CFRE MCQ 5 — Questions and Answers
Question 1: According to CFRE best practices, what is the recommended minimum size for a capital campaign leadership gift (top gift in the pyramid)?
- 5% of the total goal
- 10-20% of the total goal
- 25-30% or more of the total goal (Correct answer)
- 50% or more of the total goal
Correct answer: 25-30% or more of the total goal
Capital campaign gift pyramids typically call for a lead gift representing 25-30% or more of the total goal to establish credibility and momentum for the campaign.
Question 2: Which of the following is an example of 'restricted' fund accounting in nonprofit finance?
- Unrestricted operating funds used at board discretion
- A foundation grant designated exclusively for a specific youth literacy program (Correct answer)
- Annual fund revenue deposited into the general operating account
- Board-designated reserves set aside for building maintenance
Correct answer: A foundation grant designated exclusively for a specific youth literacy program
A restricted gift is one where the donor or funder has specified how the funds must be used — such as a grant designated exclusively for a particular program.
Question 3: A fundraiser is creating a mid-level giving society for donors giving $1,000-$9,999 annually. Which benefit would be MOST effective at this tier?
- A branded bumper sticker
- Exclusive access to a behind-the-scenes program tour and personal thank-you from program staff (Correct answer)
- A listing in the annual report alongside all donors
- A discounted ticket to the public gala event
Correct answer: Exclusive access to a behind-the-scenes program tour and personal thank-you from program staff
Mid-level donors respond best to access and insider experiences — exclusive tours and personal connections to program impact are highly valued at this giving tier.
Question 4: When a nonprofit receives a multi-year pledge, how should it be recorded on financial statements under generally accepted accounting principles (GAAP)?
- Record only the payments actually received each year
- Record the full present value of the pledge receivable in the year the pledge is made, discounted for time value (Correct answer)
- Record the pledge only after all payments are received in full
- Record it as contingent revenue until the final payment is made
Correct answer: Record the full present value of the pledge receivable in the year the pledge is made, discounted for time value
Under GAAP (ASC 958), multi-year pledges are recorded at their present discounted value when made, with a discount that unwinds to interest income over the pledge period.
Question 5: What does 'constituent relationship management' (CRM) primarily help a development office accomplish?
- Automate payroll processing for development staff
- Track donor interactions, giving history, cultivation stages, and communication preferences to strengthen relationships (Correct answer)
- Generate IRS Form 990 compliance filings automatically
- Monitor real-time social media sentiment about the organization
Correct answer: Track donor interactions, giving history, cultivation stages, and communication preferences to strengthen relationships
A CRM system centralizes donor data — including gift history, contact records, and relationship notes — enabling staff to build and sustain personalized donor relationships at scale.
Question 6: A fundraiser discovers a staff member has been submitting inflated expense reports. The FIRST action the fundraiser should take is:
- Confront the staff member privately before involving leadership
- Report the suspected misconduct to the appropriate supervisor or through the organization's established reporting mechanism (Correct answer)
- Ignore it unless the amounts exceed a material threshold
- Alert donors who may be affected by the financial irregularity
Correct answer: Report the suspected misconduct to the appropriate supervisor or through the organization's established reporting mechanism
Ethical practice requires reporting suspected financial misconduct through appropriate organizational channels immediately — not handling it informally or ignoring it.
Question 7: Which measurement best evaluates the effectiveness of a fundraising program's donor retention efforts?
- Total number of new donors acquired
- Donor retention rate (percentage of donors who give again in the subsequent year) (Correct answer)
- Average gift size across all donors
- Total gross revenue raised per campaign
Correct answer: Donor retention rate (percentage of donors who give again in the subsequent year)
Donor retention rate directly measures how well the organization is keeping existing donors engaged — retaining donors is far more cost-effective than acquiring new ones.
CFRE MCQ 5
According to CFRE best practices, what is the recommended minimum size for a capital campaign leadership gift (top gift in the pyramid)?