CNE Board Development & Governance 3 — Questions and Answers
Question 1: Which of the following is the best indicator that a board has strong fiduciary oversight of finances?
- The board chair personally approves every expenditure
- The board receives and reviews regular financial statements against budget (Correct answer)
- The executive director presents a verbal financial update at each meeting
- The nonprofit has not been audited in the past three years
Correct answer: The board receives and reviews regular financial statements against budget
Regular review of financial statements compared to the approved budget is a core fiduciary responsibility of the board.
Question 2: What is 'board succession planning' primarily designed to address?
- Replacing the executive director when they resign
- Ensuring continuity of board leadership through planned transitions (Correct answer)
- Creating a waiting list of donors who want to join the board
- Documenting the history of past board members
Correct answer: Ensuring continuity of board leadership through planned transitions
Succession planning identifies and prepares future board leaders so governance continuity is maintained during officer transitions.
Question 3: A board that 'rubber stamps' every executive director recommendation is failing which governance responsibility?
- Fundraising and resource development
- Independent oversight and critical judgment (Correct answer)
- Community outreach and public relations
- Strategic marketing and branding
Correct answer: Independent oversight and critical judgment
The board's oversight role requires independent evaluation of management recommendations, not automatic approval.
Question 4: Which statement best describes the relationship between the board and the executive director?
- The board manages daily operations; the ED sets long-term strategy
- The board sets policy and direction; the ED manages day-to-day operations (Correct answer)
- The ED supervises all board committees to ensure policy compliance
- The board and ED share equal authority over all organizational decisions
Correct answer: The board sets policy and direction; the ED manages day-to-day operations
The board governs and sets strategic direction while the executive director is responsible for operational management and implementation.
Question 5: A written board member agreement that outlines attendance, giving, and committee expectations is best described as a:
- Board liability waiver
- Board member job description or commitment form (Correct answer)
- Volunteer release form
- Conflict of interest declaration
Correct answer: Board member job description or commitment form
A board member job description or commitment form clarifies expectations and creates mutual accountability between the board member and organization.
Question 6: Which of the following is an example of the board overstepping into management (micromanagement)?
- Approving the annual budget
- Directing individual staff members on their daily tasks (Correct answer)
- Reviewing the executive director's performance annually
- Setting the organization's fundraising goal for the year
Correct answer: Directing individual staff members on their daily tasks
Directing staff members is an operational function that belongs to the executive director, not the board.
Question 7: In a nonprofit, 'board self-assessment' is best used to:
- Evaluate individual staff performance against program goals
- Help the board identify governance strengths and areas for improvement (Correct answer)
- Satisfy IRS reporting requirements for tax-exempt status
- Determine whether the organization should merge with another nonprofit
Correct answer: Help the board identify governance strengths and areas for improvement
Board self-assessment is a governance tool that helps the board reflect on its own effectiveness and identify development priorities.
CNE Board Development & Governance 3
Which of the following is the best indicator that a board has strong fiduciary oversight of finances?