hold over $230 billion in assets and have grown rapidly. Nonprofits can solicit DAF grants — they fund 501(c)(3)s — but the donor's identity is sometimes anonymous, which complicates relationship-building.

Community foundation

A 501(c)(3) public charity that pools charitable dollars from many donors in a defined geographic area and re-grants them to local nonprofits. Community foundations typically run multiple funds (donor-advised, scholarship, designated, unrestricted) and are often the biggest source of local foundation grants in mid-sized cities. They know your area; lead with the local angle in your LOI.

Family foundation

A private foundation funded and largely controlled by a single family. Family foundations vary enormously: some are highly professionalized with full staff and published priorities; others are run informally by family members with no application process. Look up the foundation's Form 990-PF to see who they fund and at what dollar amounts before you apply — many small family foundations only fund people they know.

Endowment

A pool of investments held by a nonprofit (or by a community foundation on its behalf) where only the investment earnings — typically 4–5% per year — are spent annually. The principal is preserved to generate ongoing income. Foundations almost never give to endow another nonprofit; endowment fundraising is generally a major-gifts campaign aimed at individual donors.

Challenge grant

(matching grant)
A grant that a funder will pay only if the recipient raises a specified amount from other sources first. Challenge grants are useful for two reasons: they leverage other gifts (donors give more knowing it triggers a match), and they signal validation. The match ratio (1:1, 2:1, 3:1) and the deadline by which the match must be raised are the key terms — read both carefully.

Concept paper

(pre-proposal)
A 2–4 page document, longer than an LOI but shorter than a full proposal, that some federal agencies use as a screening step. It describes the project, approach, budget range, and qualifications in enough detail for the agency to decide whether to invite a full proposal. NIH and ED program offices often use concept papers; treat them like a tighter, more technical version of an LOI.

Outputs vs. outcomes vs. impact

Three distinct things funders measure. Outputs are what you produce (200 students tutored, 50 sessions delivered). Outcomes are the changes you cause (reading scores improved by one grade level). Impact is the broader, longer-term change you contribute to (the literacy gap in this neighborhood narrowed). Strong proposals separate the three; weak proposals call everything outcomes and confuse the reviewer.

Sustainability plan

A section of a proposal describing how the funded work will continue after this grant ends. Funders ask for sustainability plans because they don't want to fund work that collapses on day 366. Honest sustainability plans name specific revenue sources (other foundations, government contracts, fee-for-service, individual donors) and a timeline for diversification. Vague sustainability plans signal you haven't thought past this grant.

Evaluation plan

A description of how you'll measure whether the funded work achieved what you said it would. Strong evaluation plans specify the indicators (what you'll measure), the methods (how — surveys, administrative data, control groups), the timeline (when measurements happen), and who's responsible. Funders increasingly distinguish between formative evaluation (used to improve the work in progress) and summative evaluation (used to judge whether it worked).

Program officer

The staff person at a foundation or federal agency assigned to a particular grant program. Program officers screen applications, ask follow-up questions, recommend funding decisions, and manage active grants. Building a relationship with the relevant program officer — through introductory calls, site visits, or thoughtful LOIs — is one of the highest-leverage activities in grant strategy. They are not gatekeepers to be circumvented; they are partners.

Site visit

An in-person visit by a program officer (or a peer-review panel) to the applicant's location, usually scheduled between LOI and full proposal or between proposal and award decision. Site visits are a chance for the funder to verify that you exist, that your operation matches what you described, and that the leadership is credible. Prepare like an investor pitch: tour ready, key staff available, materials clean.

Letter of support

A signed letter from a partner organization, government official, or beneficiary attesting to the importance and feasibility of the proposed work. Federal proposals frequently require multiple letters of support; foundation proposals sometimes do. Boilerplate letters are obvious and useless. Specific letters that name what the writer will contribute, who they are, and why they care add real weight.

Memorandum of Understanding

(MOU)
A non-binding written agreement between two organizations describing their roles in a shared activity. Common in grant proposals where two or more partners are jointly delivering the work — federal agencies often require an MOU as evidence of real partnership. MOUs spell out who does what, who gets what funding, and how decisions are made. They are a step short of a contract but stronger than a handshake.

Public support test

An IRS calculation that determines whether a 501(c)(3) is a public charity (broad-based donor support) or a private foundation (concentrated funding from one source). To pass the test, at least one-third of an organization's revenue must come from a diverse base — not from one donor or one family. Public charity status carries significant tax-policy benefits, including higher deductibility limits for donors and lower compliance requirements.

Private foundation

A 501(c)(3) classified by the IRS as funded primarily from one source (a family, an individual, a corporation) rather than the broad public. Private foundations have stricter rules than public charities: a 5% minimum annual payout requirement, excise taxes, and restricted self-dealing rules. Most private foundations make grants to public charities; the inverse — public charities receiving operating funds from private foundations — is the dominant flow of foundation money.

Public charity

A 501(c)(3) that meets the IRS's public support test, drawing revenue from a diverse base of donors and program income. Public charities have looser regulatory requirements than private foundations and donors can take larger tax deductions for gifts to them. Most operating nonprofits — the ones running programs and applying for grants — are public charities.

Audited financial statements

Year-end financial statements (statement of activities, statement of financial position, cash-flow statement, notes) that have been examined by an independent CPA who issues a formal opinion on whether they present fairly. Funders frequently require the most recent audited financials with grant applications, especially for awards over $100,000. Organizations under $500,000 in revenue often get a review (less formal) instead of a full audit.

Cost reimbursement award

A federal award structure where the recipient is paid back for actual allowable costs as they are incurred, after submitting documentation. Most federal grants are cost reimbursement. The recipient effectively floats the project until the next drawdown clears, so cash-flow planning matters: small nonprofits with thin reserves can struggle to cover payroll while waiting on a federal drawdown that may take 30 days.

Cultivation

The relationship-building work that precedes a formal grant request: introductory emails, calls, site invitations, sharing reports, attending the funder's convenings. Cultivation is what turns a cold LOI into an invited conversation. Foundations rarely fund organizations they don't know; six months of cultivation is normal before a serious ask. Skipping cultivation explains a lot of mediocre win rates.

Now go win one.

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