CNE Strategic Planning & Governance 2 — Questions and Answers
Question 1: A nonprofit board is reviewing a proposed merger with a similar organization. Which governance body has ultimate fiduciary authority over this decision?
- The executive director
- The full board of directors (Correct answer)
- The finance committee
- The founding members
Correct answer: The full board of directors
The full board of directors holds ultimate fiduciary authority over major decisions like mergers, as this responsibility cannot be delegated.
Question 2: Which strategic planning tool plots an organization's programs on two axes — market growth and competitive position — to guide resource allocation?
- SWOT analysis
- Logic model
- Boston Consulting Group matrix (Correct answer)
- Balanced scorecard
Correct answer: Boston Consulting Group matrix
The BCG matrix (growth-share matrix) helps organizations categorize programs as stars, cash cows, question marks, or dogs to inform resource decisions.
Question 3: A nonprofit's bylaws conflict with its state's nonprofit corporation act. Which takes precedence?
- The bylaws, since the board adopted them
- The state law, as it supersedes organizational documents (Correct answer)
- The articles of incorporation
- The IRS determination letter
Correct answer: The state law, as it supersedes organizational documents
State nonprofit corporation law supersedes bylaws; an organization cannot adopt bylaws that violate applicable state statutes.
Question 4: In a theory of change, what does the term 'assumption' refer to?
- The organization's mission statement
- Conditions believed to be true for the strategy to work (Correct answer)
- The measurable outcomes expected
- Budget projections for the plan period
Correct answer: Conditions believed to be true for the strategy to work
Assumptions are the conditions or beliefs the organization holds as true that must hold for the causal chain in a theory of change to succeed.
Question 5: A board member who also owns a catering company is asked to vote on awarding that company the contract for the annual gala. What is the correct governance response?
- Allow the vote since board members should be engaged
- Require the board member to recuse from the vote and disclose the conflict (Correct answer)
- Defer the decision to the executive director
- Cancel the contract process entirely
Correct answer: Require the board member to recuse from the vote and disclose the conflict
Proper conflict of interest management requires disclosure and recusal from the vote; the interested board member should not participate in the decision.
Question 6: Which planning horizon is most common for a nonprofit strategic plan?
- 6 months
- 1 year
- 3 to 5 years (Correct answer)
- 10 to 15 years
Correct answer: 3 to 5 years
Most nonprofit strategic plans cover a 3–5 year horizon, balancing aspirational direction with realistic forecasting.
Question 7: What is the primary purpose of a nonprofit's conflict of interest policy?
- To prevent board members from having any business interests
- To protect the organization's integrity and ensure decisions serve the mission (Correct answer)
- To limit the number of board members allowed per meeting
- To comply with federal campaign finance laws
Correct answer: To protect the organization's integrity and ensure decisions serve the mission
A conflict of interest policy protects organizational integrity by ensuring decisions are made in the best interest of the mission, not for personal gain.
CNE Strategic Planning & Governance 2
A nonprofit board is reviewing a proposed merger with a similar organization.
Which governance body has ultimate fiduciary authority over this decision?