CNC Nonprofit Legal & Ethical Considerations 5

Question 1

Which federal law prohibits nonprofit organizations from engaging in illegal discrimination in programs receiving federal financial assistance?

Accepted Answer

Title VI of the Civil Rights Act of 1964

Answer

Title VI of the Civil Rights Act prohibits discrimination based on race, color, and national origin in programs and activities receiving federal financial assistance.

Question 2

A nonprofit's conflict of interest policy is MOST effective when it:

Accepted Answer

Requires annual disclosure, mandates recusal procedures, and is consistently enforced

Answer

An effective conflict of interest policy requires annual disclosure of interests, clear recusal procedures, and consistent enforcement to actually prevent improper transactions.

Question 3

Under IRS rules, a 501(c)(3) may engage in lobbying activities:

Accepted Answer

To an insubstantial degree, or within the expenditure limits of the 501(h) election

Answer

501(c)(3) organizations may lobby as long as it is not a substantial part of their activities, and many elect the 501(h) expenditure test for clearer, measurable limits.

Question 4

A nonprofit wishes to compensate its CEO at $350,000 annually. To best protect against IRS excess benefit challenges, the board should:

Accepted Answer

Conduct a comparability study using data from similar organizations and document its approval process

Answer

The IRS provides a 'rebuttable presumption of reasonableness' when boards use comparability data and document their deliberations in a formal approval process.

Question 5

Which ethical framework aligns most closely with the concept of acting in the best interests of the community a nonprofit serves, even when it is costly to the organization?

Accepted Answer

Principled mission-driven stewardship

Answer

Mission-driven stewardship holds that nonprofit leaders must prioritize the welfare of those they serve, placing community benefit above organizational convenience or financial self-interest.

(CNC) Certified Nonprofit Consultant Practice Test

(CNC) Certified Nonprofit Consultant Practice Test

CNC Nonprofit Legal & Ethical Considerations 5