Nonprofit Nonprofit Governance 2

Question 1

What is the duty of care for nonprofit board members?

Accepted Answer

Making informed decisions by exercising reasonable diligence

Answer

The duty of care requires board members to make decisions with the same care a reasonably prudent person would use in similar circumstances.

Question 2

What is a conflict of interest policy in a nonprofit?

Accepted Answer

A written policy requiring members to disclose personal interests that could influence decisions

Answer

A conflict of interest policy ensures board and staff members disclose and recuse themselves from decisions where personal interests may interfere.

Question 3

Which term describes the practice of self-dealing where a board member personally benefits from a nonprofit transaction?

Accepted Answer

Private inurement

Answer

Private inurement occurs when a nonprofit's assets or earnings improperly benefit insiders like board members or executives.

Question 4

What is an Executive Session in a nonprofit board meeting?

Accepted Answer

A closed meeting for board members only to discuss sensitive matters

Answer

An executive session is a portion of the board meeting closed to staff and the public, typically used for personnel or legal discussions.

Question 5

What is the term for a board composed primarily of working volunteers who also perform operational tasks?

Accepted Answer

Working Board

Answer

A working board is common in small nonprofits where board members directly carry out programs, fundraising, and administrative work.

Nonprofit Practice Test