Certified Nonprofit Professional Exam Questions
with Accurate Answers
nonprofit organization correct answer Legally constituted, NGO, chartered by state governments.
Nonprofits have a public focused mission and are typically exempt from payment of federal and state
income taxes
Characteristics of all Nonprofits correct answer Collective or public purpose identified in the mission
statement
Designation as a tax exempt entity
Assets cannot be divided among directors, officers, or members
Classification of Nonprofits correct answer Religious
charitable
scientific
literacy
education
public safety testing
prevention of children and animal cruelty
National ind international amateur sports competitions development
Three ways of funding a nonprofit correct answer Charge for the work they do (classes, memberships,
services, and products produced)
Donations
Find other ways
Can Nonprofits make money? correct answer YES
Private Inurement Doctrine correct answer The doctrine basically says that a nonprofit can't be set up to
benefit a person instead of a cause. Specifically, this means that none of the income or assets of a tax-
exempt organization may be permitted to directly or indirectly benefit an individual or other person who
has a close relationship with the organization, particularly when that person is in a position to exercise a
,significant degree of control over the entity. The doctrine requires that these transactions or
arrangements be tested against a standard of reasonableness, meaning that all transactions with
insiders must be in line with industry norms. If found in violation of the private inurement doctrine its
tax-exempt status can be revoked or denied.
Tax Exempt Form correct answer 990 form
Good things that come out of strategic planning correct answer Establishing goals, issues, values,
priorities
Process can help ID issues within the organization
Space for new ideas
Problems of strategic planning correct answer it is driven by funders
Used to deflect criticism or unrest
delay decisions--expanding the problems and limiting solutions
5 major issues with strategic planning correct answer 1. they do not take financial sustainability seriously
2. Rarely describes HOW to achieve the goals
3. failing to build analytic capacity or relationships for the organization
4. Questions can go left unanswered
5. Confusion, Disagreement, and Financial problems are mistakenly attributed to the lack of strategic
plan
Mission Statement correct answer determines whether the organization meets the requirements to be
recognized as a nonprofit. A review of the mission statement is the first step of a comprehensive
strategic planning process.
What is the largest category of income or revenue for a nonprofit correct answer Fees for Service
Which statement best describes how Public, Nonprofit, and Private are comparable correct answer
Organizations in each of the three sectors need revenue/income to cover of staff, space, utilities, and
operational costs
,True or False: Nonprofit organizations are typically created by a set of individuals who identify a
common need or interest. Their ability to define what the group wants to do in terms of mission and
vision is the first step on the road to organization incorporation or chartering. correct answer True!
What is a bad mission statement correct answer Only communicates the What and How
What are true for nonprofits correct answer --501(c)(3) nonprofit organizations are controlled by a
volunteer board of directors within legal constraints.
--501(c)(3) nonprofit organizations are prohibited from supporting candidates running for public office.
--501(c)(3) nonprofit organizations are prohibited from distributing excess funds to individuals such as
board members.
Leadership vs. Management correct answer Leadership: Vision and long term perspective
Nurture innovation
Inspire loyalty and risk taking
Asks what and why
Managers:
Handle daily operations
Maintain and control
Focus on tactics and execution
Leadership Myths correct answer Leaders are born, not made
Good leadership is all common sense
The only school you learn leadership from is the school of hard knocks
Full picture of the nonprofit structure correct answer
, Board and executives relationship correct answer The board delegates its authority to the executive
director to run the organization
The board of directors cannot delegate legal obligations
Successful executive directors assure that the board fulfills its its roles
TRUST is critical for the partnership to work well
Key Operational role for the Board: Hiring the exec director correct answer Understanding the role of
executive director is critical so they can
Hire the right ED
Guide the organization and ED according to the mission
Evaluate the ED
The fiduciary duties of a nonprofit board of directors include: correct answer Duty of Care,
Duty of Loyalty, and
Duty of Obedienc
According to state law, which of the following is the legally liable body for a nonprofit organization?
correct answer Volunteer board of directors
In typical nonprofits, the executive director and her/his staff govern the organization and board of
directors are responsible for the management and operations of the organization. correct answer FALSE
What is leadership as defined in lesson 2 correct answer --The process of influencing people to act in the
pursuit of achieving a common goal
-- A fformal role includes strategic decision making, authority, power, responsibility
-- An informal role involves traits, interaction, behavior, visiion, values, charisma, intelligence
Key roles of a Nonprofit Leader correct answer Planning
Coordinating
Organizing
with Accurate Answers
nonprofit organization correct answer Legally constituted, NGO, chartered by state governments.
