CED CED Fundraising & Development 2 — Questions and Answers
Question 1: Which IRS form must most nonprofits file annually that includes fundraising revenue disclosures?
- Form 1023
- Form 990 (Correct answer)
- Form W-9
- Form 1099
Correct answer: Form 990
The IRS Form 990 is an annual information return that discloses an organization's revenue, expenses, and program accomplishments, including fundraising totals.
Question 2: What is a 'capital campaign'?
- A campaign to increase annual membership fees
- An intensive fundraising effort to raise a specified sum for a major project or facility (Correct answer)
- A political fundraising drive
- A monthly giving program
Correct answer: An intensive fundraising effort to raise a specified sum for a major project or facility
Capital campaigns are time-limited, goal-oriented efforts typically aimed at funding building projects, endowments, or major program expansions.
Question 3: What is the '80/20 rule' as commonly applied in nonprofit fundraising?
- 80% of donors give online while 20% give offline
- 80% of donations come from 20% of donors (Correct answer)
- 80% of grants are government-funded
- 80% of volunteers drive 20% of total hours
Correct answer: 80% of donations come from 20% of donors
The Pareto Principle in fundraising reflects that a small segment of major donors typically accounts for the vast majority of contributed revenue.
Question 4: What is 'donor stewardship'?
- Recruiting new board members
- The ongoing process of thanking, recognizing, and reporting to donors after gifts are received (Correct answer)
- Managing donor database records
- Soliciting grants from foundations
Correct answer: The ongoing process of thanking, recognizing, and reporting to donors after gifts are received
Effective donor stewardship builds trust and loyalty, increasing the likelihood of future gifts and improving overall donor retention.
Question 5: A 'lead gift' in a capital campaign typically represents what portion of the campaign goal?
- 1-2% of the total goal
- The final gift needed to close the campaign
- 10-20% of the total goal from a single donor or family (Correct answer)
- 50-60% of the total goal
Correct answer: 10-20% of the total goal from a single donor or family
Lead gifts set the pace and tone for a capital campaign and often represent a transformational commitment from a top prospect.
Question 6: Which type of nonprofit revenue is most reliable and predictable for budgeting purposes?
- One-time event revenue
- Government grants
- Monthly recurring gifts from a sustainer program (Correct answer)
- Corporate sponsorships
Correct answer: Monthly recurring gifts from a sustainer program
Monthly sustainers provide consistent, predictable income that smooths cash flow and reduces reliance on single large gifts or seasonal campaigns.
CED CED Fundraising & Development 2
Which IRS form must most nonprofits file annually that includes fundraising revenue disclosures?