Glossary | Tributary

Fundraising

Appeal: A time-limited ask for money for a stated purpose, such as a winter or emergency appeal, sent to supporters by post, email or social media. Money given for a stated purpose is restricted to it unless your wording says otherwise, so say what happens if you raise too much or too little. For a small charity, one or two well planned appeals a year beat constant asking.
Case for support: The core document that explains why your charity exists, the need you meet, what you do about it, the difference it makes and what it costs. It is written once, kept up to date, and every bid, appeal and conversation with a funder draws on it. For a small charity it saves hours, because you stop rewriting the same answers from scratch each time a funder asks.
Code of Fundraising Practice: The standards all charitable fundraising in the UK is expected to meet, covering honesty, respect for donors, handling money, third parties and data. The Fundraising Regulator sets it and handles complaints in England, Wales and Northern Ireland, and the Scottish Fundraising Adjudication Panel does so in Scotland. Small charities are expected to follow it too, and reading it before an appeal goes out is a cheap safeguard.
Commercial participator: A business that says part of the price of its goods or services goes to your charity. In England and Wales this is a legal term, and the business must sign a written agreement with you and tell customers what you receive. Scotland's law is similar and Northern Ireland's differs, so check your regulator's guidance. Small charities are often offered these deals informally, which leaves both sides exposed.
Community fundraising: Money raised by supporters and local people through events, sponsored challenges, collections and quizzes, usually organised by volunteers rather than staff. Public collections on streets or door to door need a permit, and who issues it differs across the UK nations. For a small charity it builds local awareness and a pool of future donors and volunteers as well as income, though it takes real coordination.
Corporate partnership: A relationship with a business that gives you money, staff time, goods, skills or publicity, for instance sponsorship, charity of the year or staff fundraising. If the business gets something back, such as its logo on your materials, the money may be sponsorship rather than a gift, with tax and VAT consequences. For a small charity a local firm is usually a better fit than a national brand.
Crowdfunding: Raising many small gifts online for a specific project through a platform, usually with a target, a deadline and updates to everyone who has given. Platforms charge fees and some handle Gift Aid for you, so compare terms, and money raised for the stated project is restricted to it. For a small charity it works best for one tangible thing, such as a minibus or a new kitchen.
Fundraising Regulator: The body that sets the Code of Fundraising Practice for the whole UK, handles complaints in England, Wales and Northern Ireland, and runs the Fundraising Preference Service, which lets people stop contact from named charities. In Scotland complaints go to the Scottish Fundraising Adjudication Panel. Larger charities pay a levy, and a small charity can register for a modest fee, which shows donors you take the rules seriously.
Gift Aid: An HMRC scheme letting a charity recognised by HMRC reclaim basic rate income tax on gifts from UK taxpayers who sign a declaration and have paid enough tax to cover it. The amount depends on the basic rate (check gov.uk) and costs the donor nothing. Gifts from companies do not qualify. Keep every declaration and gift record. For a small charity it is the easiest extra income there is.
Gift Aid Small Donations Scheme (GASDS): An HMRC scheme for claiming a Gift Aid style top up on small cash and contactless donations, such as bucket collections, without a declaration from each donor. Each donation and the yearly total are capped (see gov.uk), and you must also make ordinary Gift Aid claims in the same tax year. For a small charity that collects cash at events it is money many never bother to claim.
Gifts in kind: Donations of goods, services or facilities instead of money, such as free meeting rooms, a solicitor's advice or raffle prizes from a shop. If you prepare accruals accounts you usually have to show their value, and Gift Aid cannot be claimed on them. For a small charity they replace costs that would otherwise come from unrestricted funds, so ask for them as deliberately as you ask for cash.
Lapsed donor: A supporter who has given before but not for a period you define, often a year or more, and who has not asked you to stop. They already know you, so a well written letter asking them back costs less than finding new donors, provided you first check their contact preferences. For a small charity the lapsed list is often the most valuable fundraising asset nobody is using.
Legacy: A gift left to a charity in someone's will, as a fixed sum, a named item or a share of what remains after debts and other gifts. Gifts to charity in a will are free of inheritance tax. For a small charity one legacy can equal years of event income, so say plainly that you welcome them and keep your exact name and charity number easy to find.
Major donor: Someone who gives, or could give, a gift that is large by your charity's standards. There is no fixed figure, and for a small charity it may be a few hundred pounds. They are asked in person, usually by a trustee or your most senior person, and trustees should know where any large gift comes from. Two or three such supporters can change your year.
Match funding: A promise by a funder or company to match what you raise from others, pound for pound or in a set ratio, often within a campaign window. The term also describes a grant condition that you find part of a project's cost elsewhere, sometimes counting volunteer time or gifts in kind. For a small charity a match offer strengthens an appeal, because donors like seeing their gift doubled.
Payroll giving: An HMRC approved way for employees to give straight from their pay before income tax, through their employer's scheme and a payroll giving agency. You receive the gift in full, apart from any agency fee, with no Gift Aid to claim. Any employee whose workplace runs a scheme can choose your charity, which for a small charity means steady monthly income from people you may never meet.
Pledge: A promise to give a stated amount later or in instalments, rather than a gift in hand. A promise is usually not enforceable in England and Wales (Scots law can differ), and your accounts only count it once receipt is probable, so a pledge is intent, not cash. For a small charity, thank it, record it, follow it up and never spend it before it arrives.
Professional fundraiser: The legal term for anyone paid to ask the public for money for your charity, such as a telephone or street fundraising agency, rather than your staff or volunteers. In England and Wales a written agreement is required and donors must be told how the fundraiser is paid. Scotland's law is similar and Northern Ireland's differs. You stay answerable for everything done in your name, so monitor them.
Prospect research: Finding out which trusts, companies and individuals are likely to fund your work, and how much to ask for, from public sources such as charity registers and published accounts. Researching individuals means processing personal data, so your privacy notice should say so and you need a lawful basis. For a small charity an hour of research per application saves hours on bids that were never going to succeed.
Regular giving: Donors who give a fixed amount at set intervals, usually monthly by Direct Debit or standing order, rather than one-off gifts. It is the most predictable income there is, costs less to administer per pound, and one enduring Gift Aid declaration covers every payment. For a small charity fifty people giving a modest monthly sum can cover the rent, so a monthly giving programme is worth building early.
Restricted and unrestricted funds: Restricted funds are given for a stated purpose, such as a grant for one project or a specific appeal, and may be spent only on that. Unrestricted funds can go on anything within your charitable objects, including overheads. Your accounts must show them separately. For a small charity unrestricted money covers core costs, so protect it and never borrow from restricted funds to fill a gap.
Stewardship: Everything you do after a gift arrives to keep the donor close. That means thanking them quickly and personally, telling them what their money achieved, and spacing out further requests so they never feel used. It costs little beyond attention. For a small charity keeping a donor is far cheaper than finding one, and a donor who is thanked and told what happened usually gives again.
Trust and foundation: A charity set up to give grants to other charities, usually from an endowment, with its own trustees. Each has its own priorities, grant sizes, deadlines and forms, and some accept invited applications only. Many fund small charities and some fund core costs. For a small charity trusts are often the largest grant source, so a well kept list of the right ones beats any single bid.

Governance and trustees

Annual return: The yearly online form a registered charity sends to its regulator to confirm its details and, above an income level, report on finances, activities and governance. The deadline runs from your financial year end and differs between the three UK regulators, so check the current rule. A charitable company also files with Companies House. A late return shows on the public register, where funders look first.
Audit threshold: The income level, or mix of income and assets, above which a charity's accounts need a registered auditor rather than an independent examiner. The figures differ between England and Wales, Scotland and Northern Ireland and change from time to time, so check your regulator's current figure. Most small charities sit well below it, but a governing document or a funder can still require an audit, which costs far more.
Charitable company: A company limited by guarantee, registered at Companies House, that is also a charity. Its directors are its trustees, its governing document is its articles of association, and it answers to both Companies House and the charity regulator, filing accounts with each. Limited liability protects the people involved, but double reporting is a burden for a small charity with no finance staff, so many small charities choose a CIO instead.