Nonprofits have a public focused mission and are typically exempt from payment of federal and state
income taxes
Characteristics of all Nonprofits correct answer Collective or public purpose identified in the mission
statement
Designation as a tax exempt entity
Assets cannot be divided among directors, officers, or members
Classification of Nonprofits correct answer Religious
charitable
scientific
literacy
education
public safety testing
prevention of children and animal cruelty
National ind international amateur sports competitions development
Three ways of funding a nonprofit correct answer Charge for the work they do (classes, memberships,
services, and products produced)
Donations
Find other ways
Can Nonprofits make money? correct answer YES
Private Inurement Doctrine correct answer The doctrine basically says that a nonprofit can't be set up to
benefit a person instead of a cause. Specifically, this means that none of the income or assets of a tax-
exempt organization may be permitted to directly or indirectly benefit an individual or other person who
has a close relationship with the organization, particularly when that person is in a position to exercise a
,significant degree of control over the entity. The doctrine requires that these transactions or
arrangements be tested against a standard of reasonableness, meaning that all transactions with
insiders must be in line with industry norms. If found in violation of the private inurement doctrine its
tax-exempt status can be revoked or denied.
Tax Exempt Form correct answer 990 form
Good things that come out of strategic planning correct answer Establishing goals, issues, values,
priorities
Process can help ID issues within the organization
Space for new ideas
Problems of strategic planning correct answer it is driven by funders
Used to deflect criticism or unrest
delay decisions--expanding the problems and limiting solutions
5 major issues with strategic planning correct answer 1. they do not take financial sustainability seriously
2. Rarely describes HOW to achieve the goals
3. failing to build analytic capacity or relationships for the organization
4. Questions can go left unanswered
5. Confusion, Disagreement, and Financial problems are mistakenly attributed to the lack of strategic
plan
Mission Statement correct answer determines whether the organization meets the requirements to be
recognized as a nonprofit. A review of the mission statement is the first step of a comprehensive
strategic planning process.
What is the largest category of income or revenue for a nonprofit correct answer Fees for Service
Which statement best describes how Public, Nonprofit, and Private are comparable correct answer
Organizations in each of the three sectors need revenue/income to cover of staff, space, utilities, and
operational costs
,True or False: Nonprofit organizations are typically created by a set of individuals who identify a
common need or interest. Their ability to define what the group wants to do in terms of mission and
vision is the first step on the road to organization incorporation or chartering. correct answer True!
What is a bad mission statement correct answer Only communicates the What and How
What are true for nonprofits correct answer --501(c)(3) nonprofit organizations are controlled by a
volunteer board of directors within legal constraints.
--501(c)(3) nonprofit organizations are prohibited from supporting candidates running for public office.
--501(c)(3) nonprofit organizations are prohibited from distributing excess funds to individuals such as
board members.
Leadership vs. Management correct answer Leadership: Vision and long term perspective
Nurture innovation
Inspire loyalty and risk taking
Asks what and why
Managers:
Handle daily operations
Maintain and control
Focus on tactics and execution
Leadership Myths correct answer Leaders are born, not made
Good leadership is all common sense
The only school you learn leadership from is the school of hard knocks
Full picture of the nonprofit structure correct answer
, Board and executives relationship correct answer The board delegates its authority to the executive
director to run the organization
The board of directors cannot delegate legal obligations
Successful executive directors assure that the board fulfills its its roles
TRUST is critical for the partnership to work well
Key Operational role for the Board: Hiring the exec director correct answer Understanding the role of
executive director is critical so they can
Hire the right ED
Guide the organization and ED according to the mission
Evaluate the ED
The fiduciary duties of a nonprofit board of directors include: correct answer Duty of Care,
Duty of Loyalty, and
Duty of Obedienc
According to state law, which of the following is the legally liable body for a nonprofit organization?
correct answer Volunteer board of directors
In typical nonprofits, the executive director and her/his staff govern the organization and board of
directors are responsible for the management and operations of the organization. correct answer FALSE
What is leadership as defined in lesson 2 correct answer --The process of influencing people to act in the
pursuit of achieving a common goal
-- A fformal role includes strategic decision making, authority, power, responsibility
-- An informal role involves traits, interaction, behavior, visiion, values, charisma, intelligence
Key roles of a Nonprofit Leader correct answer Planning
Coordinating
Organizing
