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NFP Exam 3 Questions And Answers |Latest
2025 | Guaranteed Pass.
Characteristics of NFP Organizations - Answer✔(1) receives significant amounts of resources
from resource providers who do not expect repayment or economic benefits as a proportionate
return
(2) operates for purposes other than to provide goods or services at a profit, and
(3) does not possess ownership interests like those of business enterprises.
Not-for-profit entities are first designated as governmental or nongovernmental to determine
whether they should follow GASB or FASB standards.
The focus is on stewardship and accountability - how is funding spent?
NFP Entities Include - Answer✔1) Voluntary health and welfare organizations (VHWOs)
2) Other not-for-profit organizations (such as churches and museums)
3) Health care entities, and
4) Colleges and universities
Tax exempt status - Answer✔you have to file with the state you are operating in and the
federal government
Although an organization may be granted tax-exempt status by a state, it must still apply to the
IRS for tax exempt status, unless it is a religious organization, including churches, synagogues,
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temples, mosques, integrated auxiliaries of religious organizations, or any organization with
normal gross receipts in a taxable year of less than $5,000.
The stated purpose of the NFP and the services it will perform determine the Internal Revenue
Code(IRC) section under which the NFP requests exemption.
Tax exempt status: organizational test - Answer✔The organizational test for tax-exempt status
is that the articles of incorporation must limit the organization's purposes to those described in
the classifications in IRC Sec. 501, cannot benefit private interests, and may not attempt to
influence legislation as a substantial part of its activities.
VHWOs - Answer✔VHWOs encompass a diverse group of NFPs that are supported by and
provide voluntary services to the public.They may expend their resources to solve basic social
problems in the areas of health or welfare either globally, nationally, at the community level, or
on an individual basis.Examples include the March of Dimes, theAmerican Cancer Society, Girl
Scouts, BoyScouts, and Meals on Wheels.
Other NFP organizations - Answer✔The "other" category includes a variety of organizations,
such as libraries, museums, social organizations, political organizations, cemetery associations,
civic organizations, and religious organizations
Private Foundations and Public Charities - Answer✔Private Foundations:
.all 501(c)(3) organizations unless excluded
.support from small number of donors and investment income
.Form 990-PF
.Subject to excise tax
Public Charities:
.Form 990
.Not subject to excise tax
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NFP Exam 3 Questions And Answers |Latest
2025 | Guaranteed Pass.
Characteristics of NFP Organizations - Answer✔(1) receives significant amounts of resources
from resource providers who do not expect repayment or economic benefits as a proportionate
return
(2) operates for purposes other than to provide goods or services at a profit, and
(3) does not possess ownership interests like those of business enterprises.
Not-for-profit entities are first designated as governmental or nongovernmental to determine
whether they should follow GASB or FASB standards.
The focus is on stewardship and accountability - how is funding spent?
NFP Entities Include - Answer✔1) Voluntary health and welfare organizations (VHWOs)
2) Other not-for-profit organizations (such as churches and museums)
3) Health care entities, and
4) Colleges and universities
Tax exempt status - Answer✔you have to file with the state you are operating in and the
federal government
Although an organization may be granted tax-exempt status by a state, it must still apply to the
IRS for tax exempt status, unless it is a religious organization, including churches, synagogues,
1|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
temples, mosques, integrated auxiliaries of religious organizations, or any organization with
normal gross receipts in a taxable year of less than $5,000.
The stated purpose of the NFP and the services it will perform determine the Internal Revenue
Code(IRC) section under which the NFP requests exemption.
Tax exempt status: organizational test - Answer✔The organizational test for tax-exempt status
is that the articles of incorporation must limit the organization's purposes to those described in
the classifications in IRC Sec. 501, cannot benefit private interests, and may not attempt to
influence legislation as a substantial part of its activities.
VHWOs - Answer✔VHWOs encompass a diverse group of NFPs that are supported by and
provide voluntary services to the public.They may expend their resources to solve basic social
problems in the areas of health or welfare either globally, nationally, at the community level, or
on an individual basis.Examples include the March of Dimes, theAmerican Cancer Society, Girl
Scouts, BoyScouts, and Meals on Wheels.
Other NFP organizations - Answer✔The "other" category includes a variety of organizations,
such as libraries, museums, social organizations, political organizations, cemetery associations,
civic organizations, and religious organizations
Private Foundations and Public Charities - Answer✔Private Foundations:
.all 501(c)(3) organizations unless excluded
.support from small number of donors and investment income
.Form 990-PF
.Subject to excise tax
Public Charities:
.Form 990
.Not subject to excise tax
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