Glossary of Terms Used in Application Materials

Core support
A core support grant is usually given as unrestricted, flexible funding that can be used to cover any costs associated with an organization's ongoing charitable activities, provided the organization does not change its mission or alter any goals or objectives negotiated as part of the grant. Grants given as restricted funding must be used for a specific purpose or project.

Although the Skoll Foundation gives core support funding whenever legally possible, it works with each awardee to identify and commit to the achievement of specific core organizational goals and objectives. Detailed program budgets and financial reports are required for grants and loans governed by a fiscal sponsor, or expenditure responsibility agreements, including for-profit organizations and some foreign nonprofits. All awardees, even those receiving core support, are required to report on a regular basis on progress toward negotiated objectives.

Endowment
An endowment is a permanently reserved pool of funds intended to provide interest and investment income for continued support of a not-for-profit organization. Similarly, a board can designate a cash reserve to be held as an endowment or for an emergency fund. Skoll funding cannot be used to fund an endowment or a cash reserve.

Equilibrium change
Equilibrium describes a stable state, generally economic or social, controlled by and benefiting established entities. The social entrepreneur sees the limitations of an existing equilibrium and offers a more efficient solution with the potential to benefit those not served by the existing model. Skoll is seeking social entrepreneurs who have created and are implementing new, large-scale approaches that can change the equilibrium by fundamentally transforming the lives of marginalized populations. The ultimate example of equilibrium change would be to eliminate a problem by solving its root cause or to create global impact by driving universal adoption of a new innovation by all others who address the same issue.

Expenditure responsibility
One way a private foundation can make a grant to an organization or individual not classified by the Internal Revenue Service (IRS) as a “public charity” is through an expenditure responsibility (ER) process. The grantee will be required by U.S. law to provide assurance that the funds will be used for the intended charitable purposes. ER grantees have special restrictions, cannot receive general operating or core support, and must file special reports, including detailed financial accounting for the grant funds received.

Fiscal sponsor
An organization or individual not classified by the IRS as a “public charity” will occasionally establish an affiliation with an existing nonprofit organization for the purpose of receiving grants. The nonprofit serves as the fiscal sponsor for the grant and assumes oversight responsibility for ensuring that the grant is carried out and the funds are used as intended.

Issue area, critical challenge
The Skoll Foundation funds social entrepreneurs working to solve problems in the following issue areas which have been selected because of their importance to addressing the critical challenges of our time. Many applicants work in more than one of these areas. If you apply, you will be asked to designate a primary, and if appropriate, a secondary area of focus.

Among the issue areas are:

• Tolerance and human rights, such as religious and racial tolerance, women’s rights, sexual exploitation and human trafficking, torture and wrongful imprisonment, immigration, and general tolerance and human rights issues

• Health, such as disease control, access to health care and system problems, pollution and toxins, population control and lifestyle

• Environmental sustainability, such as biodiversity and depletion of natural resources, global warming, water, oceans and waste (general and nuclear)

• Peace and security, such as war, nuclear weapons, terrorism, arms and drug trafficking, government involvement, conflict resolution, and sustainable development and education in conflict zones

• Institutional responsibility, such as unethical labor practices, bribery and corruption, unethical government (e.g., executive pay), shareholder activism, business and the environment, irresponsible marketing, unethical sourcing and procurement, and global media integrity

• Economic and social equity, such as poverty and distribution of wealth, drugs, crime and violence, microfinance, homelessness and affordable housing, and education

Large-scale impact, systemic change
See also “equilibrium change.” Systemic social change delves behind immediate problems, involves new ways of applying resources to underlying causes and results in tangible and enduring benefits. Systemic change occurs when an outcome or goal has been attained and the subsequent result either eliminates the cause of the problem or alters programs, policies, funding streams and/or services to reduce the impact of the problem on a long-term basis.

Mezzanine stage
Mezzanine-stage funding is a venture capital term used to describe later-stage financing for a company that is between a startup (seed funding) phase and an initial public offering. We deem a social entrepreneurial organization to be at the mezzanine level if it has fully pilot tested its idea, documented its outcomes and developed a written plan to scale up its innovations, but has not yet achieved large geographic scale or had its idea widely adopted.

