CFRE(questions with verified solutions)2023/2024

CFREExplain growth of the Nonprofit Sector - correct answer 1) Philanthropy and nonprofit organizations have always played a significant role in US society 2) They play an even more significant role today 3) The nonprofit sector has grown to be a larger part of the US economy Explain philanthropy in US versus other countries. - correct answer In the US, philanthropy compare to business and government plays a larger relative role in the economy compared to other countries (no tax deduction in Europe). What are some challenges in Philanthropy? - correct answer 1) rapid growth in organizations and philanthropic giving 2) Accountability - narrow / broad 3) Blurring the boundaries (for profits with nonprofit arms) 4) Entrepreneurial models (family nonprofits Accountability - three general trends - correct answer 1) Funders and donors have increased their gift restrictions and continued their call for accountability 2) Program evaluation, focus on results, and impact studies to measure return on gifts have become common 3) Fundraisers need to ensure that their organizations are ready to respond According to the Independent Sector, narrow accountability refers to: - correct answer 1) the formal responsibilities of individuals and organizations to report their actions to higher authorities (IRS) 2) the specific reporting mechanisms they are instructed to use (990) 3) the formal standard to which they are held To ensure narrow accountability: - correct answer NPOs must implement formal reporting structure to comply with applicable laws and regulations Broad Accountability - encompasses narrow accountability and builds on it by expanding it in two important ways: - correct answer 1) Broadens the set of higher authorities to whom individuals and organizations are potentially responsible (donors & recipients) 2) Broadens the criteria expectations and standards to which individuals and organizations may be potentially held (not ethical to visit donors in a hospital) Broad Accountability is: - correct answer 1) Serving the public good 2) Preserving the public trust 3) Often implicit and subjective Broad Accountability & the public trust - correct answer is being able to account for the organization's implied promised to is constituents by pursuing its stated mission in good faith with defensible and transparent management and governance practices. Blurring the boundaries - correct answer 1) NPOs increased both fee income and government funding at higher rates than philanthropy (donations) 2) NPOs have become more interdependent rather than dependent 3) For proftis have entered fields like health care, education and social service that were once the restricted to the NP sector Entrepreneurial Models - correct answer 1) NPOs have adopted entrepreneurial models sometimes forming for profit subsidiaries to earn income that is used to support the NPO 2) NPOs earn income in different ways & compensate staff on a commission basis based on marketing and business income Fundraisers challenge: - correct answer Commission is ethical for market based income but is unethical based on philanthropic funds raised. (bonus is ok on # donors or on cumulative revenue but not on an individual basis). Donor behaviors - correct answer 1) are different from each other and from the previous generation 2) are interested in pursuing very distinctive projects 3) accumulated wealth quickly in the 1990s are interested in pursuing philanthropy at a younger age