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Explain growth of the Nonprofit Sector ~~>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...

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1 | P a g e | © copyright 2024/2025 | Grade A+




CFRE Questions and Correct Answers |
Latest Update
Explain growth of the Nonprofit Sector


✓ ~~>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.


✓ ~~>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?


✓ ~~>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




Master01 | September, 2024/2025 | Latest update

, 2 | P a g e | © copyright 2024/2025 | Grade A+


Accountability - three general trends


✓ ~~>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


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




According to the Independent Sector, narrow accountability refers to:


✓ ~~>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:


✓ ~~>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:




Master01 | September, 2024/2025 | Latest update

, 3 | P a g e | © copyright 2024/2025 | Grade A+


✓ ~~>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:


✓ ~~>1) Serving the public good

2) Preserving the public trust


3) Often implicit and subjective




Broad Accountability & the public trust


✓ ~~>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.




Blurring the boundaries


✓ ~~>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



Master01 | September, 2024/2025 | Latest update

, 4 | P a g e | © copyright 2024/2025 | Grade A+




Entrepreneurial Models


✓ ~~>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:


✓ ~~>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


✓ ~~>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)




Master01 | September, 2024/2025 | Latest update

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