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CALIFORNIA NONPROFIT EXECUTIVE
CERTIFICATION Exam – Practice Questions &
Verified Answers & Detailed Rationales
LATEST UPDATE THIS YEAR
CALIFORNIA NONPROFIT EXECUTIVE CERTIFICATION
250 Practice Questions with Verified Answers & Detailed Rationales
EXAM OVERVIEW
Category Details
Common CNE (NANOE), CFRE (Fundraising), CAE (Association Executives), CNP
Credentials (Nonprofit Leadership Alliance)
Governing Law
California Nonprofit Corporation Law (Corp. Code § 5000 et seq.)
(CA)
Tax-Exempt
IRS 501(c)(3), 501(c)(4), etc.
Status
California Attorney General (Charitable Trusts), IRS, Franchise Tax Board,
Key Regulators
Secretary of State
Annual Filing (CA) Form RRF-1 (Registry of Charitable Trusts) with the AG's office
Annual Filing
Form 990, 990-EZ, or 990-N
(IRS)
Key State Filing Statement of Information (Form SI-100) with the Secretary of State
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SECTION 1: NONPROFIT GOVERNANCE & BOARD RESPONSIBILITIES (Questions 1-40)
1. In California, a nonprofit corporation is primarily governed by which body of law?
A) California Business and Professions Code
B) California Nonprofit Corporation Law (Corp. Code § 5000 et seq.)
C) California Government Code
D) California Labor Code
Answer: B
California Nonprofit Corporation Law (Corp. Code § 5000 et seq.) governs the formation,
governance, and operation of nonprofit corporations in the state. It sets forth requirements for
articles of incorporation, bylaws, board duties, and member rights.
2. What is the primary fiduciary duty of a nonprofit board of directors?
A) To maximize shareholder profits
B) To ensure the organization generates revenue
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C) To act in the best interest of the organization and its mission
D) To hire and fire the executive director only
Answer: C
Board members owe fiduciary duties of care, loyalty, and obedience to the organization. The
primary duty is to act in the best interest of the organization and its charitable mission, not for
personal gain.
3. Which document legally creates a nonprofit corporation in California?
A) Bylaws
B) IRS Letter of Determination
C) Articles of Incorporation
D) Board Resolution
Answer: C
The Articles of Incorporation are filed with the California Secretary of State to establish the
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nonprofit as a legal entity. Bylaws are internal governance documents, and the IRS
determination letter confirms tax-exempt status.
4. What is the "duty of care" for a nonprofit board member?
A) To attend all meetings without exception
B) To act with the same care that an ordinarily prudent person would exercise in similar
circumstances
C) To personally guarantee the organization's debts
D) To manage daily operations
Answer: B
The duty of care requires board members to act with the care an ordinarily prudent person in a
like position would exercise under similar circumstances. This includes attending meetings,
reviewing materials, and making informed decisions.
CALIFORNIA NONPROFIT EXECUTIVE
CERTIFICATION Exam – Practice Questions &
Verified Answers & Detailed Rationales
LATEST UPDATE THIS YEAR
CALIFORNIA NONPROFIT EXECUTIVE CERTIFICATION
250 Practice Questions with Verified Answers & Detailed Rationales
EXAM OVERVIEW
Category Details
Common CNE (NANOE), CFRE (Fundraising), CAE (Association Executives), CNP
Credentials (Nonprofit Leadership Alliance)
Governing Law
California Nonprofit Corporation Law (Corp. Code § 5000 et seq.)
(CA)
Tax-Exempt
IRS 501(c)(3), 501(c)(4), etc.
Status
California Attorney General (Charitable Trusts), IRS, Franchise Tax Board,
Key Regulators
Secretary of State
Annual Filing (CA) Form RRF-1 (Registry of Charitable Trusts) with the AG's office
Annual Filing
Form 990, 990-EZ, or 990-N
(IRS)
Key State Filing Statement of Information (Form SI-100) with the Secretary of State
,Page 2 of 178
SECTION 1: NONPROFIT GOVERNANCE & BOARD RESPONSIBILITIES (Questions 1-40)
1. In California, a nonprofit corporation is primarily governed by which body of law?
A) California Business and Professions Code
B) California Nonprofit Corporation Law (Corp. Code § 5000 et seq.)
C) California Government Code
D) California Labor Code
Answer: B
California Nonprofit Corporation Law (Corp. Code § 5000 et seq.) governs the formation,
governance, and operation of nonprofit corporations in the state. It sets forth requirements for
articles of incorporation, bylaws, board duties, and member rights.
2. What is the primary fiduciary duty of a nonprofit board of directors?
A) To maximize shareholder profits
B) To ensure the organization generates revenue
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C) To act in the best interest of the organization and its mission
D) To hire and fire the executive director only
Answer: C
Board members owe fiduciary duties of care, loyalty, and obedience to the organization. The
primary duty is to act in the best interest of the organization and its charitable mission, not for
personal gain.
3. Which document legally creates a nonprofit corporation in California?
A) Bylaws
B) IRS Letter of Determination
C) Articles of Incorporation
D) Board Resolution
Answer: C
The Articles of Incorporation are filed with the California Secretary of State to establish the
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nonprofit as a legal entity. Bylaws are internal governance documents, and the IRS
determination letter confirms tax-exempt status.
4. What is the "duty of care" for a nonprofit board member?
A) To attend all meetings without exception
B) To act with the same care that an ordinarily prudent person would exercise in similar
circumstances
C) To personally guarantee the organization's debts
D) To manage daily operations
Answer: B
The duty of care requires board members to act with the care an ordinarily prudent person in a
like position would exercise under similar circumstances. This includes attending meetings,
reviewing materials, and making informed decisions.
