CNE Grant Writing & Compliance 3 — Questions and Answers
Question 1: When a foundation RFP states 'letters of inquiry (LOI) are required before full proposals,' what is the LOI's main function?
- It replaces the full proposal entirely
- It serves as a brief screening tool to determine fit before inviting a full application (Correct answer)
- It is a legal contract binding the funder to award the grant
- It substitutes for the organization's IRS determination letter
Correct answer: It serves as a brief screening tool to determine fit before inviting a full application
An LOI is a short document that helps funders pre-screen applicants for alignment with their priorities before investing in a full review.
Question 2: Which financial document is most commonly required to demonstrate an organization's fiscal health in a grant application?
- Monthly payroll register
- Most recent audited financial statements (Correct answer)
- Employee W-2 forms
- Grant writer's invoice
Correct answer: Most recent audited financial statements
Audited financial statements provide an independent verification of the nonprofit's financial position and stewardship practices.
Question 3: A grant application asks for 'SMART' objectives. What does the 'M' in SMART stand for?
- Meaningful
- Measurable (Correct answer)
- Motivated
- Manageable
Correct answer: Measurable
SMART objectives are Specific, Measurable, Achievable, Relevant, and Time-bound—the 'M' ensures progress can be tracked with data.
Question 4: Under federal grant rules, what is the 'period of performance'?
- The time frame during which an employee must work on the grant project
- The date range during which grant funds may be obligated and expended (Correct answer)
- The annual performance review cycle for grant staff
- The period for which indirect costs are calculated
Correct answer: The date range during which grant funds may be obligated and expended
The period of performance defines the start and end dates during which federal grant funds can be legally incurred and spent.
Question 5: A nonprofit's grant proposal includes a project serving 500 clients but only budgets for 2 part-time staff. A reviewer raises concerns about 'organizational capacity.' What does this refer to?
- Whether the building has enough physical space
- Whether the organization has the staff, systems, and expertise to execute the project successfully (Correct answer)
- Whether the board has approved the project
- Whether the nonprofit has reached its maximum number of grants
Correct answer: Whether the organization has the staff, systems, and expertise to execute the project successfully
Organizational capacity encompasses staffing, infrastructure, financial systems, and prior experience needed to implement the proposed project.
Question 6: What is the difference between 'outputs' and 'outcomes' in grant reporting?
- Outputs are long-term changes; outcomes are immediate products of activities
- Outputs are direct products of activities (e.g., people served); outcomes are changes in knowledge, behavior, or conditions (Correct answer)
- Outputs refer to financial expenditures; outcomes refer to program costs
- There is no meaningful distinction between the two terms
Correct answer: Outputs are direct products of activities (e.g., people served); outcomes are changes in knowledge, behavior, or conditions
Outputs measure the volume of services delivered, while outcomes capture the actual changes experienced by participants or communities.
Question 7: Which IRS form must a public charity file annually, and is often required as a grant attachment?
- Form 990 (Correct answer)
- Form 1040
- Form W-9
- Form 8283
Correct answer: Form 990
Form 990 is the annual information return filed by tax-exempt organizations and is frequently requested by funders to verify nonprofit status and financials.
CNE Grant Writing & Compliance 3
When a foundation RFP states 'letters of inquiry (LOI) are required before full proposals,' what is the LOI's main function?