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TL;DR:

1. Rename basis groups to something else: raw groups? source groups?  Instead, use the word basis for the concept below.
2. Define the intermediate concept of a grouping as a composite that has a basis group + include group - exclude group.
   1. The basis of a grouping reflects the grouping's intent and is usually made up of other groups (e.g. reference group for faculty + reference group for staff).
   2. A grouping's include and exclude groups only have individual members who are exceptions to the grouping's intent.  No groups here.
   3. A grouping is an intermediate-level concept between low-level Grouper primitives (group, composite, subject, memberships) and high-level TIER concepts (reference groups, bundle groups)
   4. The grouping model can be applied in all situations and helps to clearly define the intent and exceptions of any group.
3. Policy groups should be implemented as groupings to easily allow individual exceptions to the policy.

https://lists.internet2.edu/sympa/arc/grouper-users/2017-03/msg00064.html

fixed