CAP GS859 Quiz Questions

Each of these is a way endowments are traditionally established, EXCEPT A) A charity may ask a donor to hold the endowment. B) A charity may establish a supporting organization to hold its endowment. C) A charity may set up a designated fund at a community foundation. D) A charity may set up a segregated account of its own.

A) Charities generally do not think of the donor as holding an endowment for them. The other formats are permissible. A donor might hold principal and give the income or grants to the charity, but this would not necessarily be considered an endowment. Still, an advisor might see possibilities in creating an outsourced endowment held in a charitable tool (like a foundation, donor-advised fund, or charitable lead trust). The charity would be a beneficiary but only to the extent that they met donor expectations from year to year. Perhaps instead of a gift agreement there might be a pledge or some other meeting of the minds. But since the donor holds the money rather than giving it outright, the charity remains accountable. The balance of power shifts to the donor in enforcing compliance with donor desires.

Endowments serve all of these purposes, EXCEPT A) supporting new programs B) reducing the need for fundraising C) expanding charities' reach and capacity D) helping ensure that services are not reduced in an economic downturn

B) Endowment may be given as an excuse by donors for not giving money, but organizations, even Harvard, with very large endowments must continue their fundraising activities.

How is the term "term endowment" defined? A) It is restricted under the terms of the gift agreement. B) A segregated account that is termed an endowment. C) It is an endowment set aside for a period of years. D) It is a rainy day fund that is termed an endowment.

C) A term endowment is an endowment set aside for a period of years.

Which of these is how an accountant would define the term "endowment?" A) money set aside for a future purpose B) an institutional fund not wholly expendable on current purposes under the terms of a gift C) a permanently restricted fund D) the action of spending only income, not principal

C) An accountant sees an endowment as a permanently restricted fund.

What is meant by a spending policy for endowments? A) rules for determining the permitted ratio of investment expenses to assets under management B) rules for how the endowment account can be spent on fundraising costs C) rules for computing how much of the fund's income or growth can be spent for current uses D) rules for how much can be spent on managing endowment assets

C) The endowment exists to fund current programs in perpetuity; this leads to the question of how much can be spent in a given year. The spending policy addresses this.

How is the term "true endowment" defined? A) Money restricted by board resolution B) An endowment in which many people chip into a specific fund C) money set aside for a term of years D) money permanently set aside

D) A true endowment is money permanently set aside with only the income or growth used for particular purposes. Often these purposes are restricted. A restricted endowment fund is often given by a single donor.

What is the best definition of the term "quasi-endowment? A) a fund held by the client in a foundation or donor-advised fund from which gifts are made to the charity B) a fund which the client pledges to the charity but which the charity has not yet received C) a stream of annual gifts with a bequest or life insurance policy at death to endow the gift D) an endowment restricted not by donor requirements but by a revocable board resolution

D) A true endowment is restricted permanently. The board cannot revoke it. The quasi-endowment is restricted by a board resolution and can be revoked.

Planned giving does not have a hard definition, but it can be characterized. All of these would be characteristic of planned giving, EXCEPT A) Planned gifts are continent and deferred. B) Planned gifts build an endowment. C) Planned gifts are complex and difficult to accept and administer. D) Planned gifts require significant planning, while other gifts require less planning or none at all.

D) All of the statements point towards what is meant by planned giving. The statement that planned gifts require planning and other gifts do not is false. Clearly a major gift or large gift of cash might require a great deal of planning by tax, legal, and financial advisors. It just may not require a planned giving officer. Typically, planned giving is a silo in a big nonprofit, specialized to address specific deferred, contingent, and complex gifts such as CRTS, CLTs, and gift annuities; gifts of noncash assets; gifts requiring special attention by the gift acceptance committee; or gifts slated for a restricted endowment.

The classic elements of planned gifts include each of the following choices, EXCEPT A) outright gifts of noncash assets B) bequests and beneficiary designations C) life income gifts D) large current gifts of cash

D) Large gifts of cash are generally not considered planned gifts. The language surrounding planned giving is a little hazy. Yes, large gifts of any kind, particularly if large in relationship to the donor's asset base, do require the donor to plan. Yes, the cash given may have come from moves made by the donor to liquidate noncash assets. But the world of planned giving has traditionally been institution-centric. What is planned by the organization is the acceptance of the gift and the structuring of the gift proposal by the institution. Cash requires no special planning for the institution to accept and requires no specialized tax or legal expertise on the part of the charity. Advisors, on the other hand, would consider a very large gift of cash to be an occasion for significant financial and estate planning. The difference in language between advisors and fundraisers with regard to the planning of giving slows mutual comprehension. Increasingly advisors and fundraisers are speaking of gift planning. That terminology would make it easier to see that large gifts of cash do require planning from within the donor's financial world and also with a goal of impact on the charity.

What is meant by saying that a donor's gift is restricted? A) The gift consists of restricted stock. B) The gift can be spent subject to board approval. C) The gift and income from it must be held in suspense for a period of 5 years. D) The gift must be held in such a way that it may not be spent except as specified by the donor.

D) When the donor restricts his or her gift, it can only be spent as specified by the donor.

In competing for earned revenue and for government consumer-side subsidies, all of these are advantages that for-profit providers enjoy, EXCEPT A)higher salaries B)greater access to capital markets C)great ability to grow to scale quickly D)solidarity

The answer is D. What nonprofits do have as a competitive advantage is their connection to mission, traditions, and a sense of community (solidarity). A Catholic school, a Baptist hospital, a Jewish day care center, and a Quaker nursing home, for example, will compete with for-profit providers of similar services, but the connection to mission, in community with their stakeholders, makes them special to those stakeholders.

Each of these questions is part of a nonprofit board's responsibilities, EXCEPT A)"How profitable are we?" B)"How well are we doing?" C)"Whom do we serve and how?" D)"What difference are we trying to make as an organization?"

The correct answer is A. All are correct except the suggestion that nonprofit boards consider profitability. They may consider sustainability, perhaps, but not profitability since the organization is a nonprofit.

What are the three levels of the pyramid of giving, listed from the bottom to the top? A)annual, major, and planned B)planned, major, and annual C)major, annual, and planned D)current, deferred, and ultimate

The correct answer is A. Annual, Major, and Planned: This is how ongoing fundraising has traditionally been subdivided. The entry level is annual, then major, and then planned.

In 1932, a school received $100,000 to provide perpetual maintenance on a chemistry lab. The school subsequently tore down the lab and replaced it with a new science complex. The school wishes to apply the income on the original endowment to maintaining the new complex. Under what doctrine(s) might the school appeal in justifying its decision? I. cy pres II. statute of limitations

The correct answer is A. Cy pres is the right answer. Cy pres means as near as possible, or near enough. The funds are applied as nearly as possible to the original intent. The statute of limitations applies to criminal action.

All of these are true with regard to Form 990, EXCEPT A)It is confidential. B)It forces a board review of policies and procedures. C)It makes charities accountable to the public, media, IRS, and state regulatory agencies. D)It forces a review of actual practices.

The correct answer is A. Far from being confidential, the document is public. It is most often posted on the organization's website. All the other statements are true.

Each of these is an efficient way of soliciting an annual gift, EXCEPT A)face-to-face visits from board members B)events C)mailings D)internet

The correct answer is A. Generally, board visits are too precious for annual gifts; they are best used in soliciting larger gifts (such as major gifts, planned gifts, or stretch gifts for a campaign). Volunteers living in the donor's community may do face-to-face visits cost effectively.

Which of these are shared responsibilities of boards and CEOs? A)implementing the annual fundraising plan B)hiring and supervising staff C)management of day-to-day operations D)governance

The correct answer is A. Generally, boards do not handle tactical assignments, but with fundraising they are expected to get actively involved in implementation.

An actuary or comptroller would likely consider which of these as a true measure of a deferred gift's value? I. gift valuation standards II. gift counting standards

The correct answer is A. Gift counting is a marketing tool. It makes it easy to give donors credit for gifts in particular categories without recourse to actuarial or present value calculations. The valuation standards and procedures, by contrast, are more oriented to the financial analysis needed to predict future cash flows, including those from contingent and deferred gifts.

A treasurer for a charity is told that the campaign has raised $1 billion of which $500,000 is contingent and deferred. What standard(s) would the treasurer rely upon as he or she plans the budget for the current and following year? I. gift valuation standards II. gift counting standards

The correct answer is A. Gift valuation will matter far more to the treasurer than the charity's own gift counting standards. Gift counting is a matter of the charity's policy for who gets credit for what. The gift counting policies will say how much, for example, a gift of a new $1 million dollar insurance policy will count for if the donor is, say, 65. Will it count towards donor recognition and campaign totals at face amount? Will it only count for cash received or pledged by way of premium? The charity might lay down a policy of counting insurance at face amount for donors at ages 65 and over, but the treasurer does not have any money to work with now and will feel that the gift is being counted at an inflated amount. The treasurer will want to use valuation standards that take into account the time value of money and the likelihood the policy will lapse. The problem is, though, that to value each gift rigorously in this way greatly exceeds the capacity of the charity to do the valuing. So, generally, charities set up their own gift counting rules, and senior leaders are constantly uneasy with anything other than cash in hand or a legally binding pledge. Expectancies are wonderful when they mature, but until they do it is hard to know what they are actually worth.

Which statement is true with respect to giving as a percentage of GDP? A)It has remained constant for decades at around 2%. B)It has remained constant for decades at 5%. C)It has fluctuated between 2-5% depending on the state of the economy. D)It has fluctuated between 2-5% depending on the tax laws.

The correct answer is A. Giving has not changed more than a little as a percentage of GDP. Regardless of economic conditions and changes in the tax laws, the percentage has hovered between 1.6 and 2.1% of GDP since 1977.

"I want results from the grants I make from my foundation. I rely on GIIRS to discover which organizations are getting high impact." To what is this funder referring?

The correct answer is A. Global Impact Investment Rating System (GIIRS) is the emerging international standard for rating social impact organizations.

Which of these statements is (are) true in regard to soliciting foundation grants? I. Grant writing is a labor-intensive and specialized skill. II. Grant writing is a board responsibility.

The correct answer is A. Grant writing is a specialized skill. Board members should operate at a higher level, with an eye to governance not tasks.

An organization is formed to bring donors and nonprofits together online. Donors can research nonprofits, learn from one another, and make donations. The charities can make their case and provide ongoing updates on programs and results. The organization is set up as a for-profit, making its money by taking a percentage of the donations. Seed money comes from venture capitalists. The organization is highly profitable and is growing rapidly. Considering this information, which statement(s) below is (are) correct? I. The organization would be a mission-aligned investment for a foundation wishing to promote giving. II. The organization would be a program-related investment opportunity for a foundation wishing to promote giving.

The correct answer is A. I is correct. Yes, a foundation might find this a good investment considering both mission alignment and risk/return. However, it would not qualify as a program-related investment (PRI). The IRS definition of a PRI says, "Production of income or appreciation of property is not a significant purpose."

With respect to impact investing by wealthy individuals, which statement(s) below is (are) true? I. The majority either have impact investments or are interested in having them. II. The majority who do engage in impact investing reduce their giving.

The correct answer is A. I is correct. Yes, the majority (about 60%) either have such investments or are interested in having them, but only 19% of those who hold impact investments reduce their giving in part. Another 9% stopped giving entirely.

The fundraiser becomes close to a wealthy donor in his eighties. The fundraiser learns about the donor's financial situation, pending business deals, and family issues. The fundraiser sees a clear opportunity for an advisor to step into the case and facilitate a large gift transaction. He or she contacts an allied advisor, shares the financial data of the case, and arranges a lunch with the donor. Which statement best characterizes this situation? A) The fundraiser is committing an unethical act in breaching donor confidence. B) The fundraiser should be judged by results; this case may result in a large gift. C) The fundraiser is operating within the zone of freedom allowed by his or her role. D) The fundraiser is playing the role of trusted advisor and is a good example of what a CAP® should do in building bridges with advisors.

The correct answer is A. Information provided by donors to the fundraiser is confidential. It is up to the donor to decide whether that information should be shared with third parties. Financial organizations often use an authorization form for the client to sign, allowing the advisor or firm to share data with other professionals.

According to Sturtevant, what are the likely ratios differentiating ultimate, major, and annual gifts? I. Major gifts are ten times a donor's annual gift. II. The ultimate gift is ten times the donor's major gift.

The correct answer is A. It is worth taking time to contemplate the implications of Sturtevant's point. A major gift is generally defined as ten times an annual gift. So, for a donor giving $200 regularly, the charity might dispatch fundraisers to solicit and get a check for $2,000. However, the ultimate gift is something else altogether. The ultimate gift is defined as "the largest gift the donor will ever make to the charity." In fact, such gifts are very often, though not always, made toward the end of life or in contemplation of death. They are very often restricted gifts, though they could be made for a campaign or general use of the charity. They are often, though not always, deemed planned gifts. They may well be principal gifts, gifts from assets rather than cash. In any case, they are big gifts; Sturtevant says to expect them to be not ten times the major gift, but one hundred times larger than the major gift and one thousand times larger than the annual gift. Advisors will see why. A donor has to pass his or her entire estate at death. The donor giving a major gift of $10,000 may be worth $10 million. For such a donor to give $1 million is not as unreasonable as giving a percentage of the final estate. A donor without children or grandchildren might give the entire estate if the donor is properly cultivated and stewarded through a lifetime of giving. What the numbers then do is justify a more labor-intensive, donor-focused, personalized process for those organizations with the time and wisdom to embrace it. The catch, of course, is that these gifts are often the fruit of a lifetime and take time to cultivate.

Each of these is a good reason to maintain gift acceptance policies, EXCEPT A)With policies in place, individual judgment is superseded. B)Donors should know that they are being treated in accordance with standard policies and procedures. C)The staff should know who is allowed to accept what assets on what terms. D)The charity may be prevented from accepting assets, such as unmarketable real estate or property subject to an EPA problem, that might cause the charity problems.

The correct answer is A. Judgment is guided by the policies and procedures, but a gift acceptance process and delegated authority to accept gifts will still require good judgment within the rules.

To conduct a good discovery interview, Steven Meyers says, requires negative capability. This is an evocative phrase from the English poet John Keats. What does the term "negative capability" mean in the context of a discovery interview? A)It means to maintain something like what Buddhists call "beginner's mind," or "mind like water": no agenda, no pitch, no sales drill, no hurry, just pure open attention. B)It means to self-censor thoughts that might interfere with the solicitation process, maintaining attention on the process so that it can be completed successfully within the time allotted. C)It means to be able to maintain a positive attitude while absorbing and redirecting the negative energy that the donor may radiate. D)It means possessing the capacity to handle negative thoughts in both the donor and within yourself so that a positive outcome may emerge.

The correct answer is A. Keats said that negative capability means the capacity to remain in "uncertainties, mysteries, and doubts, without any irritable reaching after facts and reason." We are listening with a mind like still water. This is a poetic, or elevated, kind of attention that some call discernment. There is, as Steven says, no waiting to pounce like the cat on the mouse. This is the mutual attention to the unseen and unknown from which new creation springs as lightning strikes from gathering clouds. To be present at such moments that shape the future and lead to something that may last for generations is a privilege.

What is the IRS category for a political action committee (PAC)? A)501(c)4 B)501(c)5 C)501(c)3 D)501(c)6

The correct answer is A. Lobbying organizations are 501(c)4s. 501(c)5s are unions. A 501(c)6 is a business league. The organizations we usually have in mind when we talk about nonprofits are 501(c)3s.

According to a recent study of the National Association of Charitable Gift Planners, what percentage of their members engage in planned giving full time? A)8% B)24% C)36% D)47%

The correct answer is A. Only 8% engage in planned giving, and these are among the most sophisticated planners. The point is that gift planning is being redefined with a greater emphasis placed on major gift outright asks, major gifts as part of a campaign, and planned gifts treated as secondary.

Bella gives her university $1,000,000 through her will. Which statement(s) below is (are) true of her gift? I. It is contingent and deferred. II. It is an outright gift.

The correct answer is A. Only the first option is true. This is a vocabulary question. Planned gifts are generally contingent and deferred. Planned gifts are in contrast to outright gifts, which are made and received right now.

According to William Sturtevant, what percentage of dollars raised in a mature gift planning program comes from special and ultimate gifts, as opposed to regular, recurring gifts? A)60-70% B)80-90% C)30-40% D)50-60%

The correct answer is A. Sturtevant asserts that the bulk of dollars raised actually comes from major and planned gifts (special and ultimate) in a mature gift planning program. So, for a CAP®, this amounts to ammunition for asking the board to invest more heavily where that investment will, over the long-term, best pay off in major and planned gifts created through face-to-face asks via a suitable moves management process. When done best, this becomes personalized philanthropic planning in the style of Dr. Steven Meyers.

Under the Uniform Prudent Investor Act of 1994, which of these statements is true? A)The standard of prudence is applied to the portfolio as a whole rather than to each individual asset. B)The risk of the portfolio is the sum of the risk of each asset considered separately. C)Certain assets are prohibited. D)Delegation to an investment manager is prohibited.

The correct answer is A. The act embodies modern portfolio theory, which holds that risk is managed at the portfolio level, that asset risks can offset one another, and that no one asset in a portfolio is risky. Each asset is to be assessed as increasing or reducing the overall risk of the portfolio. Delegation of qualified money managers is appropriate.

Which person or persons does the board hire? I. the executive director II. the comptroller

The correct answer is A. The board should only hire the executive director. Everyone under the executive director should be hired by the executive director or those he or she has appointed. The board does not get into staffing issues, except for the very top job itself.

You ask a client or donor, "What is the world we want, from your perspective?" The person replies, "The strong prevail; the weak go under. That is the law of the market and the law of nature. Ethics has nothing to do with it. Money, wealth, and power come to those with great ability—like me. The world I want is one in which I own and control as much as possible for as long as possible for whatever pleases me. The rest is sentiment." Which statement(s) below is (are) appropriate? I. The client has painted his or her own moral portrait. II. The client has no ethical viewpoint.

The correct answer is A. The donor does have an ethical viewpoint. Perhaps this viewpoint is not a generous one or an empathetic one, but it is an ethical viewpoint that is recognizable as a moral perspective on self, society, and the market. The donor has indeed given us a window into his or her moral perspective.

Which role(s) is (are) the board's responsibility for effective planning in a nonprofit? I. Insist that planning take place, participate in a strategic planning process, assess the process itself, formally approve the plan, use plan goals to guide budget and priorities, and track implementation and progress. II. Supervise staff in implementing the plan, evaluate staff performance, and tie staff performance to pay.

The correct answer is A. The first list is correct; the second list is tactical and would fall at the CEO level or lower.

All of these are sources of major gifts EXCEPT A)the government B)foundations C)corporations D)individuals

The correct answer is A. The government may provide contracts and reimbursements, but it does not make gifts.

Per Amy Eisenstein, how long should a good major gift interview go? A)20 minutes B)60 minutes C)90 minutes D)120 minutes

The correct answer is A. The interview should last 20 minutes, including the greeting, small talk, the art of the ask, answering objections, and the farewell. This is a high-volume, transactional approach to fundraising and it is the dominant model. It makes economic sense for the mass affluent donor but may be a mismatch for the few donors who are capable of making transformational gifts.

With respect to the design team as Dr. Steven Meyers describes it, which statement(s) below is (are) true? I. The nonprofit design team includes the gift planner and others in the charity who are needed to accept the gift, draft the agreement, and carry out the program. II. The nonprofit design team includes the donor's most trusted professional advisor.

The correct answer is A. The nonprofit design team, as Steven describes it, is internal to the charity. Included are representatives of the internal functions needed to get the gift negotiated, accepted, and stewarded.

About how many 501(c)3 organizations are there in the U.S.? A)over one million B)between seven hundred thousand and one million C)between five hundred thousand and seven hundred thousand D)fewer than five hundred thousand

The correct answer is A. The total, taken from Salamon's data, seems to be a bit more than 1.2 million.

Per Sturtevant, which of the following is (are) correct? I. The ultimate gift is a result of a long relationship building process, in most cases II. The ultimate gift is generally 10 times larger than the biggest gift given up to that time by the donor

The correct answer is A. The ultimate gift is often 100 to 200 times higher than previous gifts by the donor. This makes sense when you consider that the ultimate gift may come from principal, while earlier gifts may be made from cash on hand. The ultimate gift is, often, the gift of the tree, not just the fruit. To garner such gifts reliably, across a large population of donors, the nonprofit has to build strong and lasting relationships.

Per Sturtevant, which of the following is (are) correct? I. In most cases, the ultimate gift is a result of a long relationship-building process. II. The ultimate gift is generally ten times larger than the biggest gift given up to the time of its donation by the donor.

The correct answer is A. The ultimate gift is often 100 to 200 times higher than previous gifts by the donor. This makes sense when you consider that the ultimate gift may come from the principal, while earlier gifts may be made from cash on hand. The ultimate gift is, often, not just the fruit but also the gift of the tree. To garner such gifts reliably across a large population of donors, the nonprofit has to build strong and lasting relationships.

Jane organizes a drug prevention program for her local high school, enlisting other parents and getting it done with minimal resources. Which of Salamon's four nonprofit poles does Jane's organization best represent? A)voluntarism B)professionalism C)civic activism D)commercialism

The correct answer is A. This is a classic example of volunteering to get things done. This is what Tocqueville honored in the American character and considered unique about Americans. Americans do not wait for the state; they do it themselves through informal or formal associations.

A charity has no emergency reserves; its funding is cyclical, with most revenue received late in the year. The charity needs an emergency line of credit. A bank is willing to provide this at 9%. The charity approaches a foundation which has supported the charity's work in the past. The foundation sets up a line of credit at 1%. What does this example represent? I. a program-related investment II. a breach of fiduciary responsibility by the foundation's investment manager

The correct answer is A. This is a program-related investment. It is a kind of recoverable grant, counting towards the 5% payout that foundations are required to make. When recovered, the money coming back in will have to be granted back out again, not necessarily to the same grantee.

Boards must meet the prudent person standard of care. Which statement best defines the prudent person standard applicable to boards? A)The board can be expected to perform within the limits of what any reasonably intelligent and prudent person would be expected to do or not do. B)The board can be expected to perform at a prudent, expert level. C)The board can be expected to perform within the limits of its own prudence. D)The board can be expected to make decisions that are prudent in the light of full information.

The correct answer is A. This is the definition of the prudent person standard: a rule that states that people or a group can be expected to perform within the limits of what any reasonably intelligent and prudent person would be expected to do or not do. This means that the standard is not that of an expert, much less an expert who has perfect information.

Steven Meyers likes to ask, "Why isn't all philanthropy personalized?" Drawing on the course as a whole, each of these is a reason why personalized philanthropic planning is rare among nonprofit gift officers, EXCEPT A) lack of interest from high-capacity funders B) high turnover among fundraisers C) high turnover among senior leaders in fundraising D) pressure from the board downward to get short-term results

The correct answer is A. To put the course in a nutshell, highest-capacity donors demand, deserve, and will reward personalized philanthropy provided by a nonprofit gift planner, but the process is resource intensive and takes time. Boards, having to balance each year's budget under difficult circumstances, are demanding short-term results, even to the detriment of longer-term relationships and the cultivation of larger future gifts. With that pressure, gift planning cycles are getting shorter. Metrics are forcing short-term gift solicitation in many organizations. This means that often sophisticated gift planning is defaulting to advisors who are increasingly willing and able to plan gifts across the relevant disciplines.

What (according to a study cited in this course) do donors most want and find hardest to obtain when it comes to picking a charity? A)information on impact B)financial information C)information on governance D)information on charitable tools supported by the organization

The correct answer is A. What donors most want and also find hardest to obtain is information about impact.

Which statement(s) below is (are) correct? I. Blended gifts are often used to optimize a donor's total contribution to a campaign. II. "Killer apps," as discussed by Dr. Meyers, are designed to optimize a donor's contribution to a campaign.

The correct answer is A. Yes, blended gifts, consisting of a major gift and a planned gift are often used in a comprehensive campaign to increase the total countable gift by a donor to a campaign. So, the donor gives $10,000 and also puts in place a bequest for $90,000. Within the campaign counting rules (which may stipulate a minimum age for the bequest to count), the donor might be credited with $100,000 for the campaign. The donor would get recognition, and the fundraiser would be given credit in accordance with some formula towards the fundraiser's own performance metrics (quota). From Steven's perspective this sounds like the Matrix, a false world of appearance created by the internal silos of the organization and their many divisions of labor, quotas, and counting rules. An advisor may well say, "It sounds like Neverland to me." It is so artificial! Steven Meyers, when he blends gifts, is not, as he says, "in service to a campaign." He is trying to help donors achieve their own short, intermediate, and long-term giving goals affordably through his organization. He ties together the annual, major, and deferred gift components to buy an endowed program on the installment plan. The upside and downside of this are that the donor gets to pick the mission of the gift. That is an upside for the donor and may be a downside for the charity if the gift is a gift outside their priority list or even off mission for the charity. To Steven, the art of fundraising means working with that tension and helping the donor pick a mission for the gift that is very important to the donor but also very important to the charity. To be able to do this, the fundraiser must have in his or her head many priority items from around his or her organization and match those carefully to funders and their wallets. Steven is starting from the donor and guiding the donor to one of many high priorities for both the donor and the charity. Campaigns, by contrast, start with the organizations highest priorities and send fundraisers out to enroll or enlist donors in those preconceived giving opportunities.

Which item(s) below is (are) within the scope of a nonprofit board's responsibilities I. Hire and evaluate the executive director. II. Hire and evaluate the head of fundraising.

The correct answer is A. Yes, the board does hire the top person who manages the operation, but that person should then hire the key leaders under him or her. The executive director should hire and evaluate the head of fundraising. The board should not micromanage the hiring decisions. To do that can cause crossed wires with the executive director.

Which statement(s) describe(s) a breach of donor confidentiality? I. sharing with an advisor publicly available information about a large gift made by the donor II. letting an advisor know that a certain anonymous gift was made by his or her client

The correct answer is B. An anonymous gift should remain anonymous unless the donor has given a person permission to share the information. A planner should not assume that just because a person is a client's advisor the client desires him or her to know confidential information. Sharing publicly available information is not a breach of confidence.

According to BoardSource, which statement is true regarding the governance and management of a nonprofit? A)The board manages, and the CEO governs. B)The CEO manages, and the board governs. C)The CEO and the board jointly manage and govern. D)The board manages and governs

The correct answer is B. Boards govern, CEOs manage, and both should respect the other's role and areas of autonomy.

According to BoardSource, what is an acceptable cost per dollar raised for an annual fundraising program that is intended to renew givers by the third year? A)45-55 cents per dollar raised B)20-25 cents per dollar raised C)70-85 cents per dollar raised D)50 cents per dollar raised

The correct answer is B. Direct mail may cost considerably more in the first few years to establish a donor base, but, within a few years, the cost of getting a gift to renew should be down to 20-25 cents per dollar raised.

In Dr. Meyers' system, during what phase of the personalized planning process is a written proposal to the donor created? A) during the closing phase B) during the buy-in phase C) during the design phase with the internal design team D) during discovery with the donor

The correct answer is B. During the buy-in phase, the gift planner has already engaged in discovery with the donor; he or she has consulted with the internal design team to see what the nonprofit can do and what they can offer as to terms. The donor has been consulted. Then, during the buy-in, the emerging understanding gets reduced to writing in a gift agreement, often an umbrella gift agreement. That document then gets signed during the closing phase of the process.

The largest source of major gifts is generally which of these? A)the government B)individuals C)corporations D)foundations

The correct answer is B. Individuals are generally the primary source of major gifts. The government does not make gifts per se.

Which statement(s) below is (are) true of L3Cs? I. They are mandated by federal law for those foundations engaging in program-related investments. II. They are created under state law to meet the IRS definition of a program-related investment.

The correct answer is B. L3Cs are created under state law to position a business as a program-related investment for foundations wishing to invest in PRIs. The 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. The L3C format reassures the foundation that the investee organization meets the requirements.

Which of these is a good example of community capital as that phrase is used in this course? I. a public company situated in a local community II. a farm funded via bonds sold to the customers who buy its produce

The correct answer is B. Only II is correct. Community capital, as exemplified by the projects done by Cutting Edge Capital, can be described as small scale, local investments offered by a local company, most often to local investors. You might think of this as grassroots investing by stakeholders in local, small organizations.

According to BoardSource, what is the biggest draw for fundraising? A)positive publicity B)the good done in the world C)a charismatic leader D)good promotional materials

The correct answer is B. Programs that make a difference in the world are the biggest and most substantive draw.

With respect to transformational gifts as depicted by Ron Schiller, what statement(s) below is (are) correct? I. They are generally made in response to an ask for a specific amount of money. II. They are generally made by donors who have a long history of increasing engagement with the charity.

The correct answer is B. Ron is unusual, and his views surprise some fundraisers. In his considerable experience, the biggest gifts are self-solicited by donors who are so deeply engaged, wealthy, and philanthropic at heart that they see the opportunity and self-solicit. Generally, fundraisers are taught to ask for a specific amount, one that is so large that the donor pales, and then wait until the donor breaks the silence. For Ron, the process is more time intensive because the donor has to be engaged and cultivated on his or her own schedule as an autonomous agent of the good. The donor has to be brought face to face with the opportunities that the charity offers, and the donor's own priorities have to be carefully meshed with the charity's. However, high pressure is not needed and may not serve the long-term interest of the charity.

Overall, tenure for major gift officers is around what number of years? A)2 B)3.5 C)5 D)6.5

The correct answer is B. Tenure is around 3.5 years. Given that it takes awhile, about 6 months to a year, to become productive in a new job and given that finding the next job takes time, fundraiser turnover is a significant drag on productivity. Needless to say, short tenure makes long-term relationships with donors difficult. Short fundraiser tenure, along with other forces inside nonprofits (such as pressure from the board on down to get immediate results) make it difficult to maintain donor-centered, personalized, fundraising systems for highest-capacity donors.

The IRS definition of the term "program-related investment" includes which of these statements? I. The primary purpose is the production of income or appreciation. II. Influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose.

The correct answer is B. The IRS definition states, "1. The primary purpose is to accomplish one or more of the foundation's exempt purposes, "2. Production of income or appreciation of property is not a significant purpose, and "3. Influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose."

Which of the following statements is (are) true? I. Annual giving and planned giving compete for donor time and attention. II. Annual giving serves as a feeder into major giving.

The correct answer is B. The annual giver is a likely source of planned gifts. The annual gift bonds the donor to the organization. The relationship may then mature to include major gifts and planned gifts.

All of these are characteristic of the gift planning process as conducted by Ron Schiller, EXCEPT A)The donor is asked for a large and specific sum. B)The donor self-solicits the gift. C)The donor turns pale or blanches when asked for a gift at capacity. D)Having made the big ask, the solicitor says nothing, making sure the donor speaks first.

The correct answer is B. The interesting thing here is that, in the process used by Ron Schiller, the way the biggest gifts are most often closed is by having the donor self-solicit. Traditionally, almost no donors self-solicit. With Ron, self-solicitation is the norm for huge gifts. Why the difference? Ron spends months or years using some donor-centered version of moves management to help the donor get more and more engaged at the nonprofit, to take on progressively greater leadership roles, come to be seen by the charity as an insider and special friend of the organization, and to see with their own eyes the special needs and opportunities at the nonprofit. In that long-term, donor-centered process, the biggest gifts are most often volunteered by the donor, rather than elicited with a hard ask.

A donor is concerned that a charity may not fulfill her intentions with respect to a restricted gift. What provision(s) might it make sense to include in the gift agreement? I. a reverter II. an alternative purpose provision

The correct answer is B. The second of the two ideas makes sense. The donor might stipulate an alternate use of the funds within the original charity, or the donor might specify an alternative charity to which the money might roll over. But a reverter does not make sense. If the donor specifies that donor or heirs will get the money back if the charity fails to perform, the gift will not be a completed charitable gift for tax purposes. That is, the gift will not qualify for an income tax deduction. Even if it did, the donor getting the money back would create a taxable event.

Which of these would be considered a principal gift? I. $100,000 from the donor's money market account II. $1,000,000 in a closely held business interest

The correct answer is B. The terminology is sometimes a bit hazy, and not all nonprofits use the exactly the same way, but principal gifts are sometimes treated as a separate department or as part of the planned gift function in large nonprofits. They are generally large and tricky. That is, they are often large gifts of something other than cash or public securities. A large gift of cash is not likely to require special handling. A gift of land, a working business interest, an odd asset like a collection, patents, royalties, timber might be broken out, treated as principal gifts, and get pushed onto a specialist on staff. Generally, such gifts are larger than the traditional annual gift. You might think of them as a major gift, ultimate gift, or leadership gift (in a capital campaign) of a noncash asset. Such gifts may represent a significant opportunity for CAPs® to collaborate across the disciplines. Many advisor CAPs® work with clients who hold assets, and few charities can successfully garner such assets without the active participation of clients' advisors.

Each of these choices is one of the three sectors EXCEPT A. the government sector B. the ecclesiastical sector C. the nonprofit sector D. the business sector

The correct answer is B. The three sectors are the government, business, and nonprofit sectors. The nonprofit sector is sometimes called the social sector, the voluntary sector, or the civic sector.

What is the best definition of the term "ultimate gift"? A)the gift that ultimately results from the fundraiser's efforts B)the largest and often the final gift a donor makes C)the remainder in a CRT or other deferred gift that is ultimately received D)the ultimate gift booked after negotiating with a donor

The correct answer is B. The ultimate gift as fundraisers use that term is the gift a donor sets up, often at the end of life, as the culmination of a lifetime of giving. It is often the largest single gift a donor has ever made.

A foundation focuses on health in Malaysia. The foundation invests heavily in a rapidly growing company whose Malaysian factories are significant polluters. A recent study shows a correlation between the factories and cancer in the surrounding population. This example highlights the need for what? A)managing foundation assets with modern portfolio theory B)managing foundation assets with an eye to mission-related investments C)maintaining a barrier between the investment managers and the grant makers in a foundation D)the need for a competent public relations counsel

The correct answer is B. This example is based on a scandal that erupted over investments made by the Bill and Melinda Gates Foundation. The story was a major driver in the mission-related investment field.

Dr. Meyers suggests, in a witty way, that there are four donor types. Which one asks, "What do I get out of this, exactly?" A) the wise donor B) the wicked donor C) the simple donor D) the naïve donor

The correct answer is B. This is a question asked by the wicked donor. These are actually excellent prospects for split-interest gifts, like CLTs, CRTs, gift annuities, bargain sales, life estate in a residence, or other tools that provide benefits to the donor as well as to the charity.

Under which of the arrangements below does the donor give the spend annually while agreeing to give the principal amount later or at death? A) vicarious endowment B) virtual endowment C) equity-building endowment D) step-up endowment

The correct answer is B. This is a virtual endowment. The charity gets the spend needed to fund the program annually and the principal will arrive later.

A donor wanted interest on her gift to be used for programs and the principal preserved. Imagine that the market has fallen 50%, along with the endowed fund. Which act(s) listed below would allow the funds to be tapped in order to meet the ongoing program needs even if the fund is below its original value? I. the Uniform Management of Institutional Funds Act (UMIFA)II. the Uniform Prudent Management of Institutional Funds Act (UPMIFA)

The correct answer is B. UPMIFA allows this. It is a newer act. The earlier act, UMIFA, did not allow it.

As to cost per dollar raised, which statement(s) below is (are) true? I. A direct mail donor generally yields a dollar for every 20 to 25 cents spent on solicitation after the first year. II. A capital campaign donor generally yields a dollar for every 10 to 20 cents spent on solicitation.

The correct answer is C (Both). According to data cited by BoardSource, both are correct. Capital campaigns are the most efficient at 10 to 20 cents on the dollar, along with volunteer solicitation at the same cost per dollar. Events are not very efficient (50 cents on the dollar). A mature planned giving program is quite efficient at 20 to 30 cents on the dollar but with a provision or two. Planned gifts cost money today and bring in the money later, often 5-7 years after they are solicited, since these gifts are generally deferred. Also, to get to a mature program, the organization needs to have a strong base of aging loyals who have been cultivated and grown over the years. The successful planned giving program is then the fruit of years of work building and solidifying a loyal donor base.

All of these fundraisers are "hunting elephants," as wealth advisors use that phrase, EXCEPT A)Bo, a principal gift fundraiser who works with a handful of very wealthy donors B)Harold, a gift planner at an Ivy league university who works with current and past board chairs to raise the lead gift for a billion dollar campaign C)Belinda, a gift planner who uses blended gifts, often including bequests, to raise gifts of $100,000 or more for a campaign to raise $500,000,000 D)Toshi, a gift planner who works with a community foundation to partner with advisors on gifts of noncash assets from very successful business owners in transition

The correct answer is C. A $100,000 blended gift which is largely made up of a bequest sounds more like a deer than an elephant. What advisors mean by an elephant is a prospect whose potential is very large and who may also be demanding. You don't shoot an elephant with a rifle used for small game, which means that special people require special handling. When fundraisers are forced, as they often are, to work very quickly with each donor, including the biggest, they are unlikely to bring down an elephant. The phrase "elephant hunting" is also cautionary. To feed his or her family, the hunter must bring back at least a little small game on a given hunt. To hunt only elephants is risky. Those who can specialize in this are few. (The very best at working with the wealthy would cringe to hear the hunting metaphor. They know that this work is best done in a spirit of service, ideals, and partnership.)

According to BoardSource, which of these statements about planned gifts is (are) true? I. Planned gifts may be complex and require experts (particularly an attorney). II. Planned gifts require specialized staff.

The correct answer is C. According to how the issue is presented by BoardSource, both of these statements are true.

All of these are ways a board can (and should) participate in fundraising EXCEPT A)introducing staff to prospective donors B)arranging a table at a benefit C)writing promotional materials D)giving at full capacity

The correct answer is C. All of these actions are listed by BoardSource as appropriate board roles, except writing promotional materials. That is a staff function or an action that can be delegated to outside resources.

With respect to data from the National Association of Colleges and Universities (NACUBO), all of these statements are true, EXCEPT A)Colleges and universities expect a total return on endowment of 7.2%. B)Colleges and universities spend about 4.4% of endowment on operations. C)Overall, endowments for colleges and universities for the 10 year period ending in 2019 had a total return of 8.3%. D)Colleges and universities reserve 1 to 1.5% of their total return to go to expenses and another 2% to be reinvested for inflation

The correct answer is C. All the statements are true, except the one about the number of actual rate of return for the period of 10 years ending in 2019. The actual total return on endowment over a 10 year period was 5.8%. Clearly, something has to give! Yet it is hard for the organizations to cut back on the spend. They rely on it for 9-10% of operations.

Endowments may begin in which way(s)? I. an endowment building campaign II. a donor-restricted legacy gift that comes in by surprise

The correct answer is C. Both I and II are possible. Of course the charity can put together a campaign to build an endowment, often by asking that donors mention them in their will. The charity then puts in the incoming bequests into an endowment. But a charity may also find itself having to start an endowment when they receive an unexpected first legacy gift. When the donor specifies that the gift should fund a program in perpetuity, the charity finds itself having to set up an endowment to support the program.

With respect to government funding for the nonprofit sector, which statement(s) below is (are) true? I. Under the Great Society Programs of the Lyndon Johnson era, the government generally would grant money to charities or contract with them to outsource programs the government wanted. II. From Reagan onward, government revenue has increasingly shifted to consumer-side subsidies of services purchased from nonprofits.

The correct answer is C. Both I and II are true. Consumer-side subsidies include vouchers, tax credits, and reimbursements (Medicare/Medicaid).

Government support for nonprofit services can come from which of these? I. Provider Side: funding the service through grants and contracts between the government and the nonprofit provider II. Consumer Side: funding the service provision by giving the consumer service vouchers, reimbursements, tax credits, or other subsidies

The correct answer is C. Both approaches are common. In response to conservative legislators, there has been a shift away from direct grants and contracts to consumer subsidies since the time of the Great Society. This introduces a degree of market discipline; the consumer is expected to shop for the best cost and service (for example, from medical or educational providers).

Salamon makes which point(s) below? I. Nonprofits are increasingly being held to a businesslike standard and are pulled towards commercialism. II. Nonprofits have certain key values that distinguish them from both government and businesses. Nonprofits are ideally productive, empowering, effective, reliable, responsive, and caring.

The correct answer is C. Both are correct. Salamon sees the sector being pulled towards commercialism and also becoming increasingly dependent on government funding. Hence it is increasingly bureaucratic and manages within government rules and procedures. At the same time, however, Salamon believes that the heart and soul of the sector lies in its defining and distinctive qualities: productive, empowering, effective, reliable, responsive, and caring. He feels that to protect and preserve itself, the sector must assert these defining, value-based differences and not merely initiate business or court government funding. From a CAP® standpoint this means leading with above-the-line missions, visions, and values at the nonprofit; following through in a businesslike way; and completing necessary tasks

Which of these can be considered a social enterprise? I. a for-profit II. a nonprofit

The correct answer is C. Both are correct. The social venture philosophy says that the choice of form is secondary to getting results sustainably.

How can a charity protect itself as it enters into gift agreements with donors? I. If possible, gift agreements should be flexible. II. If possible, gift agreements should contain provisions for change.

The correct answer is C. Both are good ideas if the donor will agree to them.

With respect to impact investing by high net-worth families, what did the 2018 study by U.S. Trust® find? I. Of those who use it, 19% reduce their giving at least in part. II. Of those who use it, 9% use it to completely replace giving.

The correct answer is C. Both are true.

With respect to leadership gifts, which statement(s) below is (are) true? I. These are solicited during the silent phase of a capital campaign. II. These gifts, few and large, set the pace for the campaign.

The correct answer is C. Both are true.

"Freedom from" and "freedom for"—With respect to this distinction, which statement(s) below is (are) true? I. "Freedom from" can be glossed as freedom from external constraint. II. "Freedom for" can be glossed as service to a greater good.

The correct answer is C. Both are true. "Freedom from" is (as was once explained to the course author by a British philosopher) "the Englishman's God-given right to do as he pleases." In other words, "freedom from" is just the freedom from external constraints. A gambling addict, a drug addict, a person who cannot resist another chocolate—all are "free" to behave better; there is no external constraint. They have simply failed to master themselves. "Freedom for," by contrast, means that freedom comes from service to an ideal or to a higher good. The athlete doing 100 push ups daily is less free maybe than one who lounges about watching TV, but in another sense the athlete is paying the price of higher freedom to excel. "True freedom is perfect service" is a religious doctrine. "Freedom is riding easy in harness" is how Robert Frost once put it. But "freedom for" can also be a dangerous political doctrine, such as when a zealot tells followers that only by obeying and subordinating themselves to him can the follower find perfect freedom. This analysis comes from the noted British moral and political philosopher, and historian of ideas, Isaiah Berlin. Its relevance to CAP® is deep. Our clients are free within the limits of the law to give or not give, invest, spend, or do as they please. That is "freedom from." But within them, is there at times an urge that we can tap to find "freedom for," the freedom found in aligning with their deeper purposes and those of the traditions of which they are a part? We cannot impose our purpose, but can we help them find their own? Might this be "discernment"?

Who loses when an organization accepts a gift for an endowed program that produces mission drift? I. the donor II. the charity

The correct answer is C. Both are true. A donor seldom wins if a pet project is funded that drives the organization off mission into areas it cannot pursue long term with appropriate programs. No donor really wants that, and programs that cause mission drift are often finessed or discontinued, leading to donor unhappiness and even legal proceedings. The best gifts amount to a partnership in which both the donor's goals and the charity's priorities are in harmony.

A gift officer trained in blended gifts could execute what process(es) below? I. Ask a donor for an outright gift. II. Open a discussion of a planned gift in service of a campaign.

The correct answer is C. Both are true. A gift officer should be able to make an ask for a major gift. But a gift officer who solicits blended gifts should also be able to "blend in" a planned gift, say, a bequest, to increase the total gift. Generally, this is done in service of a campaign. For example, a donor gifts $10,000 outright and sets up a bequest of $90,000. Campaign rules at a particular charity may allow this to be counted as $100,000 towards the campaign goal.

With respect to nonprofit legitimacy, which statement(s) below is (are) true? I. A public charity must, by definition, have a broad base of public support. II. Even small gifts demonstrate that givers support the organization.

The correct answer is C. Both are true. Even though nonprofits often generate the bulk of their gifts from a small number of very large donors, the smaller gifts are important, not only for the money, but also as an indication of broad public support. A public charity has to have that support to be perceived as legitimate.

What statement(s) below capture what is meant by Steven Meyers as to the term "the tyranny of one number"? I. Fundraisers are often asked to state in one number how much money they raised last year. II. To give one number as to dollars raised is difficult when some gifts are current, some deferred, and some are both contingent and deferred.

The correct answer is C. Both are true. Fundraisers are expected to say in one number how much they raised, but it is difficult to come up with one number when some gifts are current, some are set up irrevocably to come in later, and some are set up so that they may come in later.

With respect to a comprehensive campaign, what statement(s) below is (are) true? I. Such a campaign serves many purposes rather than just one (such as building a building). II. In such a campaign planned gifts are often allowed to count towards overall campaign totals.

The correct answer is C. Both are true. In a comprehensive campaign many aspects of the organization may be funded, and many kinds of gifts, including those that are planned gifts, are counted. Counting planned gifts is a bit of a challenge, though, because they are often contingent and deferred. How does the charity count such a gift towards the campaign thermometer, and how much credit should the donor get towards donor recognition, such as the honor wall, recognition at an event, or in a publication. In setting up the campaign, such issues are discussed and policies laid down.

As to the terminology of fundraising, which statement(s) below is (are) correct? I. Annual, major, and planned giving functions have traditionally been considered as separate from one another. II. Increasingly, gift planning is the term used to describe the work of fundraisers who can solicit both major and planned gifts, adapting them to the donor's intentions and to the capacities of the nonprofit.

The correct answer is C. Both are true. Major gifts are often just gifts of cash, often solicited face to face from loyal donors. In the past, planned giving was considered to be a separate, more sophisticated specialization, requiring a planned giving officer versed in tax, tools, and techniques. Increasingly, however, fundraisers are expected to be able to do both. The new term for this kind of work is gift planning. (Note how the name of the professional association for gift officers who understand planned gifts has changed over the last 30 years: the National Committee for Planned Giving, then the Partnership for Philanthropic Planning, and now the National Association of Charitable Gift Planners.) Dan Rice puts it humorously, "Are Planned Gift Officers incubating Dodo Birds?" Most who had been called planned gift officers today are more likely to say they are gift planners," meaning they are not just talking about complex charitable tools, but they are also out there just directly asking for the major gift.

"I am all about getting results. I expect nonprofits to get results. I am perfectly happy to invest in a for-profit, if it gets better results in a particular area than nonprofits do. The legal form of the entity is of no importance to me. I am interested in getting the best results possible for every dollar invested." With respect to this person's views, which statement(s) below is (are) true? I. This person's view of nonprofits is closest to commercialism on Salamon's chart of the four poles in the nonprofit force field. II. This person exemplifies the views associated with social entrepreneurialism and impact investing.

The correct answer is C. Both are true. Many of those taking this course, particularly advisors, will consider the statements made here to be educated commonsense. "Of course it is all about results! What else could it possibly be about? It has to be about cost-benefit analysis. What results per after tax dollar? Show me the spreadsheet! I demand to see it. This has to be like investing. If it is not, why am I here?" Salamon would reply, it could possibly be about more than commercialism or social entrepreneurialism. It could also be about civic activism, values guardianship, or professionalism. Salamon would agree that results are important, but he would ask if in going after results, and results only, whether the social sector is in danger of losing its soul. In other words, nonprofits serve many functions beside the provision of services. Little League, a reading group, a public library, a dance festival, a house of worship, a protest group are not so easily parsed as "getting results." They are more like a seedbed for the participant's humanity. Of course, a seedbed gets results, too, but those results are often unpredictable, not always convertible into dollars and cents, not always measurable within a spreadsheet, and only seen years hence.

With respect to FASB 2016, which statement(s) is (are) true? I. The FASB rules clarify, for the sake of the board, donors, and financial institutions, which endowed funds are available to be spent on general operations and which can only be spent on donor-restricted purposes. II. The new disclosures clarify the nonprofit's ability to meet its financial obligations.

The correct answer is C. Both are true. The FASB rules now require that the charity be transparent about the status of donor-restricted funds. Stakeholders are the board, donors, and financial institutions. The goals are to ensure that the stakeholders are clear on what the charity has available to spend to "keep the lights on" and what funds must be retained in support of the donor-restricted purpose.

With respect to transformational gifts as Ron Schiller sees them, which statement(s) below is (are) true? I. They are transformational for the organization receiving them. II. They are transformational for the donor.

The correct answer is C. Both are true. The gifts are transformational to both the organization and the donor.

Vouchers and reimbursements promote competition in which way(s)? I. They encourage consumers to shop around to find the best nonprofit provider of a service. II. They encourage consumers to shop around to see if a for-profit provides the best service.

