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

Restrictions placed on funds by the board of directors

Answer

Government regulations governing nonprofit tax exemptions

Answer

External auditor recommendations for financial improvement

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 bank that offers low-interest loans to nonprofits

Answer

A government agency that oversees nonprofit grant compliance

Answer

A major donor who funds an organization's entire operating budget

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

IRS guidelines for calculating executive compensation

Answer

State rules for nonprofit annual registration

Answer

Accounting standards for nonprofit financial statements

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

An annual giving campaign targeting current donors

Answer

A digital crowdfunding effort for program expenses

Answer

A government grant application process

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

When the organization spends more than it earns for two consecutive years

Answer

When a grant is spent before the end of the grant period

Answer

When the board is unable to meet quorum for budget approval

Question 6

Which financial ratio measures a nonprofit's ability to pay short-term obligations?

Accepted Answer

Current ratio (current assets divided by current liabilities)

Answer

Program expense ratio

Answer

Fundraising efficiency ratio

Answer

Debt-to-equity ratio