Charitable incorporated organisation (CIO): A legal form only for charities. A CIO exists in its own right, so it can hold property, employ staff and sign contracts, and its trustees and members have limited liability. It registers with the Charity Commission alone, not Companies House. Scotland's version is the SCIO, registered with OSCR. In Northern Ireland, check with the regulator which forms are available. It gives a small charity protection without company paperwork.
Charitable objects: The clause in your governing document that says what the charity exists to do, such as relieving poverty in a named town. Objects must fall within the purposes the law recognises as charitable, and the lists differ slightly between England and Wales, Scotland and Northern Ireland. Spending outside the objects is a breach of trust, so change them before drifting into new work, and expect funders to check them.
Charitable trust: A charity set up by a trust deed, with trustees holding money or property for charitable purposes. It has no legal identity of its own, so trustees hold assets and sign contracts in their own names and are personally liable. It suits grant-making bodies and charities holding an endowment, but a trust that starts employing staff or signing leases should ask whether a CIO would protect trustees better.
Charity regulators: The bodies that register and oversee charities. In England and Wales it is the Charity Commission, in Scotland the Office of the Scottish Charity Regulator (OSCR), and in Northern Ireland the Charity Commission for Northern Ireland. Each has its own register and guidance, and a charity working across borders may need to register with more than one. Knowing yours tells you which guidance to follow and where to file.
Conflict of interest: A situation where a trustee's personal interests, or loyalty to another person or body, could affect a decision made for the charity. Trustees must declare conflicts, record them in the minutes and usually leave the room while the matter is decided. Small charities, where trustees are often also volunteers, suppliers or relatives of staff, meet conflicts constantly, and the regulator expects them handled openly rather than absent.
Connected person: Someone closely linked to a trustee, such as a spouse or partner, child, parent, sibling, business partner, or a company they control. Paying one, or dealing in property with one, is restricted as for a trustee, so it needs authority from the governing document, the regulator or the law. Where the treasurer's partner keeps the books or a trustee's firm prints the newsletter, check this first.
DBS check: A criminal record check from the Disclosure and Barring Service, used in England and Wales for staff and volunteers. The role, not the charity, decides which level you may ask for, and the highest is reserved for regulated activity with children or adults at risk. Scotland uses Disclosure Scotland's PVG scheme, Northern Ireland uses AccessNI. A check is one part of safer recruitment, so take references and supervise too.
Designated safeguarding lead: The named person responsible for safeguarding in your charity. They receive concerns, decide whether to refer to social services or the police, keep records and keep policies current. Many charities also name a safeguarding trustee so the board oversees it directly. In a small charity the lead is often the only person who knows the procedure, so name a deputy, train both and tell every volunteer who they are.
Going concern: The assumption behind a set of accounts that the charity will keep operating for at least twelve months after trustees approve them. Trustees must consider whether that is realistic, looking at cash, confirmed income and commitments, and disclose any serious doubt. For a small charity living on one or two grants, it forces an honest look at next year's funding while there is still time to act.
Governing document: The legal document that sets out why your charity exists and how it is run. A CIO or unincorporated association has a constitution, a charitable company has articles of association, and a charitable trust has a trust deed. It covers the objects, trustee appointments, meetings and closure. Many disputes end with someone reading it for the first time, so read it before you need it.
Public benefit: The requirement that a charity's purposes benefit the public, with any private benefit incidental. In England and Wales trustees must have regard to the Charity Commission's guidance and report yearly on it. Scotland's charity test, run by OSCR, also weighs fees or conditions that might exclude people, and Northern Ireland has its own. It underpins your tax reliefs, so your annual report must show who benefited and how.
Quorum: The minimum number of trustees, or members at a general meeting, who must be present for decisions to count. Your governing document sets it, as a number or a fraction of the board. A meeting that falls short may talk but cannot decide, and any decision it takes can be challenged. Small boards fall short whenever two people are ill, so know your number and check it first.