The correct answer is C. Both are true. The idea is to combine government money with free market principles of consumer choice. Who provides the best education? Heart operations? Nursing home care? Increasingly, consumers are using government consumer-side subsidies to purchase services from for-profits. This has led to nonprofits becoming more and more commercial in their own right

According to William Sturtevant, which statement(s) below is (are) true? I. Annual gifts account for 30-40% of revenue from annual gifts. II. 60-70% comes from major (special) gifts and planned gifts.

The correct answer is C. Both are true. The moral is that it pays to have major and planned gift programs in place. Many organizations, though, are bottom heavy, as Penelope Burk says. That is, they invest heavily in asking donors each year for the regular annual gift, but underinvest in the staff needed to ask, often face to face, for larger gifts and planned gifts.

Which of these is (are) an assumption of donor-centered fundraising? I. Donors have a natural urge to give. II. Donors should be allowed to give without pressure.

The correct answer is C. Both are true. The three main assumptions are as follows: Donors have a natural urge to give. The fundraiser should focus on the charity's mission and results, not on its needs. The solicitation should be proportional to the donor's inclination, interests, needs, and means, and it should be made without pressure.

With respect to underwater restricted endowments, which statement(s) below is (are) correct? I. FASB 2016 requires disclosing the amount of the original gift value to be maintained by law. II. FASB 2016 requires disclosing the charity's spending policy for endowed funds and any action taken as a result of the underwater status.

The correct answer is C. Both are true. When a fund is underwater (the value in the fund has declined below what is legally required, generally to preserve the original value of the gift), that too must be reported, along with policies on endowment spending and information about what actions are being taken as a result of the fund being underwater.

With respect to Roca, what statement(s) below is (are) true? I. It is funded in part through pay-for-performance contracts in which individual investors can profit if Roca keeps youth from going to prison. II. Roca is a nonprofit.

The correct answer is C. Both are true. Yes, Roca is a nonprofit, and it does get about 31.2% of its revenue from pay-for-success contracts with investors. As Roca hits performance thresholds, the government saves money and provides some of that money back to investors. The better Roca does at keeping youth from prison, the more the government saves and the more investors (and Roca itself) receive.

As Lucy Bernholz uses the terms which approach(es) below would be an example(s) of private resources for public purposes? I. giving $1 million to a 501(c)4 to provide attack ads in a presidential election II. investing $1 million in a solar panel company that over time provides a 25% a year compound annual return to the investor

The correct answer is C. Both are ways to use private resources to affect the world. Whether "dark money" in elections is good or bad, it is an investment that certain people and companies make to promote their vision of a better world through electoral politics and policy change. Likewise, an investor could make a fortune in a for-profit company that address an urgent social need. This would not be philanthropy, as the term is traditionally defined, but it is a social investment. In Lucy's terminology, philanthropy is a private use of funds for a public purpose. Where is it written, she might ask, that money has to be given to a nonprofit, in order for it to do good in the world?

Which of these are examples of civic activism, as Salamon uses the phrase? I. the Civil Rights Movement II. the Womens Movement

The correct answer is C. Both movements are examples of civic activism: both organize for a social cause.

In evaluating a fundraising program, a board should do which of these? I. Set quantifiable goals and measure performance against goals. II. Establish benchmarks for cost per dollar raised.

The correct answer is C. Both of these are board responsibilities.

Which of these is (are) part of the board's oversight responsibility? I. Review and approve the budget. II. Hire an independent auditor.

The correct answer is C. Both of these are central to board oversight.

Under Sarbanes-Oxley, nonprofits must have which of these policies in place? I. whistle blower protections II. document retention policies

The correct answer is C. Both of these are the two provisions of the act which apply to nonprofits.

The lecture for Assignment 1, America's Nonprofit Sector, suggests that which of these is (are) great American virtues? I. self-reliance II. mutual aid

The correct answer is C. Both self-reliance and mutual aid were discussed as the two great American virtues.

Typically, foundations do good in the world by making grants. Other than by making a grant, in which way(s) can a foundation do good with its corpus? I. program-related investments II. mission-related investments

The correct answer is C. Both statements are correct.

You hear a fundraiser say, "Well, gift agreements are all well and good, but they are seldom enforceable. After all, the donor has given up control. It wouldn't legally be a gift if the donor still had control." Which of these is (are) a point a CAP® should make? I. A number of current lawsuits indicate that gift agreements may well be enforced in the courts. II. The organization has an obligation to respect donor intent to the extent possible for ethical reasons and also to preserve and enhance the good will of donors.

The correct answer is C. Both statements are correct. Lawsuits are increasingly showing that donor intent can be enforced. Also, it is right to fulfill the obligation undertaken in the gift agreement. It is certainly good for the organization's ongoing fundraising to be known for keeping faith with donors after the gift is made.

With regard to ideals, which statement(s) is (are) in line with the essay by Duska and Cubeta? I. Gift planning is a profession oriented to an ideal. II. Gift planning, like any profession, is governed by ethical standards prohibiting certain acts.

The correct answer is C. Both statements are correct. The essay stresses that behaving ethically is important, but merely avoiding shady practices is not enough. Giving is a virtue. Gift planning is a profession oriented towards ideals—serving clients, helping communities, and making life better for others. To the extent we orient our practice to ideals, we uplift the profession and create a public recognition that CAPs® are doing a good service.

Which of these is required of fiduciary managing trust assets or assets in an endowment? I. a prudent process II. a prudent portfolio

The correct answer is C. Both statements are correct. The process and the portfolio must both be prudent. You have to go through the right steps and be able to document that you have done so.

With respect to the Copernican Revolution in donor behavior, as cited by Charles Bronfman and Jeffrey Solomon, which statement(s) below is (are) true? I. Years ago, highest-capacity donors wanted to revolve around the charity's mission. II. Today, the highest-capacity donors want the charity to revolve around the donor's mission.

The correct answer is C. Both statements are true. But it is also important to add that no big donor wants a charity to get so far from its own mission that the money is wasted. Instead, what the donor wants is for the charity to successfully complete a mission of importance to both. Still, Bronfman and Solomon are clear that the conversation has to begin with questions regarding the donor's mission. That is the approach taken so successfully by Ron Schiller when he asks, "Do you have a giving plan? A giving philosophy? A passion?" Then, if possible, he shows how his organization can fulfill that donor's priority.

"Crash the fundraising matrix"—Which statement(s) below capture(s) what Steven Meyers means by that advice? I. The distinctions between annual, major, and planned gifts are built into the way nonprofits have traditionally delegated, measured, and managed the work of gift planning. II. The delegation of labor within annual, major, and planned gift divisions or functions can be a hindrance to a sophisticated gift design, which may include elements of all three.

The correct answer is C. Both statements are true. Steven is essentially trying to work on behalf of the donor and the institution by working within and across the three traditional departments, functions, and silos to create gifts that include elements of all three.

Your client made his money supplying landmines to any country willing to buy them. Years after the war, children are still running into fields strewn with mines and dying. The client has read about Alfred Nobel who invented dynamite and then went on to create the Nobel Prizes, including the Peace Prize for which he is best remembered today. The client approaches you about how best to use $2,000,000 to enhance the donor's reputation. This situation represents which of these? I. a potential conflict with the planner's personal ethics II. a technical challenge for the planner

The correct answer is C. Both statements are true. The case is challenging technically. It is not easy to change the world's perception of a man grown rich at the cost of innumerable lives. Representing such a client may also put a strain on the planner's own ethical sensibility. Imagine, for example, that a drug lord wants to burnish his reputation by means of philanthropy. Would you accept that challenge? Yet this type of situation occurs often. Doctors cure Mafia dons, and lawyers represent criminals. Do we, as professional gift planners, have an obligation to represent all who come to us for advice? Should every person be entitled to adequate philanthropic counsel? Are the sources of a client's funds relevant (assuming the funds are legally obtained) to our taking a client? Would we be "on our moral high horse" in refusing to accept such an engagement?

With respect to nonprofit boards, which of these statements is (are) true? I. A board's authority is rooted in state and federal law. II. A board's responsibilities are outlined in the organization's bylaws.

The correct answer is C. Both statements are true. These are direct quotations from the slide summarizing a board's authority versus a board's responsibilities.

Which statement(s) below is (are) true of planned gifts? I. Planned gifts are often contingent gifts. II. Planned gifts are often deferred gifts.

The correct answer is C. Both these statements are true of what are termed "planned gifts" in the jargon of this field. A planned gift is generally a bequest, a split-interest gift, a life insurance policy, or qualified plan designation. Bequests are often contingent because the will, or the arrangement, is subject to change. They are deferred. Life insurance and annuity beneficiary designations are contingent, and the money comes in later (deferred). Even a life policy owned by the charity is subject to the contingency that it might lapse if the donor ceases donating the premium amount. A CRT's charitable beneficiary designation is often contingent. If the document comes from the client's attorney, he or she will suggest that the beneficiary be left subject to change. With a CRT, the charity gets the money later. With a gift annuity, it may irrevocably go to the charity that wrote it, but the money does come in later. The point overall is that planned gift money is generally deferred and often contingent. This, in today's world of organizations needing money now, makes it hard to sell boards on keeping or growing a planned giving program. Deferred and contingent seems less attractive to cash-strapped organizations than "now money" or irrevocable pledges.

Penelope Burk speaks of the triumvirate, whose decisions govern gift planning in a nonprofit. All of these choices are members of the group, EXCEPT A)the head of advancement B)the executive director C)the comptroller D)the board

The correct answer is C. Burk does not mention the comptroller, though the pressure for money now will filter up to the board from the comptroller through the executive director and the financial statements and projections which the comptroller provides to the board.

A technology company contracts with a university to do research that will be proprietary to the company. The income from such contracts becomes an ever increasing percentage of the total revenue to the college. Which of these is (are) the IRS implication(s)? I. Revenue from such contracts will likely be taxed as unrelated business income. II. The university's tax exemption may be lost if it has drifted far from its exempt mission.

The correct answer is C. Clearly the income will be taxable as unrelated business taxable income, since doing research that will be proprietary to a tech. company is not part of the school's exempt purpose. In an extreme case, the IRS might even revoke the school's tax exemption if it has drifted so far from its mission that it is behaving more like a vendor to business than a provider of education and knowledge to the public. Charities can also get in trouble with the IRS for mischaracterizing a gift as a fee for services. For example, an overly generous "gift" from a catering company to name a college stadium may disguise what is better seen as concession revenue from a vendor wanting to lock in to sell hot dogs and soda. The enthusiasm with which charities have embraced earned-income strategies is being countered today by increased IRS scrutiny as to whether this is correctly characterized, whether taxes are paid on the unrelated business income, and whether the charity has drifted off mission to become a business in its own right.

Which of these is the smallest source of donated revenue for nonprofits? A)living individuals B)private foundations C)corporations D)bequests

The correct answer is C. Corporate giving is the smallest source (5%) of capital.

Mabel has many badges on Facebook which indicate her preferred charities to which she has given a few dollars each. Mabel is a good example of which of Salamon's main motives for civic engagement? A)problem identification and advocacy B)solidarity C)expressive function D)commercialism

The correct answer is C. Mabel's badges express her social identity. They are markers or indications of the social identity she wishes to present. This is not to say the other motives need be absent, but displaying one's preferred charities in a public space in a way that focuses on oneself is an expressive act or social gesture.

Mel says, "Cut to the chase: I have prostate cancer. I formed a nonprofit to find a cure for prostate cancer, to counsel those with the disease, and to lobby for more government funding for this important cause." Which motive(s), as discussed by Salamon, does Mel embody? I. service provision II. problem identification and advocacy

The correct answer is C. Mel sees his nonprofit as identifying and advocating for a cause (prostate cancer) and ultimately in providing a cure; meanwhile the organization provides a service (counseling).

In Sturtevant, what is meant by the phrase "moves management"? A)putting the right moves on the donor B)managing employee relocation C)managing the gift planning cycle by deciding who will take which move in the process, how, when, and with whom D)managing the relationships back and forth between charity and advisors

The correct answer is C. Moves management is the act of managing the gift planning cycle by deciding who will take which move in the process, how, when, and with whom.

With respect to planned gifts, which statement(s) below is (are) true? I. They are often restricted by the donor. II. They often go into an endowment.

The correct answer is C. Planned gifts (particularly bequests, which comprise the bulk of planned gifts) very often go into a donor-restricted endowment, with the spend used for purposes specified by the donor for a period of time, often in perpetuity.

Based on the comprehensive surveys conducted by Penelope Burk, which statement(s) below is (are) true with respect to donor attrition or churn? I. Attrition today from year one to year two averages 65%. II. From year one to year five, attrition averages 90%.

