CCD Budgeting, Fundraising, & Financial Management 3

Question 1

Under IRS rules, what is the maximum percentage of a nonprofit's activities that may be devoted to lobbying before jeopardizing tax-exempt status?

Accepted Answer

A substantial part, generally interpreted as no more than 20% of activities

Answer

501(c)(3) organizations may engage in lobbying as long as it does not constitute a 'substantial part' of activities, typically interpreted as under 20%.

Question 2

A camp's board finance committee reviews a variance report showing actual food costs are $8,000 below budget. What is the most important follow-up question?

Accepted Answer

Is the variance due to fewer campers served, menu changes, or true cost savings?

Answer

Understanding the root cause of a favorable variance is critical before making any decisions, as it may reflect reduced enrollment rather than genuine efficiency gains.

Question 3

Which type of fundraising gift allows a donor to give an asset to a camp while retaining income from it during their lifetime?

Accepted Answer

Charitable remainder trust

Answer

A charitable remainder trust allows the donor to receive income from the donated asset during their lifetime, with the remainder passing to the charity upon death.

Question 4

A for-profit camp wants to compare its operating efficiency against industry peers. Which ratio is MOST useful for this comparison?

Accepted Answer

Operating expense ratio (operating costs ÷ total revenue)

Answer

The operating expense ratio measures what percentage of revenue is consumed by operating costs, making it a direct efficiency comparison tool across organizations.

Question 5

What is the primary purpose of a camp's reserve fund policy?

Accepted Answer

To provide a financial cushion for unexpected expenses or revenue shortfalls

Answer

A reserve fund policy establishes guidelines for maintaining liquid funds that protect the organization from financial disruption caused by unexpected costs or revenue declines.

(CCD) Certified Camp Director Practice Test

(CCD) Certified Camp Director Practice Test

CCD Budgeting, Fundraising, & Financial Management 3