CFRE MCQ 3 — Questions and Answers
Question 1: Under IRS regulations, a donor who receives a benefit in exchange for a charitable contribution must be informed of:
- The organization's total annual budget
- The fair market value of the benefit received so they can calculate the deductible portion (Correct answer)
- The number of other donors who gave at the same level
- The organization's overhead ratio
Correct answer: The fair market value of the benefit received so they can calculate the deductible portion
IRS rules require organizations to provide a good faith estimate of the fair market value of any benefit received so donors can calculate their net deductible contribution.
Question 2: Which type of prospect research tool aggregates publicly available data such as real estate holdings, SEC filings, and political donations to estimate donor capacity?
- Wealth screening software (Correct answer)
- Donor survey instruments
- Psychographic segmentation tools
- Engagement scoring models
Correct answer: Wealth screening software
Wealth screening software uses publicly available data sources to estimate a prospect's financial capacity to give, helping prioritize major gift outreach.
Question 3: A donor bequeaths 5% of their estate to a nonprofit in their will. This gift is best classified as:
- A charitable gift annuity
- A testamentary bequest (Correct answer)
- A revocable living trust transfer
- A charitable lead annuity trust
Correct answer: A testamentary bequest
A testamentary bequest is a planned gift made through a donor's will that transfers assets to a nonprofit upon the donor's death.
Question 4: In the context of annual fund appeals, what does 'LYBUNT' stand for?
- Last Year But Unfortunately Not This year (Correct answer)
- Loyal Yearly Benefactor Under New Terms
- Last Year's Budget Under New Tracking
- Long-Year Benefactor Upgrading Now Today
Correct answer: Last Year But Unfortunately Not This year
LYBUNT stands for 'Last Year But Unfortunately Not This Year' — donors who gave in the prior fiscal year but have not yet given in the current year, making them a key lapsed-donor segment.
Question 5: Which principle guides the ethical use of donor information in a nonprofit's database?
- Sharing donor data freely increases the sector's collective impact
- Donor information should be used only for purposes consistent with the donor's reasonable expectations and organizational mission (Correct answer)
- All donor data should be made public to ensure transparency
- Donor data may be sold to similar nonprofits to generate revenue
Correct answer: Donor information should be used only for purposes consistent with the donor's reasonable expectations and organizational mission
Ethical stewardship requires that donor information be used only in ways donors would reasonably expect and consistent with organizational mission, honoring donor trust.
Question 6: A capital campaign's 'quiet phase' typically ends when:
- The board approves the campaign goal
- Approximately 50-60% or more of the goal has been secured in lead gifts (Correct answer)
- The first donor makes a gift
- The public announcement event is planned
Correct answer: Approximately 50-60% or more of the goal has been secured in lead gifts
The quiet phase ends and the public phase begins once 50-60% or more of the goal is secured from lead gifts, providing a strong foundation and momentum for the public launch.
Question 7: Which of the following BEST describes the role of a gift acceptance policy?
- It sets minimum gift amounts for all donors
- It provides guidelines for evaluating and accepting non-cash, complex, or potentially problematic gifts (Correct answer)
- It outlines how staff will be compensated for securing major gifts
- It determines which donors qualify for named recognition
Correct answer: It provides guidelines for evaluating and accepting non-cash, complex, or potentially problematic gifts
A gift acceptance policy guides the organization in evaluating non-cash gifts, complex planned gifts, or gifts with conditions that may create legal, financial, or reputational risk.
CFRE MCQ 3
Under IRS regulations, a donor who receives a benefit in exchange for a charitable contribution must be informed of: