CED Nonprofit Governance & Compliance 2

Question 1

A nonprofit board member learns that the organization is about to enter a contract with a company she owns. What is the MOST appropriate action?

Accepted Answer

Recuse herself and disclose the conflict in writing to the full board

Answer

Board members must disclose conflicts of interest in writing and recuse themselves from related discussions and votes to satisfy fiduciary duty of loyalty.

Question 2

Which IRS form must most tax-exempt organizations with gross receipts of $200,000 or more file annually?

Accepted Answer

Form 990

Answer

Organizations with gross receipts ≥$200,000 or total assets ≥$500,000 must file the full Form 990 annually.

Question 3

What does the nonprofit governance principle of 'duty of care' require of board members?

Accepted Answer

Acting in good faith with the diligence of a reasonably prudent person

Answer

Duty of care obligates board members to make informed decisions with the judgment a reasonably prudent person would exercise in similar circumstances.

Question 4

A charity solicits donations without registering in a state that requires charitable solicitation registration. This is primarily a violation of:

Accepted Answer

State charitable solicitation laws

Answer

Most states require nonprofits to register before soliciting donations, and failure to do so violates state charitable solicitation statutes.

Question 5

An executive director wants to add a new board member who is also a major donor. Which governance concern is MOST relevant?

Accepted Answer

Potential conflict of interest between donor interests and fiduciary duty

Answer

A major donor serving on the board may face conflicts between personal financial interests and their fiduciary obligations to the organization.

(CED) Certified Executive Director Practice Test

(CED) Certified Executive Director Practice Test

CED Nonprofit Governance & Compliance 2