CED Nonprofit Governance & Compliance 3

Question 1

A nonprofit's bylaws require a quorum of two-thirds of board members to conduct business. At a meeting with 12 of 15 members present, is quorum met?

Accepted Answer

Yes, because 12 exceeds two-thirds of 15

Answer

Two-thirds of 15 is 10, and 12 members present exceeds that threshold, so quorum is satisfied.

Question 2

What distinguishes a nonprofit's 'interested party transaction' from a standard vendor contract?

Accepted Answer

A board member, officer, or key employee has a financial interest in the other party

Answer

An interested party transaction involves a person with authority over the nonprofit who also has a personal financial stake in the contracting entity.

Question 3

Under IRS intermediate sanctions rules (Section 4958), who is considered a 'disqualified person'?

Accepted Answer

Someone in a position to exercise substantial influence over the organization's affairs

Answer

Disqualified persons include those who can substantially influence the organization, such as executive directors, board members, and certain key employees.

Question 4

A nonprofit receives a restricted gift for a specific program that was later discontinued. What is the BEST course of action?

Accepted Answer

Return the funds to the donor or seek donor approval to redirect them

Answer

Restricted gifts must be used as the donor specified; if circumstances change, the organization must seek donor consent or apply cy pres doctrine to redirect funds.

Question 5

Which governance document establishes the internal rules for how a nonprofit is managed, including meeting procedures and officer roles?

Accepted Answer

Bylaws

Answer

Bylaws are the internal operating rules that govern board and officer procedures, meeting requirements, and organizational structure.

(CED) Certified Executive Director Practice Test

(CED) Certified Executive Director Practice Test

CED Nonprofit Governance & Compliance 3