The correct answer is C. Sadly, both are correct. Attrition is now at 65% from year one to year two. A decade or so ago, Burk says, her surveys showed 50% attrition from year one to two. Donors, it seems, are burning out on direct mail, e-mail, events, and other routine solicitations. As these work less and less well, there may be pressure from the board on down to do it more often in order to make up for the increasing ineffectiveness. That leads to outright donor push-back. Many studies have shown that one of the biggest reasons donors hesitate to give, or give and stop giving, is the risk of being contacted again. "Take me off your list." How many of us are saying that to the charities to which we once gave a small amount or even a large amount? Donors are demanding a more humane and personalized approach, one that respects their good sense, their time, and their hunger for specific results. They prefer to be given choices of funds (designated to a purpose) and to hear from year to year how the fund is being used and what the results are. While all of this is clearly in the data in this assignment, so are the challenges. When over twenty percent of charities do not even have a donor database, it is clear that most cannot currently engage in sophisticated, targeted communications with specific donor groups. The trend noted in this assignment towards increased reliance on sophisticated advisors seems likely to continue until at least the larger charities begin to provide services as personalized and reliable over time, as do the best boutique advisory firms and dedicated advanced planning divisions.

All of these are defining characteristics of a social enterprise as discussed by Peter Frumkin, EXCEPT A)It is designed from inception to be sustainable. B)It is designed to be able to scale up rapidly if successful. C)It is designed to nurture and sustain discernment at all levels of the organization. D)It is designed to produce social change through innovative solutions.

The correct answer is C. Social enterprises are discussed in the language of markets and business. The humanistic or religious language of discernment and virtue is secondary. The "commanding heights" on this viewpoint are held not by faith, government, or private virtues but by markets, enterprises, and entrepreneurs.

Which of the statements below most accurately describes how CEO compensation should be set? A)Reasonable compensation is set annually by the IRS in Table 76. B)The board determines compensation using the prudent person standard. C)The board should set compensation based on salaries for comparable work at comparable organizations. D)The CEO's salary is a management issue, not a board issue.

The correct answer is C. The IRS dictates that compensation, including benefits, be reasonable, but it does not stipulate what reasonable compensation is for specific roles. Considering comparable jobs and pay at comparable organizations is a good practice.

According to how the term is used in this course, stewardship describes which of these? I. using given funds in accordance with donor intent II. investing endowments prudently

The correct answer is C. The best answer is both.

Which of the following statements are responsibilities in regard to stewardship of planned gifts? I. using given funds in accordance with donor intent II. investing endowments prudently

The correct answer is C. The best answer is both.

Which statement is true with regards to board leadership? A)Boards advise rather than govern or manage. B)Boards should oversee the organization's day-to-day operations. C)Boards should focus on their visions, missions, and strategic plans. D)Boards comanage with the executive director or CEO.

The correct answer is C. The board is the highest level governing body for an organization; its focus is on their vision, mission, and strategic plan.

In establishing a socially good organization, a social entrepreneur should be greatly concerned about all of these, EXCEPT A)creating an organization that is sustainable in doing good B)creating an organization that provides innovative solutions C)creating an organization that qualifies as a nonprofit D)creating an organization that is scalable

The correct answer is C. The choice of form is considered secondary to creating results through innovative solutions.

Which of these statements is (are) in line with the Model Standards of Practice for the Charitable Gift Planner? I. The tax and financial benefits should be clearly explained. II. Philanthropic intent should be the primary reason for giving.

The correct answer is C. The donor should understand the tax and financial aspects of the gift. Beyond that, The Model Standards of Practice for the Charitable Gift Planner call for philanthropic intent to be the primary motive for giving. This is a strong standard. Clients do make gifts for many reasons, but the standards say that philanthropic intent would be the most important motive.

In the movie The Matrix, as Steven Meyers recounts it, human beings are kept in pods and their life energy sucked out of them to maintain the system which keeps them imprisoned, the Matrix. Considering this analogy, which statement(s) below is (are) implied by Dr. Meyers regarding the gift planning matrix? I. The matrix is the artificial and bureaucratic division of gift planning labor into annual, major, and planned gift silos. II. The humans serving the matrix are the fundraisers, and also the donors.

The correct answer is C. The first statement is certainly true. Steven may be too tactful to state the second out loud, but it is clearly implied by his work. He wants to humanize the process for both the donor and the fundraiser so that the two meet creatively on higher ground to serve the donor, a charity whose mission the donor loves, and the community that both the charity and the donor are committed to serving. This is a true calling, not just a job within a matrix.

In gift planning, what is meant by the term "linkages"? A)links between a donor and a fundraiser, such as shared hobbies B)links between the past and present in a donor's life C)links connecting the donor and the organization D)links among the donor, the advisor, and the fundraiser

The correct answer is C. The more ties the donor has to the organization, the more likely he or she will make a gift to that organization. Hence, fundraisers look for linkages and opportunities to create more linkages.

Which phrase(s) describe(s) the term "anomie"? I. social isolation II. the loneliness of the urban crowd

The correct answer is C. The term may sound academic, but the social ill it designates is omnipresent and chilling. Anomie refers to a situation in which members of a society or group are given little guidance or standards in regard to determining ethical courses of action. It is the breakdown of social bonds between an individual and the community, e.g. under unruly scenarios resulting in fragmentation of social identity and rejection of self-regulatory values. It was popularized by French sociologist Émile Durkheim in his influential book Suicide (1897). When we discuss civil society and the nonprofit sector in purely economic terms (as a way to get results for every dollar invested), we may neglect the role civil society plays as an antidote to "anomie." This would be an antidote to the cold sense that we are alone in this world, using and being used by others, solely as means to an end. We are without any bonds of love, care, or concern connecting us. One of the results certain nonprofits foster is a more cohesive self in community with others.

"Morality is the best of all devices for leading humankind by the nose." — Nietzsche. What this philosopher meant is best paraphrased by which remark below? A) Morality is a reflection of the most sacred principles. B) Morality is a key component of leadership. C) Morality is for the sheep; for the wolf a different and higher law applies. D) Morality is what holds our fragile community life together.

The correct answer is C. The view that morality is for the sheep while for the wolf a higher law applies is seldom expressed but may often be acted upon. There are those who see morality as something to which lip service must be paid while operating on altogether more selfish principles.

A large national foundation commissions a study of recidivism in Georgia (convicts being released from prison only to be sentenced to prison for a newly committed crime). The study is conducted by experts who conclude that the primary cause of recidivism is the lack of job training available to convicts. The foundation then consults with education experts and a panel drawn from prison management. The result is the funding of a nonprofit that teaches job skills to prisoners on parole. The teaching is conducted by experienced trainers from several industries. Results of the program are measured with quarterly reports to the foundation. Which of Salamon's four nonprofit poles best represents this approach? A)voluntarism B)civic activism C)professionalism D)commercialism

The correct answer is C. This is a classic example of relying on experts and professionals to get the job done. The model utilizes social science.

A named chair generally requires $5 million up front. The spend rate is 4%. That throws off $200,000 to fund the chair and expenses. The donor can afford to give $500,000 a year but not $5 million now. The donor is 45 years old and should have a strong cash flow available for many years. What is the gift format that makes the most sense with this set of facts? A) endowment B) virtual endowment C) equity-building endowment D) step-up endowment

The correct answer is C. This is a perfect set of facts for what amounts to an amortization schedule. The total amount to be amortized is the $5 million needed for the chair. The first $200,000 pays the spend for one year. The balance of the $500,000 each year goes to pay off the outstanding balance. This is just like paying off a mortgage by paying more than the interest rate due.

Under the Uniform Management of Institutional Funds Act (UMIFA), a nonprofit may release funds from a restriction imposed by a donor when I. the fund is over 20 years old II. the fund is less than $25,000

The correct answer is D (Neither). It is the Uniform Prudent Management of Institutional Funds Act (UPMIFA, not UMIFA) lets a charity modify a restriction on a small (less than $25,000) and old (over 20 years old) fund without going to court. If a restriction has become impracticable or wasteful, the charity may notify the state charitable regulator, wait 60 days, and then, unless the regulator objects, modify the restriction in a manner consistent with the charitable purposes expressed in any documents that were part of the original gift.

What percentage of endowed funds at colleges and universities are donor restricted per the National Association of College and University Business Officers (NACUBO)? A)10% B)25% C)50% D)90%

The correct answer is D. 90% of endowed funds are restricted by the donor to a specific purpose.

With respect to planned gifts, all of these statements are true, EXCEPT A)They are often made towards the final third of life, either as bequests, or as a split interest gift from which the donor gets an income back. B)They are often the ultimate gift made by the donor. C)Planned gifts can be made as part of a blended gift with credit given to the donor and the fundraiser towards campaign goals. D)Planned gifts are those planned by the client's own advisory team.

The correct answer is D. A donor may choose to involve his or her advisors in planning a gift, but the term "planned giving" refers to a specific kind of gift solicited by the nonprofit. A planned gift is a bequest or charitable tool benefiting the charity. These can be solicited by planned gift officers who specialize in such tool-driven gifts, or they can be made by a major gift officer who has a conversational understanding of the tool and brings in the planned gift officer to help explain and close the gift. Increasingly, planned gifts are being rolled into a capital campaign, by way of a blended gift. The donor to the campaign is asked for a major gift towards the campaign, but is also asked to add a planned gift. The two are counted, within the campaign rules, for recognition for the donor and credit for the fundraiser towards the fundraiser's own quota.

Which of the statements below is true regarding program-related investments made by a foundation? A)Program-related investments are made in programs conducted by the foundation. B)Program-related investments are made by the foundation in the infrastructure needed by the foundation to accomplish its exempt purpose. C)An investment advisor to a foundation should avoid program-related investments because their expected return is low and their risk is often high. D)A program-related investment counts towards the required 5% foundation payout.

The correct answer is D. A foundation can use program-related investments in calculating the 5% payout. Program-related investments which may be "bad investments" (low return and high risk) from one perspective have to be considered in the context of a grant which would have been a 100% loss.

Dave Dunlop pioneered moves management. This begins with his checklist. What statement about that checklist is correct? A)Dunlop's checklist begins by creating a portfolio of 100-150 donors assigned to a fundraiser. B)The checklist specifies what the fundraiser should say or do with each donor. C)The checklist serves to ensure that all fundraisers in a given organization stay on message. D)The checklist isolates 10-25 of the best potential donors for special handling.

The correct answer is D. A generation ago, Dunlop pioneered the idea of always treating the top donors as special over a lifetime, as opposed to just during a campaign. Experience has proven that isolating the top 10%, 1%, or even .01% pays off if we put a more advanced process into motion through moves that make both institutional sense and good sense to the donor. But the process does require expertise and patience. The institution has to be willing to invest the resources against a potentially large, but often deferred and sometimes contingent, return.

As to gift agreements, which statement(s) below is (are) accurate? I. A gift agreement is generally drafted by the client's attorney. II. A gift agreement is generally floated to a number of potential charities by the client's advisors to see which charity can best meet the donor's objectives.

The correct answer is D. A gift agreement is almost always drafted by the charity. Seldom are these "shopped" by the donor to other charities. Generally, the donor is committed to the organization already, and the process is conducted within the walls of the organization.

With respect to high wealth donors, which statement(s) below is (are) true? I. Only a minority of them have a specific strategy in place to guide their giving. II. Only a minority target their giving to specific causes or geographical areas.

The correct answer is D. Actually, the vast majority (73% in one study) have a plan in place to guide their giving, and almost all (93% in one study) say that they target specific causes or geographical areas. All of this matters when a fundraiser visits a high net-worth donor and asks for, say, a gift to a specific campaign. In the donor's mind, the important issue is whether or not the campaign fits with his or her giving plan or strategy and whether or not it fits with the donor's chosen causes or geographical area. Schiller would make the point that it is best for the fundraiser to begin by asking about the donor's philosophy of giving, plan, passion, or issue areas. Then, and only then, can the fundraiser best position the giving opportunity at his or her charity. The goal is to build a bridge from the donor's passion or focus to the charity's capabilities.

Ron Schiller says that almost all donors who make transformational gifts have all of these characteristics, EXCEPT A)They have a long-term engagement with the charity. B)They have served on the board. C)They have volunteered for the charity. D)They give when advisors suggest that they do so.

The correct answer is D. All are true except the last. Ron does not mention advisors. The kind of donor that Ron considers transformational appears to be a self-actualized person who knows full well that he or she is a giver and goes at it deliberately. The donor doesn't give because he or she is asked and doesn't need an advisor to suggest it. He or she gives from his or her own passion, in line with the donor's own giving philosophy. The donor grows to make the biggest gift of a lifetime through a long-term process of increasing engagement and volunteer roles. Ron says that all or almost all transformational donors have or have had board roles.

You are creating a corporation devoted to social good as well as to making a profit. Some of your potential investors are skeptical that your social intentions are more than just public relation stunts. To where might you turn to have your company reviewed and certified as a socially good company? A)Candid B)Philanthropedia C)Mightycause D)B Lab

The correct answer is D. B Lab certifies corporations as B corporations, meeting criteria for doing social good.

40% of professional fundraisers surveyed by Penelope Burk are considering leaving for which of these reasons? A)pay B)benefits C)family reasons D)disagreement with those above them about how to raise money

The correct answer is D. Conflicting opinions as to how to raise money (to do their job) was the greatest source of discontent. This goes back to what Burk has shown about the triumvirate. The board may be responsible for fundraising as one of its ten most important responsibilities, as BoardSource says, but boards do not necessarily truly understand it. In fact, as BoardSource-cited data in earlier assignments has shown, fundraising is one of the functions that boards like least and least understand. Fundraisers at the point of attack, face to face with donors, can sense how poorly the systems that fundraisers operate under are working today. The front line staff know that a more humane, discerning, consultative, personalized approach to top donors is mission aligned, good for everyone's morale and self-respect, and will ultimately garner much larger gifts. The executive director is caught in the middle. In defense of the board, budgets are growing tighter and tighter. The result of this collision between what works best in the long term and what must work right now is donor discontent and fundraiser turnover, which becomes its own vicious cycle (as other studies cited in this assignment indicate).

Lester Salamon suggests that nonprofits exist in a force field with four poles. All of these choices are among the four he mentions, EXCEPT A)voluntarism B)civic activism C)professionalism D)faith

The correct answer is D. Faith is not mentioned. It would most likely fit under voluntarism. The fourth pole, which does not appear as an answer choice, is commercialism. That is his term for what some would call social venture philanthropy, impact investing, markets for good, or other vehicles that harness market mechanisms.

Why are variance powers in a gift agreement a good idea from the nonprofit's perspective? A)Donors generally prefer including them. B)The donor's legal counsel will insist upon the powers' inclusion. C)The donor's heirs will want the gift to change with the times. D)Such provisions may protect the charity when the donor or the heirs disagree with the charity about how the gift will be used.

The correct answer is D. Forever is a long time. Restricted gifts can become an encumbrance to the charity as time goes on. So, letting donors know in advance that the organization's policy is to give the charity flexibility may provide some defense if the charity and the donor or heirs disagree in the future. The organization will be on record in regard to the degree of flexibility the gift accords itself before the gift is made.

BoardSource asked boards to give themselves a report card on their ten basic responsibilities. Which of these recieved the lowest grade? A)legal and ethical oversight B)recruitment of new board members C)strategy D)fundraising

The correct answer is D. Fundraising scored lowest. Fewer than 20% gave themselves an A or a B.

Lester Salamon flags a number of tensions between how the public thinks about nonprofits and how nonprofits actually operate today. Each of these is a tension he mentions, EXCEPT A)The public thinks nonprofits are supported mostly by gifts, but in reality the sector is supported primarily by earned income and secondarily by government money. B)The public thinks of nonprofits as neighborly organizations that embody traditions of solidarity, community, care, and concern, but in reality many are managed to a bottom line that focuses primarily on getting results in a businesslike fashion C)The public thinks of the nonprofit sector as being made up of volunteers, but in reality nonprofit work is increasingly professionalized, run and staffed with people who hold specialized degrees, which are often in the science of nonprofit management. D)Overall, the public has a good understanding of the strengths and weaknesses of the nonprofit sector but has little interest in its success.

The correct answer is D. Generally the public is not well informed about nonprofits and holds outdated views based on what Salamon calls a "Norman Rockwell vision" of a bygone America. In this vision, charities are largely made up of volunteers doing good, supported primarily by charitable donations. The tensions noted by Salamon are between this outdated Norman Rockwell vision and the realities of today's nonprofit sector. The public sees nonprofits as values guardians, driven by idealistic volunteers and activists and inspired by a sense of community in the old fashioned way of neighbor helping neighbor. In reality, though, nonprofits are increasingly run by experts and managed as if they were businesses. Commercialism and professionalism, in Salamon's terms, have prevailed. He sees the tension between civic activism and values guardianship as dangerous because nonprofits enjoy the goodwill of the public and enjoy tax benefits, in part because of the outdated vision the public holds of nonprofits as good-hearted entities operating outside the market, and largely outside government, as a third sector in which ideals prevail. Insofar as the public comes to understand that nonprofits are operating almost like businesses, and often relying on government funds, the public may lose faith in the sector and come to question why nonprofits expect tax benefits.

What is the best definition of the term "gift counting" as discussed in the National Association of Chartiable Gift Planners' (CGP), "Guidelines for Reporting and Counting Charitable Gifts, 2nd edition"? A)the number of gifts given in each category of gifts, such as current, major, and planned gifts B)an actuarial analysis taking into account the amount of the gift, the time it will take to mature, and how likely it is to mature C)the present value analysis of the economic value of current and deferred gifts D)the crediting of gifts towards campaign totals and donor recognition levels

The correct answer is D. Gift counting is the crediting of gifts towards campaign totals and donor recognition levels.

In Duska and Cubeta's essay on the ethics and ideals of gift planning, all of these points are made, EXCEPT A) Gift planning or philanthropic planning is an emerging profession. B) Moral issues and points of conflict are not unusual in gift planning. C) Many professional codes apply to planning for philanthropy since it draws on many professions, each of which has its own professional code. D) Gift planning is a highly regulated industry.

The correct answer is D. Gift planning is not recognized as a regulated profession. It is an emerging profession, drawing on many related disciplines. The term is beginning to be used to refer to a nonprofit professional engaged in working with donors on their philanthropy as it relates to the organization that the fundraiser represents. Some for-profit people, however, may say that they are gift planners because they work with clients to plan a gift within an estate or a financial plan. Likewise, a consultant to donors who specializes in placing a gift with the right charity could say that he or she is engaging in gift planning.

According to a recent survey of members of the National Association of Charitable Gift Planners, what percentage have been in their job 3 years or less? A)10% B)25% C)75% D)50%

The correct answer is D. Half have been in the job for 3 years or less, and this is among members of the association that caters to more sophisticated gift planners.

What is the largest source of capital within the category of private giving (as opposed to government funding and earned revenue)? A)corporations B)foundations C)bequests D)living donors

The correct answer is D. Living donors are by far the largest source of capital, forming 70% of total donors. Bequests are 9%, foundations are 16%, and corporations are 5%.

With respect to planned gifts all of these are true, EXCEPT A)They usually involve a charitable tool or bequest. B)They are often deferred. C)They are often contingent. D)They are generally established with $1 million or more.

The correct answer is D. Many planned gifts can be quite small. It is principal gifts that are sometimes defined as being over a million dollars, or otherwise very large in the eyes of the charity. Planned gifts do tend to be deferred (with the money coming in later to the charity even if the arrangement is set up now), and they are often contingent. The giver can, say, change his or her will, the beneficiary of the life policy, the beneficiary of the IRA, and even the beneficiary of a CRT if the document allows it. All of this matters because it points to the changing attitudes among top management as to the relative importance of the planned gift as opposed to the outright major gift. It is hard to blame top management for wanting cash money right now, as opposed to booking gifts that may or may not materialize.

Generally, we pay for and receive the benefit in commerce. Often in a nonprofit setting, we give and others benefit. Yet in certain settings the bulk of a charity's revenue may come from those who currently and directly benefit from it. All of these are good examples EXCEPT A)a symphony B)a university C)a hospital D)a food bank

The correct answer is D. Many successful nonprofits serve those who have the money. They take in funds as fees or tuition or in ticket sales. In addition, those served by the nonprofit may donate funds to perpetuate the institution by which they and their family have been touched. A social service organization, however, like a food bank, takes in resources from one group and provides them at low or no cost to those who cannot afford to pay or give much. Over time these social services organizations have gravitated toward government funding through contracts, grants, and reimbursement. As such funding declines, as it seems likely to do, this raises the question of who will step up, why, and how quickly.

With respect to the major assumptions of donor-centered fundraising, which statement(s) below is (are) true? I. The fundraiser is a fiduciary for the donor. II. The fundraiser represents the donor.

The correct answer is D. Neither I nor II is true. Financial services are evolving towards a fiduciary standard in which the advisor is expected to serve the client and can be held to a high standard in that respect. The fundraiser, by contrast, is clearly a representative of the charity. The three assumptions or principles of donor-centered philanthropy are as follows: People have a natural urge to give. The fundraiser should focus on the mission or the cause and not on the needs of the organization or its budget. The solicitation should be in proportion to the donor's means, interests, and inclination, and it should be without pressure. These show a focus on the donor and on connecting the donor to a mission but stop short of suggesting that the fundraiser is working for the donor and is the donor's legal representative, advisor, or fiduciary.

According to the procedures outlined in the "Guidelines for Reporting and Counting Charitable Gifts, 2nd edition," by the National Association of Charitable Gift Planners (CGP), what are the three categories used to count gifts towards donor recognition levels and campaign totals? A)current, future, and contingent B)current, major, and planned C)certain, uncertain, and likely D)outright, revocable deferred, and irrevocable deferred

The correct answer is D. Outright, revocable deferred, and irrevocable deferred are the three categories.

With respect to the planned gift officer role, all of the statements below are true, EXCEPT A)Planned gift interviews often take longer than do major gift asks. B)Planned gift donors tend to be older than major gift donors. C)Planned gifts tend to involve a bequest or charitable tool. D)The number of gift officers doing planned gifts full time is around 17%.

The correct answer is D. Planned gift donors tend to be older, the gifts often involve a bequest or charitable tool, and the interviews take longer, but the percentage of fundraisers doing planned giving full time is far less than 17%. Even among the minority who can do planned gifts at all, only about 8% do so full time. So says a survey done by what was then the Partnership for Philanthropic Planning, formerly known as the National Committee for Planned Giving, now called the National Association of Charitable Gift Planners. These name changes point to a changing reality. Planned giving, defined as gifts made via a bequest or a charitable tool, is evolving away from being a job description unto itself and is evolving into just an aspect of the gift planner's job. In this context, it is increasingly common for planned gifts to be integrated into a blended gift and a comprehensive campaign, where the main focus is on getting major, outright gifts.

All of these are reasons why it is difficult to successfully fuse major and planned gift job functions EXCEPT A)The processes used in these functions are quite different from each other. B)The prospects for these two functions vary quite a bit. C)The mindset of people engaged in these two functions (attitudes and degree of technical knowledge) differ. D)Donors prefer a compartmentalized approach to their giving to a particular organization.

The correct answer is D. Planned gifts are oriented to tools. They require an expert mindset and a multi-interview process. Planned gifts are often bequests and split-interest gifts targeted to an older, often much older, donor base (70-90). Planned gifts are often oriented to assets other than cash. Major gifts are generally cash and can be solicited ("the art of the ask") in one interview. Donors, however, might well prefer a more integrated approach in which major and planned gifts were orchestrated over time by a relationship-oriented gift planner who would make sure that the donor's lifetime of giving added up to something meaningful to the donor.

How would Ron Schiller respond when he reads that a donor to his organization has just given a large donation to another organization? A)He would be disappointed that the money has gone to another organization. B)He will feel that his organization is now less likely to get a big gift since the donor may be tapped out. C)He will lower the donor on the list of donors to be called on. D)He will make it a point to visit the donor to ask what motivated the donor to make the gift and what plan lies behind it.

The correct answer is D. Ron is a master at this. He feels that the more a wealthy donor gives, the more likely he or she is to do it again. He says that big donors are almost addicted to giving. They love doing it. Giving is a high priority for them. They want to give big and be proud of their gifts. They love to talk to someone who appreciates philanthropy. A good fundraiser and the donor share a passion for a gift well made. While the fundraiser is there, he or she can get the donor talking about the gift and the passion, plan, and priorities that lie behind it. Then, the fundraiser can look for a good fit with gift opportunities at his or her organization. At the very least, the fundraiser can use moves management to begin to weave the donor into progressively greater engagement with the fundraiser's charity, based on what the fundraiser now knows to be the big donor values.

As surveyed by Penelope Burk, what percentage of boards will invest in a fundraising program if the payback is 1.5 years or less? A)50% B)60% C)65% D)70%

The correct answer is D. Seventy percent of boards will invest in a fundraising program if the payback is 1.5 years or less. The results break down as follows: 31% demand a 12-month payback; 39% will accept an 18-month payback. Only 30% will accept a 24-month payback. This does not bode well for donor-focused gift planning, but it also shows that a significant board-level downward improvement would be possible as a defining difference for organizations that are able to seek longer-term results with at least certain programs oriented to high-capacity donors.

According to Salamon, solidarity is one of the main motives for participating in the nonprofit sector. Which of the statements below best captures what Salamon means? A)We are motivated by nonprofits to give to the nonprofit organizations when they have solid and measurable results. B)Nonprofits are formed when people wish to express themselves through their own philanthropic intent. C)Nonprofits are actors in a social economy. D)We are social creatures who live in community with others who share certain interests and who form associations and nonprofits to advance those interests.

The correct answer is D. Solidarity means linking arms in community with others. It means celebrating a common identity. It means building community and is sometimes discussed as building social capital. It can also mean neighborliness.

With respect to cultivating and soliciting planned gifts, all of these statements are true, EXCEPT A)The best prospects tend to be older (65-95). B)The interviews tend to be longer than major gift interviews. C)The gifts solicited often are deferred with respect to when the charity gets to spend the money. D)Planned gifts are, by definition, irrevocable arrangements.

The correct answer is D. Some planned gift arrangements are irrevocable; for example, the donor may give to get a gift annuity, and the charity will eventually have access to the residuum. The donor might gift a house but retain a life estate. That arrangement is irrevocable. A CRT might have an irrevocable charitable beneficiary. But most planned gifts are bequests, and they can be changed. Many CRTs have revocable charitable beneficiaries. Likewise, an IRA to charity via a beneficiary arrangement can be changed, and a life policy owned by a donor with a charity as the revocable beneficiary is subject to change. The gifts are also generally deferred as to their creating spendable cash for the charity. The CRT, bequest, or beneficiary designation may go into place today, but it may be many years before the gift matures. At the same time, to get a client to act may well take more time than with a simple major gift ask. The donors are older, often retired, and happy to give generously. The gifts are more complex and may require multiple interviews. All of these points add up to a challenge for someone who hopes to be paid to specialize in planned gifts. Their employer may prefer that they just go out and ask for the major gift, and then slide into a planned gift conversation as an additional commitment. This is why blended gifts are so topical today.

Consider the following gift cultivation and solicitation process. It begins with open questions to get the donor talking about his or her ongoing engagement with the charity, reasons for giving, favorite gift, giving goals, and the like. It goes on to ask the donor what the donor considers the charity's greatest opportunity or challenge. It closes by asking how the donor feels he or she could help with that opportunity or challenge. As to this process, all of the statements below are true, EXCEPT A)The process is consultative. B)The process encourages the donor to give to the charity from his or her own goals and perspective. C)It may land on donor-restricted gifts. D)It fits well in a capital campaign for, say, a new building.

The correct answer is D. The challenge with a process like the one outlined is that it will elicit gifts in line with the perspective of the donor. That is not a bad thing in itself, but it can lead to gifts that could be restricted by the donor so that they benefit programs which interest the donor but which are of a low priority to the charity. In a capital campaign for, say, a new building, the fundraiser working with core donors is more in the role of a communicator and persuader. The goal is get the donor to buy into the charity's goal and to give at capacity for that goal.

A gift chart is used to plan a fundraising campaign. What elements go into setting up such a chart? A)the gift level today for each donor, the gift level expected in 5 years, the highest gift level expected over a lifetime, and the total gifts expected over the donor's lifetime and at death B)the gift level, the number of gifts, the number of years the gift is expected, and the total gifts from all givers at that level over their lifetime C)the gift anticipated by each person, the number of givers, and the expected total gifts per person per year D)the gift level, number of prospects for such a gift, the number of gifts anticipated to be made at that level, the subtotal of gifts from that level, and the cumulative total from gifts at that level and above

The correct answer is D. The columns in the gift chart are the gift level, the number of gifts at that level, the expected total gifts from that level, and the cumulative total from gifts at that level and above. The chart shows how top-heavy giving is. The highest levels, say the top 5-10% of givers, may be giving a disproportionate percentage of the total to be raised in a campaign. A handful of major relationships make a major difference in the success or failure of the campaign to reach its total goal.

With respect to theories of ethics, all of these are true, EXCEPT A) Utilitarians judge actions by their consequences. B) Deontologists judge actions under a rule or precept as right or wrong regardless of the consequences. C) Philanthropy is considered a virtue in many ethical and religious systems. D) To say that an action produced excellent results but was morally wrong is a contradiction for a deontologist

The correct answer is D. The deontologist holds that consequences are not relevant in judging the moral weight of an action. For a utilitarian, though, it would be a contradiction to say that an action produces fine consequences but is morally wrong.

Each of these illustrates "the tyranny of one number" in nonprofit gift planning, EXCEPT A) asking a planned gift officer, who also does major gifts, "How much did you raise last year?" and expecting one number in response B) asking the head of advancement, who oversees annual, major, and planned gift divisions, "How much did advancement raise last year?" and expecting one number in response C) establishing a campaign to raise $250 million counting bequest commitments, insurance policies, IRA beneficiary designations, and CRT commitments towards the campaign total, and expressing progress towards that total with one number (as on a thermometer) D) working backward from a specific amount needed to fund an endowed program (such as a chair), computing the annual spend rate, and then working out a series of payments to provide the spend rate while also eventually paying off the endowed amount

The correct answer is D. The final example is the kind of thing Dr. Meyers recommends. The endowed amount is known, but the ways to obtain that are many. This is not tyrannical; it is creative, a way to help the charity with a program that can start right now while giving the donor flexibility in how that program is paid up over time. In the other examples, someone who really does not understand the complexities forces a fundraiser or vice president of advancement to respond with one number, even though no one number adequately describes the situation. The National Association of Gift Planners, as we know from another assignment, suggests that rather than using one number to measure campaign totals, the subtotals (outright gifts, deferred irrevocable gifts, and deferred contingent gifts) should be reported separately and not added together.

Uniform Prudent Management of Institutional Funds Act (UPMIFA) specifies four ways a gift agreement can be reformed. Each of these is an acceptable way, EXCEPT A)Donor Release: The donor agrees to the change. B)Doctrine of Deviation: The charity petitions the court to be allowed to deviate since the original purpose is no longer practical or has become impossible. C)Cy Pres: The charity petitions court to allow a change to the nearest possible purpose when the original purpose has become impractical or impossible. D)Small Gift: If a gift is "old and cold" (more than 50 years old and under $50,000) it may be reformed without going to court if the charity deems the gift to be "unlawful, impracticable, impossible to achieve, or wasteful," and if the attorney general in the state of the charity's domicile is notified.

The correct answer is D. The final one of these is misstated. The amount considered must be $25,000 to be considered small enough, and the gift must be 20 years old or older to be considered old enough. If $25,000 or less and 20 years old or more, the gift can be reformed without court intervention if the charity deems the original intent to be "unlawful, impracticable, impossible to achieve, or wasteful." The attorney general in the charity's state of domicile must be notified.

Government funding of the nonprofit sector takes all of these forms EXCEPT A)contracts B)vouchers C)reimbursements D)gifts

The correct answer is D. The government is not a philanthropist. The money from the government comes from contracts with the charity, vouchers that the recipient can use to purchase services from the nonprofit, and reimbursement by the government of covered costs incurred by the user of a nonprofit service.

What is the primary source of prospects for a planned gift officer at a large, stable nonprofit, such as a hospital, college, or large social service organization? A)donors the fundraiser has known and cultivated from work at other nonprofits B)referrals from existing donors C)centers of influence that the fundraiser cultivates for consistent donor referrals D)the loyals found in the organization's database

The correct answer is D. This is a point of differentiation between many financial advisors and gift planners. A financial advisor will very often cite prospecting as the number one focus of his or her activity. Referrals, centers of influence, and personal observation all are used to find appropriate new clients. But with nonprofit gift planners, the prospects are generally found in the pipeline of donors who have been giving to the organization for many years (an exception to this rule may be community foundations whose prospects often come from advisor referrals). For a fundraiser to draw on leads from prior charities at which he or she has worked is an ethical violation. The donor "belongs" to the charity, not the fundraiser.

Lois is raising money for a religious organization. Over time she has become the trusted confidant of an older wealthy woman. The woman is unhappy with her children. As the woman ages, she begins to fear for her immortal soul. Lois suggests that God wants the woman to give big. Lois knows that the woman is slowly losing her mental competency, and Lois knows it is unethical to exert undue influence on the donor. But Lois is at risk of losing her job if she does not seal a large legacy deal soon. Lois continues to invoke the Almighty's wishes as the best reason for the gift. This is an example of which? A) a moral dilemma B) a tragic conflict C) a quandary D) akrasia

The correct answer is D. This is an example of akrasia, or weakness of the will. Lois is knowingly doing the wrong thing because the temptation is so great.

Carla made a fortune running a Wall Street firm that bought out, rebuilt, and sold privately held companies. Upon retiring, she started a foundation to apply market principles to social ills. The foundation targets recidivism: the tendency of convicts to return to prison having committed further crimes. The foundation buys out a local bakery, using it to hire and train those recently released from prison. The bakery is set up as a for-profit with a social purpose. The bakery aims to make 5% return on investment, and generally makes 1-5% per year. This example best represents which of Salamon's four poles at work in nonprofits? A)voluntarism B)civic activism C)professionalism D)commercialism

The correct answer is D. This is commercialism, in Salamon's terminology, since market methods drive the process. Calling it "commercialism" might be insulting to such a funder. The funder is more likely to use terms like "social venture," "double bottom line investing," or "social entrepreneurialism."

What is the best definition of the term "blended gift"? A)a gift that consists of both money and volunteering B)a gift that comes from two or more people who pool their gift C)a gift that blends a return to the donor with a return to the charity D)a gift that combines a major gift with a planned gift

The correct answer is D. Traditionally, major gifts and planned gifts are solicited by different fundraisers at different times. In a blended gift, or double ask, the fundraiser asks for both the major gift and a planned gift, such as a bequest, at the same time.

Which of the sentences below best exemplifies solidarity in the way Salamon uses the term, as a motive of civic engagement? A)Tom forms a social venture and engages his employees in making a profit while doing good. B)Tammy, a physician, works in a nonprofit hospital serving the poor. C)Tad is an investor who wants social return as well as financial return on his investment. He achieves that by investing in a firm that provides low-cost solar stoves to the developing world. D)Vera joins a women's giving circle which meets weekly to share ideas and encourage one another in giving to projects that aid women and young girls.

The correct answer is D. Vera is showing solidarity with, or in community with, women funders as well as the women and girls served by the funding.

Which of the statements below is (are) true? I. A moves manager at a charity decides who will approach which donor, how, and with whom. II. The natural partner is the one who has overall responsibility for that donor relationship.

The correct answer is a A. The terminology goes back to Dave Dunlop, a highly regarded fundraiser. William Sturtevant writes about it at length in The Artful Journey: Cultivating and Soliciting the Major Gift. The system sees fundraising as a multistep process for several players. The moves manager is a fundraiser who develops a list of high-potential donors and manages the process of cultivating and soliciting them. The natural partner is a person who is well positioned to get an appointment with the donor and influence the donor. It could be the president, executive director, a board member, or a close friend of the prospect and a fellow donor. The primary player is the natural partner best positioned to make the ask or to support the fundraiser when the fundraiser makes the ask.

In the terminology of Dave Dunlop and others, which of these is a special gift? A)Bill has been giving $1,000 a year for 35 years in a row. B)Jill gives $10,000 when asked face to face. She has given $1,000 a year for 10 years. C)Bo, who has been giving every year for 35 years and who has given generously for several campaigns, now makes the organization the sole beneficiary of his significant estate. D)Dorcas gives appreciated land to her favorite charity in return for a gift annuity.

The correct answer is a B. The first gift is considered a regular, or sustaining, gift. In other words, an annual gift. The second is considered a special, or major, gift, often defined as ten times or more than the annual gift. The third, the gift which is largest gift and often made at the end of life, is considered an ultimate, or planned, gift. The final option, the gift of land in return for a gift annuity, might be considered an ultimate gift if the land has a large value and occurs at the end of Dorcas's lifetime, or it might just be considered a planned gift.