Mixed Deck — All CFRE Topics Flashcards

What is the primary purpose of an annual fund in a nonprofit organization?

Answer: To provide a broad base of unrestricted operating support from many donors

The annual fund provides broad-based unrestricted operating support, allowing the organization flexibility to meet day-to-day expenses and programmatic needs.

What is 'phonathon' fundraising most commonly associated with?

Answer: Higher education alumni giving programs

Phonathons originated in higher education and remain most associated with university alumni annual fund campaigns using student callers.

A freely given, unconditional transfer of something of value without asking for anything in return at the moment of the transfer or in the future. The transfer is not a gift if the person making it entertains any thoughts of regaining it.

Answer: Gift

This definition perfectly encapsulates the essence of a "gift." It emphasizes the voluntary, unconditional, and irrevocable nature of the transfer of value. The key characteristic is that nothing is expected in return, either immediately or in the future, and the donor relinquishes all claim to the item.

Which of the following best describes 'philanthropic inclination' in prospect research?

Answer: The likelihood that the prospect is motivated to give charitably based on past giving history, interests, and values

Philanthropic inclination (or affinity) measures how likely a prospect is to give charitably, based on their demonstrated giving history, values, and personal connection to a cause.

What does 'ROI' stand for and how is it applied in fundraising?

Answer: Return on Investment; used to measure net fundraising revenue relative to fundraising costs

ROI (Return on Investment) in fundraising measures how much net revenue is generated for every dollar spent on fundraising activities, helping prioritize the most cost-effective strategies.

Giving to charity organizations results in tax savings on income, gifts, and estates.

Answer: tax benefits

Tax benefits refer to the financial advantages, such as deductions or credits, that donors receive on their income, gift, or estate taxes when contributing to qualified charitable organizations. These benefits are designed to incentivize philanthropy by reducing a donor's overall tax liability. They are a significant motivator for many charitable gifts.

What is the typical response rate range for a direct mail renewal letter sent to lapsed donors?

Answer: 2% to 5%

Lapsed donor reactivation mailings typically achieve 2%–5% response rates, higher than cold acquisition but lower than active donor renewal.

What is a 'bequest society' in planned giving?

Answer: A recognition program for donors who have notified the organization of their intention to include the charity in their estate plan

A bequest society (or legacy society) acknowledges and recognizes donors who have made or expressed intention to make a planned gift, helping to cultivate and retain these long-term relationships.

When a board member feels uncomfortable asking for gifts, the fundraiser should:

Answer: Train them in lower-risk fundraising roles such as cultivation, stewardship, and opening doors rather than direct solicitation

Not every board member needs to make face-to-face asks; effective development programs offer multiple engagement roles that play to individual strengths and comfort levels.

What is '100% board giving' and why is it important?

Answer: Every board member makes a personal financial contribution, regardless of size, demonstrating commitment to the organization

100% board giving means all board members contribute personally, which signals organizational credibility and is often required by foundations and major donors as a prerequisite for their own gifts.

How should a fundraiser respond when a donor requests changes to a gift agreement after it has been signed?

Answer: Work with legal counsel and the donor to formally amend the agreement if changes are allowable

Gift agreement amendments should be handled formally with legal guidance and explicit donor consent to protect both the donor's intent and the organization's integrity.

Under the CFRE Code of Ethical Principles, which action is expressly prohibited?

Answer: Receiving compensation based on a percentage of funds raised

Percentage-based compensation for fundraising is prohibited under AFP and CFRE ethical standards because it creates a conflict of interest and can distort fundraising priorities.

A charitable organization's board member is also the owner of a company being considered for a major vendor contract. This is an example of:

Answer: A conflict of interest requiring disclosure and recusal

When a board member has a personal financial interest in an organizational decision, it creates a conflict of interest that requires disclosure and typically recusal from the decision.

What is 'prospect research' in the context of fundraising?

Answer: The process of identifying and evaluating potential donors' capacity, inclination, and connection to the organization

Prospect research involves gathering and analyzing information about potential donors to assess their philanthropic capacity, philanthropic history, and connection to the organization's mission.

Which metric helps evaluate the health of a direct mail program?

Answer: Response rate, average gift size, and net revenue per piece mailed

Direct mail program health is assessed through response rate (percentage of recipients who donate), average gift size, and net revenue generated per piece mailed.

Which fundraising strategy involves asking a donor for a gift that is significantly larger than their previous contribution?

Answer: Stretch ask

A stretch ask encourages donors to give at a level somewhat beyond their past giving to grow their philanthropic investment.

A 'charitable lead trust' (CLT) is structured so that:

Answer: The charity receives income first for a period of time, and then the remainder passes to the donor's heirs

In a charitable lead trust, the charity receives income (the 'lead' interest) for a term of years or lifetime, after which the remaining assets pass to the donor's heirs or other beneficiaries.

When planning a donor cultivation event, the primary goal should be:

Answer: Building relationships and deepening donor engagement with the mission

Cultivation events are designed to deepen relationships and connect donors emotionally to the mission, laying groundwork for future solicitations rather than immediate asks.

The concept of 'peer-to-peer fundraising' relies primarily on:

Answer: Donors and supporters soliciting their own networks on behalf of the organization

Peer-to-peer fundraising leverages the personal networks and relationships of supporters who solicit their own friends, family, and colleagues, dramatically expanding the donor base.

Why is it important for fundraisers to maintain accurate and complete donor records?

Answer: To fulfill fiduciary responsibilities and enable accurate stewardship and reporting

Accurate donor records support ethical stewardship, ensure gifts are used as intended, and fulfill the organization's fiduciary and reporting responsibilities.