CAP Donor Relations & Fundraising 2 — Questions and Answers
Question 1: In major gift fundraising, the moves management system tracks:
- The processing of online donation transactions
- Planned, intentional interactions designed to cultivate a donor toward a major gift commitment (Correct answer)
- Volunteer hour management for event planning
- Compliance filings with state charity registration offices
Correct answer: Planned, intentional interactions designed to cultivate a donor toward a major gift commitment
Moves management is a systematic approach to major gift cultivation, tracking each planned move—contact, engagement, ask—designed to advance the donor relationship toward a significant commitment.
Developed by David Dunlop at Cornell, moves management assigns each major gift prospect a portfolio manager who plans and records interactions. Moves include cultivation events, site visits, conversations with institutional leadership, and volunteer opportunities. The goal is to align the donor's philanthropic interests with the organization's priorities, increasing the likelihood and size of a transformational gift.
Question 2: The gift range chart in a capital campaign helps a nonprofit determine:
- The tax deductibility of each gift level
- The number and size of gifts needed at each level to reach the campaign goal (Correct answer)
- Which donors are eligible for planned gifts
- The proper accounting classification for campaign pledges
Correct answer: The number and size of gifts needed at each level to reach the campaign goal
A gift range chart models the distribution of gifts needed across different levels to achieve a campaign goal, typically based on the 80/20 principle where 80% of funds come from 20% of donors.
A typical gift range chart shows that the top gift should represent about 10-20% of the goal, with subsequent levels requiring increasing numbers of donors at decreasing gift amounts. This helps counsel leadership on the critical importance of securing leadership gifts before a public campaign launch.
Question 3: A CAP advisor helping a nonprofit with its development program would advise that donor retention is most directly measured by:
- Total dollars raised each year
- The percentage of donors who give again in the subsequent year (Correct answer)
- Average gift size per donor
- Number of new donors acquired annually
Correct answer: The percentage of donors who give again in the subsequent year
Donor retention rate is the percentage of donors from one year who make a gift the following year; retaining an existing donor costs far less than acquiring a new one.
The Fundraising Effectiveness Project consistently finds that average sector retention rates hover around 43-46%. A 1% improvement in retention can significantly increase lifetime donor value. CAP curriculum emphasizes that building long-term donor relationships through acknowledgment, stewardship, impact reporting, and engagement is more cost-effective than perpetual new donor acquisition.
Question 4: Which of the following best describes the ethical principle of donor intent in philanthropic advising?
- Ensuring donor gifts are invested in socially responsible funds
- Honoring the specific purpose and conditions the donor designated for their gift (Correct answer)
- Advising donors to direct gifts toward the greatest societal needs
- Requiring charities to match donor contributions
Correct answer: Honoring the specific purpose and conditions the donor designated for their gift
Donor intent refers to the obligation of recipient organizations to use gifts in accordance with the donor's expressed purposes and restrictions.
Donor intent is both a legal and ethical principle. Restricted gifts create a contractual obligation for the charity. Courts have enforced donor intent in cases like Robertson v. Princeton. CAP advisors help clients articulate intent clearly in gift agreements and counsel nonprofits on honoring those agreements even when organizational priorities shift.
Question 5: Under the AFP Code of Ethical Standards, fundraising professionals are prohibited from:
- Accepting employment with a competing nonprofit within one year
- Being compensated on a percentage of funds raised (Correct answer)
- Soliciting major gifts without board approval
- Disclosing donor information to board members
Correct answer: Being compensated on a percentage of funds raised
Commission-based fundraising—where compensation is a percentage of dollars raised—is prohibited by AFP's code because it creates conflicts of interest that can harm donors and compromise fundraising integrity.
Percentage compensation in fundraising is also considered unethical by the National Association of Charitable Gift Planners and is prohibited by most state charitable solicitation laws. Such arrangements may encourage fundraisers to solicit larger gifts than appropriate, pressure donors, or misrepresent the organization's needs.
Question 6: A charitable endowment fund typically operates under which spending rule to preserve purchasing power over time?
- Distribute all investment returns annually
- Spend only earned income, never principal
- Apply a total return spending rate of approximately 4-5% annually (Correct answer)
- Distribute 10% of assets each year to maintain tax-exempt status
Correct answer: Apply a total return spending rate of approximately 4-5% annually
Most endowments use a total return spending policy—typically 4-5% of a multi-year moving average of asset value—balancing current distributions with long-term preservation of purchasing power.
UPMIFA allows institutions to appropriate from an endowment as much as is prudent, considering the fund's purposes, duration, distribution requirements, and investment and economic factors. The 4-5% rule attempts to align spending with long-term real investment returns, preserving the endowment's inflation-adjusted value for future beneficiaries.
CAP Donor Relations & Fundraising 2
In major gift fundraising, the moves management system tracks: