CNE Strategic Planning & Governance 3 — Questions and Answers
Question 1: A nonprofit conducts an environmental scan as part of strategic planning. Which framework specifically examines Political, Economic, Social, Technological, Legal, and Environmental factors?
- SWOT
- PESTLE (Correct answer)
- Balanced scorecard
- Force field analysis
Correct answer: PESTLE
PESTLE (or PEST) analysis systematically examines macro-environmental factors that may affect an organization's strategy.
Question 2: Board term limits are primarily designed to achieve which governance outcome?
- Reduce the board's legal liability
- Ensure fresh perspectives and prevent entrenchment (Correct answer)
- Lower the cost of board meetings
- Comply with IRS Form 990 requirements
Correct answer: Ensure fresh perspectives and prevent entrenchment
Term limits refresh board composition, bringing new perspectives and preventing governance stagnation while managing power concentration.
Question 3: Which document legally establishes a nonprofit corporation and is filed with the state?
- Bylaws
- Strategic plan
- Articles of incorporation (Correct answer)
- IRS Form 1023
Correct answer: Articles of incorporation
Articles of incorporation (or a certificate of incorporation) are the foundational legal documents filed with the state to create a nonprofit corporation.
Question 4: A strategic goal differs from a strategic objective primarily in that goals are:
- More specific and time-bound
- Broader statements of desired outcomes (Correct answer)
- Assigned to individual staff members
- Tied to specific budget line items
Correct answer: Broader statements of desired outcomes
Strategic goals are broad aspirational outcomes, while objectives break goals into specific, measurable, time-bound steps.
Question 5: A nonprofit board that rubber-stamps every executive director recommendation without independent analysis is exhibiting which governance failure?
- Mission drift
- Over-governance
- Lack of independence / passive governance (Correct answer)
- Board dominance
Correct answer: Lack of independence / passive governance
Passive governance — where the board fails to exercise independent judgment — violates the board's fiduciary duty of care.
Question 6: When should a nonprofit update its strategic plan?
- Only at the end of the plan period
- Only when required by a funder
- When significant environmental changes make current strategies obsolete (Correct answer)
- Every six months regardless of circumstances
Correct answer: When significant environmental changes make current strategies obsolete
Strategic plans should be revisited when major environmental shifts — such as a pandemic, leadership change, or funding loss — render current strategies ineffective.
Question 7: The 'duty of obedience' for nonprofit board members requires them to:
- Follow all instructions from the executive director
- Ensure the organization adheres to its mission and applicable laws (Correct answer)
- Obey the majority vote of the donor base
- Comply with requests from government grant agencies
Correct answer: Ensure the organization adheres to its mission and applicable laws
The duty of obedience requires board members to ensure the organization remains true to its stated mission and complies with applicable laws and its own governing documents.
CNE Strategic Planning & Governance 3
A nonprofit conducts an environmental scan as part of strategic planning.
Which framework specifically examines Political, Economic, Social, Technological, Legal, and Environmental factors?