CFRE Fundraising Planning and Strategic Management 2 — Questions and Answers
Question 1: What is the primary purpose of an annual fundraising plan?
- To replace the need for a strategic plan
- To outline goals, strategies, timelines, and resources for all fundraising activities over the coming year (Correct answer)
- To report to the IRS on charitable activities
- To determine staff bonuses
Correct answer: To outline goals, strategies, timelines, and resources for all fundraising activities over the coming year
An annual fundraising plan provides a roadmap covering revenue goals, fundraising strategies, timelines, and staffing to guide all development activities for the year.
Question 2: Which of the following is the correct formula for calculating 'cost to raise a dollar'?
- Total revenue ÷ total donors
- Total fundraising expenses ÷ total funds raised (Correct answer)
- Total gifts ÷ total number of solicitations
- Total operating expenses ÷ total revenue
Correct answer: Total fundraising expenses ÷ total funds raised
Cost to raise a dollar (or fundraising efficiency ratio) is calculated by dividing total fundraising expenses by the total funds raised during the same period.
Question 3: A SWOT analysis in fundraising strategic planning stands for:
- Strategies, Workplans, Outcomes, Timelines
- Strengths, Weaknesses, Opportunities, Threats (Correct answer)
- Supporters, Workers, Operations, Targets
- Solicitations, Wins, Offers, Transitions
Correct answer: Strengths, Weaknesses, Opportunities, Threats
A SWOT analysis evaluates internal Strengths and Weaknesses and external Opportunities and Threats to inform strategic fundraising planning decisions.
Question 4: What is 'prospect research' in the context of fundraising?
- Research into grant writing best practices
- The process of identifying and evaluating potential donors' capacity, inclination, and connection to the organization (Correct answer)
- Research into peer-to-peer fundraising platforms
- Background research on fundraising staff candidates
Correct 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.
Question 5: In a fundraising context, 'diversification of revenue streams' is important because:
- It reduces the need for donor stewardship
- It protects the organization from financial risk if any single funding source declines (Correct answer)
- It allows the organization to spend more on administration
- It increases the number of staff needed in the development office
Correct answer: It protects the organization from financial risk if any single funding source declines
Revenue diversification reduces dependency on any single funding source, making the organization more financially resilient if grants, events, or major gifts fluctuate.
Question 6: Which metric helps evaluate the health of a direct mail program?
- Board meeting attendance rates
- Response rate, average gift size, and net revenue per piece mailed (Correct answer)
- Number of volunteers at events
- Social media engagement rates
Correct 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.
CFRE Fundraising Planning and Strategic Management 2
What is the primary purpose of an annual fundraising plan?