Risk register: A list of the main things that could harm the charity, how likely and how bad each is, what you do about it and who owns it. Larger charities must describe their main risks in the trustees' annual report. For a small charity one page covering the half dozen risks that could close you, such as losing your main funder, is enough if the board reviews it twice yearly.
Safeguarding: Protecting the people your charity works with, its staff and volunteers, from harm, abuse and neglect, and acting properly when concerns arise. It applies to every charity, not only those working with children or adults at risk, and regulators expect arrangements proportionate to the work. For a small charity that means a short policy, a named lead, safer recruitment and knowing who to call, owned by the trustees.
Serious incident report: A report to the Charity Commission when something happens, or is alleged, that causes or risks significant harm to people, serious loss of money or property, or serious damage to reputation. Safeguarding allegations, fraud and large data breaches are common examples. OSCR runs a similar notifiable events scheme and Northern Ireland has its own. Report promptly and update as facts emerge, because the regulator judges how trustees handled it.
SORP: The Charities Statement of Recommended Practice, the accounting rulebook for charities preparing accruals accounts. It sets the layout of the accounts and what the trustees' annual report must cover. Charitable companies must follow it at any size. Below an income threshold, unincorporated charities and CIOs may use simpler receipts and payments accounts, so check the figure. Which side you fall on decides how much accounting help you need.
Trustee: Anyone with overall responsibility for running a charity, whatever their title, including a charitable company's directors and an unincorporated association's committee. Trustees are usually unpaid and must act in the charity's interests, follow the governing document, manage money and risk sensibly and take no personal benefit without authority. Small charity trustees often also run sessions or do the admin, so know which role you are in.
Trustees' annual report: The written report that accompanies the accounts each year. It explains what the charity is for, what it did and achieved, how it is governed and funded, and states its reserves policy. Small charities below an income threshold may write a shorter version. It goes to the regulator and onto the public register, so it is often the only account of your work a funder reads.
Unincorporated association: A group of people who have agreed rules, usually a constitution, to pursue a shared purpose. It is the simplest form for a community charity but has no legal identity of its own, so property and contracts sit in trustees' names and they are personally liable. That works with small funds and no staff, and is a reason to consider a CIO once you employ anyone or rent premises.

Money and finance

Accruals accounts: Annual accounts that record income when earned and costs when incurred, not when cash moves, prepared under the Charities SORP with a balance sheet. Every charitable company must prepare them, as must other charities above an income threshold set by each UK regulator, so check the current figure. For a small charity they usually mean paying an accountant, so know which side you fall on.
Apportionment: Splitting a shared cost like rent or the manager's salary across your projects or funds on a fair and consistent basis, usually staff time or floor space. Accruals accounts under the SORP expect support costs to be allocated this way. It matters to a small charity because a funder will only pay its share of overheads if you can show how you worked it out.
Budget variance: The gap between what you budgeted for a line of income or spending and what actually happened, shown as a figure, a percentage or both, usually for the year to date. A variance is neither good nor bad until someone explains it. For a small charity the variance column is where trustees spot a late grant or an overspend while there is still time to act.
Cashflow forecast: A month by month projection of the money you expect to receive and pay out, and the bank balance left at each month end. It differs from a budget, which looks at the year as a whole. A small charity can be solvent on paper and still miss payroll because a grant arrives six weeks late, and trustees are expected to see that coming.
Cost centre: A label in your bookkeeping that groups income and spending by project, service or site so each can be reported on separately, for example Youth Club or Advice Line. Accounting software calls them tracking categories, classes or departments. For a small charity they are the simplest way to show a funder what its money bought and to spot services that cost more than they bring in.
Data controller: The organisation that decides why and how personal data is used. Your charity is the controller for information about the people it supports, its donors, staff and volunteers, and the duties under UK GDPR and the Data Protection Act 2018 sit with it, not with your software suppliers. A small charity cannot hand this role to anyone else, so trustees need to know they hold it.
Data processor: An organisation that handles personal data only on your instructions, such as a payroll bureau, a cloud database or a business AI tool. UK GDPR requires a written contract with each one. A free consumer AI tool is often not a processor, because it may use your data for itself. For a small charity the responsibility stays with you when a processor fails, so check the terms.
