CNC Nonprofit Organization Management 5

Question 1

A nonprofit is experiencing rapid growth and the executive director is struggling to manage all departments. Which organizational management solution is MOST appropriate?

Accepted Answer

Create a senior leadership team with department directors reporting to the ED

Answer

Building a senior leadership team with clear reporting lines is the standard approach to scaling management capacity as a nonprofit grows.

Question 2

What is the role of an advisory board in a nonprofit organization, as distinct from the governing board?

Accepted Answer

Advisory boards provide expertise and connections without legal governance authority

Answer

Advisory boards offer subject matter expertise, community connections, and credibility but have no legal authority over organizational decisions.

Question 3

Which risk management practice involves purchasing insurance to cover the personal liability of nonprofit board members for their governance decisions?

Accepted Answer

Directors and Officers (D&O) liability insurance

Answer

Directors and Officers (D&O) insurance protects board members from personal financial liability arising from alleged wrongful acts in their governance roles.

Question 4

A nonprofit's revenue is 80% dependent on a single government grant. Which financial management strategy should the consultant recommend?

Accepted Answer

Diversify revenue sources to reduce concentration risk

Answer

Revenue diversification reduces financial vulnerability; over-reliance on a single funder creates existential risk if that funding is reduced or eliminated.

Question 5

Which legal doctrine holds nonprofit board members to a standard of acting as a 'reasonably prudent person' would in managing the organization's affairs?

Accepted Answer

Duty of care

Answer

The duty of care requires board members to make decisions with the diligence and prudence of a reasonably careful person in a similar position.

(CNC) Certified Nonprofit Consultant Practice Test

(CNC) Certified Nonprofit Consultant Practice Test

CNC Nonprofit Organization Management 5