Pay What It Takes: Definitions
A list of terms and definitions related to PWIT to support understanding and the adoption of a common language.
Definitions
Charities
Organisations registered with the ACNC and have a specific charitable purpose.
Not-for-profits
A broader group, encompassing any organisation that has declared itself a not-for-profit entity in its constitution. All charities are not-for-profits, but not all not-for-profits are charities.
For-purpose organisations
Broader again, encompassing organisations like some social enterprises that exist to fulfil a social purpose, regardless of whether they are not-for-profits.
Note: In the PWIT values, principles and tools we use ‘for-purpose organisations’ as a general term to refer to fundees including charities, not-for-profits, for-purpose organisations and non-government organisations.
Non-government organisations (NGOs)
A subgroup of not-for-profits, often broadly defined as working on social objectives or internationally.
Funders
Government, philanthropic organisations, PAF’s, PuAF’s, charitable trusts, community funds and all other organisations that grant funds to for-purpose organisations.
Capacity-building
Strengthening the overall systems, structures, resources, and capabilities of an organisation to improve its ability to achieve its mission and sustain its activities. It is a broader concept that encompasses capability-building but also includes enhancing organisational infrastructure, processes, and strategic alignment.
Capability-building
The process of developing specific skills, competencies, and expertise within individuals or organisations to perform tasks or achieve specific goals effectively. It focuses on enhancing the abilities of people and organisations to carry out their roles and responsibilities successfully.
Note: We acknowledge the latest literature and thinking in capacity- and capability-building, where the terms 'capacity-building’ and ‘capability-building’ assume a deficit lens rather than a strengths based view. Funders and for-purpose organisations have suggested alternative terms such as capacity liberation / enhancement / strengthening, organisational resiliency, care-pacity. In this guideline, drawing on GEO’s guidance, we use the term capacity-building being sensitive to this discourse.
Equity
Equity focuses on achieving outcomes that reflect justice and rectify imbalances in power and resources. It involves recognising and addressing the historical and systemic disadvantages faced by marginalised groups, and taking specific actions to ensure that everyone has access to the same opportunities, even if that requires different levels of support.
Equality
Providing everyone with the same resources and opportunities, regardless of their starting point or circumstances. While equality aims to treat everyone the same, it does not account for the different needs or barriers that individuals or groups may face. As a result, equality can inadvertently perpetuate existing disparities if it ignores the unique challenges and contexts of marginalised populations.
Equitable granting
The process of allocating funds in a manner that actively addresses historical and systemic inequalities. It involves designing funding practices that recognise the diverse needs of different communities, especially those who have been marginalised or disadvantaged. Equitable granting ensures that resources are distributed in ways that support equitable outcomes, taking into account the unique challenges faced by different groups and providing targeted support.
Diversity
The presence of a wide range of differences, including but not limited to race, ethnicity, gender, age, sexual orientation, disability, socio-economic status, and cultural background.
Direct costs
Direct costs are those costs that are specific to a project, such as salaries for project staff and materials required for the project. The key test is that these costs would not be incurred if the project being funded did not exist. For example, staff time that can be unambiguously identified as having been spent on the project, or travel costs for the project.
Shared costs
Shared costs are those costs that benefit multiple programs or projects. These costs can be assigned or allocated across programs or projects in a reasonably consistent and accurate way. They are just as integral to the delivery of the project as the direct costs. Examples of such costs include occupancy and facilities, utilities, telephone and internet access (note that these costs are generally non-personnel costs).
Indirect costs
Indirect costs are costs for activities or services that support the organisation as a whole rather than any particular program or project, including administrative and fundraising costs. These are not costs associated with the delivery of program services; nonetheless, they are essential costs of maintaining and managing the organisation through which program services are delivered. Examples of such costs include bank fees, fundraising, human resources, board meetings, finance and accounting support.
Sustainable growth / long-term sustainability
Sustainable growth, in the context of Pay What It Takes (PWIT) funding, refers to the capacity of for-purpose organisations to continuously expand their impact and reach while maintaining financial health and operational stability. This concept emphasises the need for funding models that cover the full costs of program delivery, including overhead and administrative expenses, as well as innovation and collaboration.
Flexible funding
Flexible funding, (also known as unrestricted funding, general / core budget support, partnerships, or flexible financing), is provided by funders without any specific restrictions or mandates on how the funds should be used. This type of funding allows for-purpose organisations the flexibility to allocate resources according to their priorities and needs, supporting overall operations and adapting to changing circumstances.
Restricted funding
Restricted funding (or earmarked grants) comes with specific conditions set by the funder. These funds must be used for particular purposes as outlined by the funder. This type of funding limits for-purpose organisations ability to reallocate resources to other areas or respond to unforeseen challenges.
Inclusion
The practice of creating environments where all individuals, especially those from marginalised or underrepresented groups, feel valued, respected, and able to fully participate. Inclusion involves actively removing barriers and fostering a culture that embraces diverse perspectives and ensures that everyone has a voice. It goes beyond simply having diverse representation to ensuring that all members can contribute meaningfully and be valued for it.
Open dialogue
A communication approach that promotes transparency, honesty, and mutual understanding between funders and for-purpose organisations. Open dialogue encourages regular, candid conversations about goals, challenges, and expectations.
Mutual understanding
A shared comprehension and agreement on goals, values, and expectations between funders and for-purpose organisations. Mutual understanding is foundational for building strong, effective partnerships.
Transparency
The state that results from making information available from inside an organisation to a wider public, either through proactive publication or by responding to requests for information¹.
Accountability
A readiness to take responsibility for actions, achieved by being transparent about those actions against a predefined framework of values and indicators, and responding to the findings of any evaluation and/or the feedback received from stakeholders².
¹ From https://funderaccountability.guide/
² From https://funderaccountability.guide/Questions or comments?
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