Designated funds: Unrestricted money the trustees have chosen to set aside for a particular purpose, such as a roof repair or redundancy costs. Because the trustees created the designation they can also remove it, which separates it from a restricted fund, where the donor sets the condition. For a small charity, showing designated funds separately in the accounts tells funders you plan ahead rather than simply hold cash.
Full cost recovery: Pricing a project or contract so that it covers its direct costs and a fair share of the overheads that make it possible, such as rent, insurance, management time and finance. It relies on an honest apportionment method you can explain. For a small charity it matters because every project funded on direct costs alone is quietly subsidised from your reserves, and that subsidy runs out.
Independent examination: A lighter form of scrutiny than an audit, for charities under the audit threshold. The examiner checks your accounts and reports whether anything looks materially wrong. In England and Wales the smallest charities need none unless their governing document says so, while in Scotland and Northern Ireland every charity needs one, so check your regulator's thresholds. For a small charity it costs far less than an audit.
Lawful basis: The legal reason UK GDPR requires before you use someone's personal data. There are six, and charities most often rely on legitimate interests, consent, contract and legal obligation. Health, religion, ethnicity and other special category data need an extra condition. For a small charity the basis must appear in your privacy notice and is hard to change later, so decide it before you collect the data.
Management accounts: Regular internal figures, usually monthly or quarterly, showing income and spending against budget for the year so far, often with cash and fund balances. Nobody files them. They exist so trustees can steer. For a small charity they matter because the statutory accounts arrive months after the year ends, too late to fix anything, whereas one page of these catches a problem while it is still small.
Overheads: The costs of keeping the charity running that are not tied to one service, such as rent, insurance, accountancy, software and management time. The Charities SORP calls them support costs and governance costs. For a small charity they are real costs of doing the work, not waste, and the charity that hides or underfunds them in its bids is the one that fails.
PAYE: Pay As You Earn, how an employer deducts income tax and National Insurance from wages and pays them to HMRC. Employ anyone earning above the reporting threshold and you must register as an employer, report each payday and pay it over. Scottish income tax rates differ and Welsh rates can, which payroll software handles through the tax code. Late filing penalties hit a small charity from its first employee.
Payroll: The whole process of paying staff, from working out gross pay and deducting tax, National Insurance, pension and student loan repayments to issuing payslips, filing with HMRC, paying the pension scheme and handling statutory sick and parental pay. Many small charities hand it to a payroll bureau or their accountant for a modest monthly fee. It matters because mistakes land on low paid staff and attract HMRC penalties.
Pension auto enrolment: Every UK employer's duty under the Pensions Act 2008 to put eligible staff into a workplace pension and contribute to it. Eligibility depends on age and earnings, and minimum contributions are set by law, so check The Pensions Regulator's site for the figures. You must re-enrol staff every three years and declare compliance. For a small charity it applies from the first employee, and the regulator does issue fines.
Personal data breach: An incident where personal data is lost, destroyed, changed or seen by someone who should not have it. Emailing a spreadsheet to the wrong person or pasting case notes into a public AI tool both count. Assess the risk, report to the ICO within 72 hours if it risks harm to people, and log every breach. Small charities hold sensitive information about vulnerable people, so plan ahead.
Receipts and payments accounts: The simpler form of annual accounts, recording cash in and cash out during the year, with a statement of assets and liabilities at the year end. No accruals, no balance sheet. They are allowed for charities that are not companies and sit below an income threshold, which each UK regulator sets separately, so check yours. For a small charity they can usually be prepared without an accountant.
Reserves: The unrestricted money a charity holds that is not committed, designated or tied up in buildings and equipment, known as free reserves. Trustees should have a reserves policy saying how much to hold and why, usually as months of running costs, explained in the annual report. For a small charity too little means one late grant closes you, and too much makes funders ask why they should give.
Restricted funds: Money given for a specific purpose, set by the donor or funder, that can lawfully be spent only on that purpose. Trustees cannot lift the restriction without the funder's agreement or, sometimes, the regulator's permission. They must be tracked and shown separately in your accounts. Spending them on something else is a breach of trust, and for a small charity it is the most common serious finance mistake.
Retention schedule: A list of each type of record, such as case files, donor records, safeguarding notes and trustee minutes, with how long each is kept and what happens then. Some periods are set by law, for example payroll records for HMRC, while others you choose and must justify. UK GDPR says keep personal data no longer than necessary, and for a small charity the schedule proves you decided.
Subject access request: A person's right under UK GDPR to ask what personal data you hold about them, why, who sees it, and to get a copy. It can be made verbally or in writing to anyone at the charity, and you normally have one month to reply, usually free, with few exemptions. For a small charity with scattered files, one request from a former employee can mean weeks of work.
VAT partial exemption: A VAT registered charity making both taxable and exempt supplies (welfare or education, for instance) can reclaim only the part of the VAT on its costs that relates to the taxable side. Grants and donations are usually outside the scope of VAT. Most small charities need not register unless taxable turnover passes the gov.uk threshold. Unrecoverable VAT is a real cost, so budget for it and take advice before registering.

AI essentials

Acceptable use policy: A short document that tells staff, volunteers and trustees which AI tools they may use, what they may put into them, what they must never put in, and who to ask when unsure. It has no set legal meaning, but it shows a charity handles personal data responsibly. For a small charity it is the cheapest safeguard available, and one afternoon is enough to write one.
Agent: An AI system that does more than answer. It is given a goal, then plans steps, uses other software (a browser, email, a spreadsheet) and keeps going until it finishes or gets stuck. Agents are newer and less predictable than chatbots. A small charity should treat an agent like a new volunteer with system access, give it narrow tasks, and check its work before anything goes out.
Anonymisation and pseudonymisation: Anonymisation removes everything that could identify a person, so the information is no longer personal data under UK data protection law. Pseudonymisation swaps names for codes but keeps a key, so the data is still personal data and still protected. Before you paste anything about the people your charity supports into an AI tool, anonymise it properly, because changing a first name is not enough.
Automated decision making: A decision about a person made by software with no human involved, for example a tool that scores hardship grant applications and rejects some automatically. UK data protection law gives people safeguards when such a decision has a legal or similarly significant effect, including the right to a human review. Few small charities need this. If a tool offers it, check the ICO's current guidance first.
Automation: Getting software to carry out a repeated task on its own, such as sending a thank you email when a donation arrives or moving form answers into a spreadsheet. Much automation involves no AI at all and has been reliable for years. For a small charity with no admin staff, well chosen automation often saves more hours than any chatbot, and it is far easier to check.
Bias: The tendency of an AI tool to favour or disadvantage certain groups because of patterns in the material it learned from. It can show up as a bid that assumes beneficiaries are a certain age, or a shortlist that overlooks disabled applicants. Equality law (the Equality Act 2010 in Great Britain, separate legislation in Northern Ireland) applies to a charity's decisions whether or not a machine helped.
Chatbot: Software you talk to by typing or speaking. The term covers everything from a rigid website helper that only follows a script to ChatGPT, Claude, Copilot and Gemini, which hold open conversations. Most charity staff use the second kind as a writing aid. A small charity should be careful about putting one on its own website, because it will answer for you, and sometimes wrongly.
Context window: The amount of text an AI tool can hold in mind during one conversation, counted in tokens. Everything you paste, every reply and any attached files take up room. When the window fills, the tool quietly forgets the start. If a long session goes strange, that is often why, so start a fresh conversation for each big job, such as a bid, and paste your context card again.
Copilot: A general word for an AI assistant built into software you already use, suggesting text, summarising documents or drafting replies as you work. Microsoft uses it as the name of its own assistant inside Word, Outlook and Teams, which is where most charities meet it. Check which version your organisation actually has, because the free consumer one and the paid business one handle your data differently.
Data protection impact assessment (DPIA): A structured check, required by UK data protection law before processing that is likely to pose a high risk to people, which records what you plan to do with personal data, the risks, and how you will reduce them. Introducing an AI tool that touches beneficiary or donor data will often trigger one. The ICO publishes a template, and for a small charity an afternoon is usually enough.
Deepfake: A fake image, video or voice recording made with AI that looks or sounds like a real person. The quality is good enough to fool a busy person. For a small charity the risk is practical, a voice message that sounds like the chief executive asking the treasurer for an urgent payment, so agree that no payment ever moves on a voice or video request alone.
Fine tuning: Training an existing AI model further on a particular set of examples so it behaves in a specific way, for instance writing in one organisation's style or recognising one type of document. It needs technical skill, a good deal of clean data and money. Almost no small charity needs it, because a well written prompt and a few pasted examples get most of the same result for nothing.
Generative AI: AI that produces new material, such as text, images, code, audio or video, rather than only sorting or scoring what already exists. ChatGPT, Claude, Copilot and Gemini are all generative. It is the kind of AI most small charities actually use, for drafting bids, newsletters and policies, and it is also the kind most likely to state something confidently that is not true.
Guardrails: Limits built into an AI tool, or set by the people using it, that stop it doing certain things. Inside the tool they are rules the maker has set, such as refusing to write abuse. For a small charity the second kind matter more, such as a list of data that never goes in and a rule that a person checks every output before it goes out.
Hallucination: When an AI tool states something false as if it were fact. It invents a statistic, a quote, a grant programme, a court case or a reference, and presents it with complete confidence. It does this because it predicts likely words, not because it checks anything. For a funding bid or a trustee report this is the main risk, so verify every fact, figure and name yourself.
Human in the loop: A way of working where a person checks what an AI tool produces before it is acted on, rather than letting it go straight out. It is the simplest safeguard against hallucinations, bias and leaked data. For a small charity it should be the default for anything that reaches a funder, a beneficiary or the public, and UK data protection law expects it for significant decisions about individuals.
Large language model (LLM): The engine behind tools such as ChatGPT, Claude, Copilot and Gemini. It has read a vast amount of text and learned to predict what words are likely to come next, which lets it write, summarise, translate and answer questions. It does not understand or check facts as a person does. For a charity, that explains why it is useful and why its output must be checked.
Machine learning: A way of building software by letting it find patterns in many examples rather than giving it fixed rules. It is behind spam filters, fraud detection, the recommendations on streaming services and the language models behind chatbots. For a small charity the term mostly appears in supplier brochures, and it is worth asking what the tool actually learned from and how often it is wrong.
Model: The trained system inside an AI tool that actually produces the answers. One company may offer several models at different prices and abilities, and the same model can appear inside many products. For a small charity it matters when you read a tool's privacy notice, because your data may pass to the model's provider as well as the tool's maker.
Prompt: The instruction you type into an AI tool. A good prompt says who you are, who the reader is, what you want and in what format, and never includes real details about the people you support. A weak prompt gets a generic answer, which explains most disappointment with AI. For a small charity it is the one AI skill that pays back at once and costs nothing.
Retrieval augmented generation (RAG): A technique where an AI tool looks up relevant passages in a set of documents you have given it, then writes its answer from those passages rather than from memory alone. It reduces hallucination and lets a tool answer from your own policies or funder guidance. Products that let you upload files or create a custom assistant usually work this way, so check where those files are stored.
Shadow AI: AI tools that staff, volunteers or trustees use for charity work without the organisation knowing or agreeing, usually a personal ChatGPT account on a phone. The person almost always means well and wants to save time. The danger for a small charity is that beneficiary details end up in a tool nobody checked, so the answer is a clear policy and an approved tool, not a ban.
Token: The chunk of text an AI tool actually reads and writes, roughly three quarters of an English word, so a thousand tokens is about 750 words. Tools count tokens to measure the context window and, on paid plans, to work out the bill. For a small charity it explains why pasting a whole annual report into a chat works worse than pasting the two pages that matter.
Training data: The text and images an AI model learned from when it was built. For most tools this is a large slice of the public internet plus licensed sources. Some tools also learn from what users type in unless they are told not to. For a small charity the question for any provider is simple. Will what you paste train the model, and how do you turn that off?