Proof of concept
Proof of concept is evidence which demonstrates that a model or innovative approach is viable, feasible and capable of solving or diminishing a particular problem. It is drawn from actual experience using an innovation in a real-world environment for a sufficient amount of time to prove that the model:
• Is cost-effective and sustainable
• Provides the intended results
• Provides a measurable improvement over other existing models (or diminishes a problem that no one else is addressing)
• Contains a system to continually refine the model based on evidence from the field

The most competitive applicants can show that they have assessed the effectiveness of the proposed approach and have incorporated lessons learned in preparation for replication or scaling up.

Program-related investment (PRI)
A program-related investment (PRI) is a loan or other mission-related investment made by a foundation to another organization for a charitable project. Foundations often have guidelines, applications and strategies for PRIs that are similar to their grant program; however, PRIs are intended as loans (usually at a below-market interest rate) and must be paid back on an agreed-upon schedule to the foundation.

Replicate, scale up
To replicate or scale up a program is to significantly increase its impact in size, amount or extent. Scaling an impact can occur in many ways, including growing an organization’s own capacity, developing independent affiliates or franchising, encouraging widespread adoption of the model by others, or through a combination of scaling approaches. The most competitive applicants have a clear, achievable replication plan that leads to exponential growth of their innovation, as opposed to slow, incremental growth over time.

For a better understanding of how other social entrepreneurs are working to achieve scale, we encourage you to visit www.socialedge.org where you will find multiple discussions and blogs about what it means to overcome the real-life barriers that social entrepreneurs face as they seek to achieve scale.

Sectarian
Sectarian groups are religious, political or ideological organizations whose services are limited to a particular sect or who require recipients to adhere to a specific dogma, political point of view or religious practice in order to receive services.

Seed money
Seed money is a grant or funding used to start a new project or organization. Seed grants may cover salaries and other operating expenses of a new project.

Social entrepreneur
Just as entrepreneurs change the face of business, social entrepreneurs act as the change agents for society, seizing opportunities others miss by improving systems, inventing new approaches and creating sustainable solutions to change society for the better. However, unlike business entrepreneurs who are motivated by profits, social entrepreneurs are motivated to improve society. Despite this difference, social entrepreneurs are just as innovative and change oriented as their business counterparts, searching for new and better ways to solve the problems that plague society.

Social entrepreneurs that meet Skoll’s criteria for Skoll Awards can be characterized by their ability to:
• Recognize an unjust equilibrium that leads to the exclusion, marginalization or suffering of vulnerable members of our society
• Identify an opportunity within this unjust equilibrium to change the existing system and, through inspiration, creativity, direct action, courage and fortitude, implement a better solution
• Demonstrate potential to scale up their innovation until they have replaced the old system with a new, stable equilibrium that alleviates the suffering of the targeted group and creates a better future

Sustainability
Sustainability for a social entrepreneurial organization is the ability to achieve and sustain its impact for as long as there is a need for its intervention. Factors that contribute to long-term sustainability include:
• Leveraging a broad array of resources over time and applying them in the most effective way
• Building the governance and staffing capacity necessary to create and maintain a strong management structure, high-quality partnerships, skill in communicating its model and the ability to evaluate and measure change
• Achieving large-scale impact through elimination of the root cause of the problem and/or widespread acceptance of an innovation and replication by others

Theory of change
A theory of change is a strategy or blueprint for achieving large-scale, long-term goals. It identifies the preconditions, pathways and interventions necessary for an initiative's success. The term can refer to a specific planning tool as well as to a more general overview of how an organization intervenes in a system to initiate and sustain positive change. For more information, visit the Theory of Change site sponsored by ActKnowledge and the Aspen Institute Roundtable on Community Change at http://www.theoryofchange.org/.

Track record
A track record is a documented history of actual, recognized accomplishments under “real-world” conditions. The most competitive Skoll applicants can demonstrate:
• No less than three years of experience in implementing the proposed model or approach
• Documented results showing the actual impact resulting from their intervention
• Evidence that others in the field are aware of and acknowledge the validity of the proposed innovation

U.S. public charity, 501(c)(3)
The section of the United States tax code that defines nonprofit, charitable, tax-exempt organizations is 501(c)(3). After filing the required paperwork to document its nonprofit mission, a 501(c)(3) designated charity will receive a confirmation letter and tax identification number from the IRS. A foreign entity can apply for and receive a U.S. 501(c)(3) designation provided it complies with U.S. laws and meets certain requirements and restrictions.

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