Nonprofit Nonprofit Financial Management 3

Question 1

What is internal controls in a nonprofit financial context?

Accepted Answer

Policies and procedures designed to safeguard assets and ensure accurate financial reporting

Answer

Internal controls are organizational safeguards like segregation of duties and authorization policies that prevent fraud and ensure financial accuracy.

Question 2

What is a fiscal sponsor in the US nonprofit sector?

Accepted Answer

An established 501(c)(3) that provides legal and financial infrastructure to a sponsored project

Answer

A fiscal sponsor is a 501(c)(3) organization that accepts tax-deductible donations and manages finances on behalf of a project that lacks its own exempt status.

Question 3

What is the Uniform Guidance (2 CFR Part 200) relevant to nonprofits?

Accepted Answer

Federal regulations governing the use and auditing of federal grant funds by nonprofit recipients

Answer

The Uniform Guidance (formerly OMB Circulars) sets compliance and audit requirements for nonprofits receiving federal grants or contracts.

Question 4

What is a capital campaign in nonprofit fundraising?

Accepted Answer

An intensive fundraising effort to raise a significant sum for a specific major purpose such as a building or endowment

Answer

A capital campaign is a targeted, time-limited fundraising effort typically aimed at funding major projects like facilities, equipment, or endowment growth.

Question 5

What does it mean for a nonprofit to be 'underwater' on an endowment?

Accepted Answer

When the fair value of an endowment fund falls below the original donor-restricted gift amount

Answer

An underwater endowment occurs when market losses cause the fund's current value to drop below the historic gift value, restricting spending under most state laws.

Nonprofit Practice Test

Nonprofit Practice Test

Nonprofit Nonprofit Financial Management 3