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CFRE Exam Study Guide with Complete Solutions Explain growth of the Nonprofit Sector - Answer-1) Philanthropy and nonprofit organizations have always played a significant role in US society 2) They play an even more significant role today 3) The nonprofit sector has grown to be a larger part o...

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  • October 3, 2024
  • 94
  • 2024/2025
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EMILLYCHARLOTTE 2024/2025 ACADEMIC YAER ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISH SEPTEMBER 2024




CFRE Exam Study Guide with Complete
Solutions

Explain growth of the Nonprofit Sector - Answer✔✔-1) Philanthropy and nonprofit organizations have

always played a significant role in US society


2) They play an even more significant role today


3) The nonprofit sector has grown to be a larger part of the US economy


Explain philanthropy in US versus other countries. - Answer✔✔-In the US, philanthropy compare to

business and government plays a larger relative role in the economy compared to other countries (no tax

deduction in Europe).


What are some challenges in Philanthropy? - Answer✔✔-1) rapid growth in organizations and

philanthropic giving


2) Accountability - narrow / broad


3) Blurring the boundaries (for profits with nonprofit arms)


4) Entrepreneurial models (family nonprofits


Accountability - three general trends - Answer✔✔-1) Funders and donors have increased their gift

restrictions and continued their call for accountability


2) Program evaluation, focus on results, and impact studies to measure return on gifts have become

common


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3) Fundraisers need to ensure that their organizations are ready to respond


According to the Independent Sector, narrow accountability refers to: - Answer✔✔-1) the formal

responsibilities of individuals and organizations to report their actions to higher authorities (IRS)


2) the specific reporting mechanisms they are instructed to use (990)


3) the formal standard to which they are held


To ensure narrow accountability: - Answer✔✔-NPOs must implement formal reporting structure to

comply with applicable laws and regulations


Broad Accountability - encompasses narrow accountability and builds on it by expanding it in two

important ways: - Answer✔✔-1) Broadens the set of higher authorities to whom individuals and

organizations are potentially responsible (donors & recipients)


2) Broadens the criteria expectations and standards to which individuals and organizations may be

potentially held (not ethical to visit donors in a hospital)


Broad Accountability is: - Answer✔✔-1) Serving the public good


2) Preserving the public trust


3) Often implicit and subjective


Broad Accountability & the public trust - Answer✔✔-is being able to account for the organization's

implied promised to is constituents by pursuing its stated mission in good faith with defensible and

transparent management and governance practices.




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Blurring the boundaries - Answer✔✔-1) NPOs increased both fee income and government funding at

higher rates than philanthropy (donations)


2) NPOs have become more interdependent rather than dependent


3) For proftis have entered fields like health care, education and social service that were once the

restricted to the NP sector


Entrepreneurial Models - Answer✔✔-1) NPOs have adopted entrepreneurial models sometimes forming

for profit subsidiaries to earn income that is used to support the NPO


2) NPOs earn income in different ways & compensate staff on a commission basis based on marketing

and business income


Fundraisers challenge: - Answer✔✔-Commission is ethical for market based income but is unethical

based on philanthropic funds raised. (bonus is ok on # donors or on cumulative revenue but not on an

individual basis).


Donor behaviors - Answer✔✔-1) are different from each other and from the previous generation


2) are interested in pursuing very distinctive projects


3) accumulated wealth quickly in the 1990s are interested in pursuing philanthropy at a younger age


4) have developed a venture philanthropy approach (projects)


5) with a good project v. NP was a good cause (merging the two are challenging)


Engaging constituents - Answer✔✔-1) Generation (1910-1930) was the 'long civic generation' since they

volunteered more than any generation before or since



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2) Studies show that young people are coming back to volunteering stimulated by programs such as

AmeriCorps, Vista and Learn & Serve


Younger generations - Answer✔✔-1)Volunteer on an ad hoc basis rather than making a long term

commitment


2) Prefer to provide direct service rather than become involved at the policy level


3) Want to volunteer with friend and voworkers and view volunteering as a social activity


4) Challenge NPs because they lack the structure to engage volunteers on their terms


--new models must be developed to engage new generations


Professionalization of the Sector - Answer✔✔-1) Management of NPOs have become more professional

and so has philanthropic fund raising


2) Graduate and undergrad degrees in philanthropic studies and NP Management are increasing with

expectation of continued growth


Professionalism (general) - Answer✔✔-1) Better resources


2) More strategic approaches


3) Enhanced accountability


4) More effective fundraising


5) Enhanced and developed philanthropy


Professionalism - Answer✔✔-1) Potential to diminish the volunteer experience


2) Disengage volunteers if not managed

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