CNC 501(c)(3) Governance & Bylaws 3

Question 1

Which document takes legal precedence when a nonprofit's bylaws conflict with its Articles of Incorporation?

Accepted Answer

The Articles of Incorporation, because they are the foundational governing document

Answer

Articles of Incorporation are the primary legal document filed with the state, and they take precedence over bylaws in cases of conflict.

Question 2

A nonprofit board member who learns of a pending real estate deal involving the organization and wants to purchase the property personally is most likely violating:

Accepted Answer

The duty of loyalty

Answer

Using confidential organizational information for personal financial gain violates the duty of loyalty, which prohibits self-dealing and conflicts of interest.

Question 3

What is the primary purpose of an indemnification clause in nonprofit bylaws?

Accepted Answer

To shield board members from personal liability for actions taken in good faith on behalf of the organization

Answer

Indemnification provisions protect board members and officers from personal financial liability for decisions made in good faith while acting on behalf of the organization.

Question 4

Under what circumstances may a 501(c)(3) organization engage in lobbying activities?

Accepted Answer

To an insubstantial extent without jeopardizing tax-exempt status

Answer

Public charities may engage in a limited, insubstantial amount of lobbying (attempting to influence legislation) without losing 501(c)(3) status.

Question 5

Which of the following best describes 'staggered terms' for board members?

Accepted Answer

Board terms are arranged so only a portion of the board is up for election each year

Answer

Staggered terms (also called classified boards) ensure continuity of governance by rotating which members' terms expire, so institutional knowledge is preserved.

(CNC) Certified Nonprofit Consultant Practice Test

(CNC) Certified Nonprofit Consultant Practice Test

CNC 501(c)(3) Governance & Bylaws 3