CAP GS859 STUDY CARDS UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
Question:
1. Two great American virtues
Answer:
self-reliance and mutual aid
Question:
2. According to William Sturtevant, what percentage of dollars raised in a mature gift planning program
comes from special (major) and ultimate (planned) gifts, as opposed to regular, recurring (annual) gifts?
Answer:
60-70%
Question:
3. How are L3Cs created?
Answer:
Under state law to meet the IRS definition of a program-related investment
Question:
4. Does the IRS mandate creation of L3Cs?
Answer:
IRS lays down the definition but does not require that the foundation invest only in organizations
specifically formed for that purpose and blessed by state law.
Question:
5. How does Lucy Bernholz define philanthropy?
Answer:
private use of funds for a public purpose
Question:
6. What is community capital?
Answer:
Small-scale, local investments offered by a local company, most often to local investors.
Question:
7. How is community capital conducted?
Answer:
Grassroots investing by stakeholders in local, small organizations.
Question:
8. What is an alternative purpose provision?
Answer:
donor stipulates an alternative use of the restricted funds within the original charity, or the donor specifies
an alternative charity to which the money might roll over
,Question:
9. How does annual giving serve as major giving efforts?
Answer:
1) Annual giver is a likely source of planned gifts.
2) Annual gift bonds the donor to the organization.
3) Relationship may then mature to include major gifts and planned gifts.
Question:
10. What is the primary driver of fusion of major and planned gifts?
Answer:
Demand by the charity's board for short-term results
Question:
11. What are 2 common challenges of development departments?
Answer:
1) donor database is incomplete
2) every division within advancement advocates for its own budget
Question:
12. What is used to optimize a donor's total contribution to a campaign?
Answer:
Blended gifts
Question:
13. What are killer apps?
Answer:
UPDATE WITH ANSWER
Question:
14. What is an acceptable cost-per-dollar-raised, for renewing donors in their third year in an annual gifts
program?
Answer:
20-30 cents per dollar raised
Question:
15. What did an IRS study on nonprofit organizations reporting on UBI find in their research on UBI
reporting?
Answer:
1) A majority underreported UBI.
2) Some reported losses as being connected to unrelated business income, when they were not thus
connected.
3) Some misallocated general expenses to reduce reported UBI.
4) Some reported as mission-related income what was unrelated income.
Question:
16. Per Lester Salamon, what are the four impulses shaping the nonprofit sector?
,Answer:
voluntarism, professionalism, civic activism, and commercialism.
Question:
17. What is the treatment of endowed funds with respect to FASB 2016?
Answer:
FASB requirements are designed to help boards, donors, and financial institutions better understand how
restricted and unrestricted funds are being managed.
Question:
18. What kind of gift is a virtual endowment?
Answer:
blended gifts, in that they have an annual gift component and a planned gift component (or even annual,
major, and planned gift elements strung together) to accomplish something larger
Question:
19. What provisions are included in an umbrella gift agreement?
Answer:
multiple gifts over time, aggregated to a purpose that is restricted by the donor.
Question:
20. Are umbrella gift agreements binding?
Answer:
morally and, perhaps, legally binds both the organization and the donor.
Question:
21. What is a B corp?
Answer:
"B Corp." is an entity that is certified by B Lab as being set up in such a way that profits will be sought in
line with certain ethical and social benefit standards. The company can make lots of money, if things go
well.
Question:
22. What is a L3C?
Answer:
Meets IRS guidelines to be a low-profit or no-profit organization designed primarily to do good. Designed
and built to be suitable investments for a foundation. The foundation weighs making little or no profit and
doing a lot of good vs. distributing the money in grants and doing a lot of good. The benefit of the L3C is
not profit to the foundation but doing good while retaining the asset. The money invested in the L3C by a
foundation counts towards the foundation's annual 5% payout.
Question:
23. What is planned giving?
Answer:
phrase that has traditionally been used to refer to gifts made via specific charitable tools, like bequests and
split-interest gifts.
, Question:
24. What is gift planning?
Answer:
Collapsing planning giving into major gifts. Planned giving is evolving into gift planning, meaning that the
planned gift people are being cross-trained in major gifts and being encouraged to use all the tools to raise
as much as possible right now while also raising deferred gifts.
Question:
25. With respect to the CPG gift counting guidelines, how should a campaign report on its level of
success?
Answer:
Break out three categories and reporting on each separately.
Question:
26. What are the three categories for reporting CPG guided gift counting?
Answer:
cash and equivalents; revocable, contingent gifts; and deferred irrevocable gifts.
Question:
27. What is the single largest source of planned gifts to charities?
Answer:
Bequests
Question:
28. What is typical revenue breakdown for nonprofits?
Answer:
Earned revenue as the largest slice, government funding as the second largest slice, and donated revenue as
the smallest slice. Bequests are a small slice of a small slice.
Question:
29. What percentage of boards are willing to wait 3 years for a return on an investment in fundraising, per
comprehensive studies by Penelope Burk?
Answer:
0%
Question:
30. What is the board expectations for wait on ROI on fundraising investment?
Answer:
31% demand a one-year pay back; 39% will accept a pay back within 1.5 years; 30% would accept a
2-year pay back. None said they would accept a period longer than 2 years.
Question:
31. What is the wait on planned giving programs?
Answer:
5-7 years to show a return on investment, since the gifts are often deferred and contingent.
AND CORRECT ANSWERS
Question:
1. Two great American virtues
Answer:
self-reliance and mutual aid
Question:
2. According to William Sturtevant, what percentage of dollars raised in a mature gift planning program
comes from special (major) and ultimate (planned) gifts, as opposed to regular, recurring (annual) gifts?
Answer:
60-70%
Question:
3. How are L3Cs created?
Answer:
Under state law to meet the IRS definition of a program-related investment
Question:
4. Does the IRS mandate creation of L3Cs?
Answer:
IRS lays down the definition but does not require that the foundation invest only in organizations
specifically formed for that purpose and blessed by state law.
Question:
5. How does Lucy Bernholz define philanthropy?
Answer:
private use of funds for a public purpose
Question:
6. What is community capital?
Answer:
Small-scale, local investments offered by a local company, most often to local investors.
Question:
7. How is community capital conducted?
Answer:
Grassroots investing by stakeholders in local, small organizations.
Question:
8. What is an alternative purpose provision?
Answer:
donor stipulates an alternative use of the restricted funds within the original charity, or the donor specifies
an alternative charity to which the money might roll over
,Question:
9. How does annual giving serve as major giving efforts?
Answer:
1) Annual giver is a likely source of planned gifts.
2) Annual gift bonds the donor to the organization.
3) Relationship may then mature to include major gifts and planned gifts.
Question:
10. What is the primary driver of fusion of major and planned gifts?
Answer:
Demand by the charity's board for short-term results
Question:
11. What are 2 common challenges of development departments?
Answer:
1) donor database is incomplete
2) every division within advancement advocates for its own budget
Question:
12. What is used to optimize a donor's total contribution to a campaign?
Answer:
Blended gifts
Question:
13. What are killer apps?
Answer:
UPDATE WITH ANSWER
Question:
14. What is an acceptable cost-per-dollar-raised, for renewing donors in their third year in an annual gifts
program?
Answer:
20-30 cents per dollar raised
Question:
15. What did an IRS study on nonprofit organizations reporting on UBI find in their research on UBI
reporting?
Answer:
1) A majority underreported UBI.
2) Some reported losses as being connected to unrelated business income, when they were not thus
connected.
3) Some misallocated general expenses to reduce reported UBI.
4) Some reported as mission-related income what was unrelated income.
Question:
16. Per Lester Salamon, what are the four impulses shaping the nonprofit sector?
,Answer:
voluntarism, professionalism, civic activism, and commercialism.
Question:
17. What is the treatment of endowed funds with respect to FASB 2016?
Answer:
FASB requirements are designed to help boards, donors, and financial institutions better understand how
restricted and unrestricted funds are being managed.
Question:
18. What kind of gift is a virtual endowment?
Answer:
blended gifts, in that they have an annual gift component and a planned gift component (or even annual,
major, and planned gift elements strung together) to accomplish something larger
Question:
19. What provisions are included in an umbrella gift agreement?
Answer:
multiple gifts over time, aggregated to a purpose that is restricted by the donor.
Question:
20. Are umbrella gift agreements binding?
Answer:
morally and, perhaps, legally binds both the organization and the donor.
Question:
21. What is a B corp?
Answer:
"B Corp." is an entity that is certified by B Lab as being set up in such a way that profits will be sought in
line with certain ethical and social benefit standards. The company can make lots of money, if things go
well.
Question:
22. What is a L3C?
Answer:
Meets IRS guidelines to be a low-profit or no-profit organization designed primarily to do good. Designed
and built to be suitable investments for a foundation. The foundation weighs making little or no profit and
doing a lot of good vs. distributing the money in grants and doing a lot of good. The benefit of the L3C is
not profit to the foundation but doing good while retaining the asset. The money invested in the L3C by a
foundation counts towards the foundation's annual 5% payout.
Question:
23. What is planned giving?
Answer:
phrase that has traditionally been used to refer to gifts made via specific charitable tools, like bequests and
split-interest gifts.
, Question:
24. What is gift planning?
Answer:
Collapsing planning giving into major gifts. Planned giving is evolving into gift planning, meaning that the
planned gift people are being cross-trained in major gifts and being encouraged to use all the tools to raise
as much as possible right now while also raising deferred gifts.
Question:
25. With respect to the CPG gift counting guidelines, how should a campaign report on its level of
success?
Answer:
Break out three categories and reporting on each separately.
Question:
26. What are the three categories for reporting CPG guided gift counting?
Answer:
cash and equivalents; revocable, contingent gifts; and deferred irrevocable gifts.
Question:
27. What is the single largest source of planned gifts to charities?
Answer:
Bequests
Question:
28. What is typical revenue breakdown for nonprofits?
Answer:
Earned revenue as the largest slice, government funding as the second largest slice, and donated revenue as
the smallest slice. Bequests are a small slice of a small slice.
Question:
29. What percentage of boards are willing to wait 3 years for a return on an investment in fundraising, per
comprehensive studies by Penelope Burk?
Answer:
0%
Question:
30. What is the board expectations for wait on ROI on fundraising investment?
Answer:
31% demand a one-year pay back; 39% will accept a pay back within 1.5 years; 30% would accept a
2-year pay back. None said they would accept a period longer than 2 years.
Question:
31. What is the wait on planned giving programs?
Answer:
5-7 years to show a return on investment, since the gifts are often deferred and contingent.
