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CAP GS859 2nd Sample Exam
Consider the idea of "the tyranny of one number." Why is it impracticable to hold planned gift givers to one number of dollars raised? A) Planned gift people should not be measured by results. B) Results in gift planning cannot be quantified. C) The cash element in planned gifts is relatively minor. D) Planned gifts fall into three main categories (current, deferred, and contingent and deferred). It is not logically possible to add these into a single meaningful number. - correct answer ✔✔The correct answer is D. To add apples, oranges, and potatoes to get one number is easier than to add current, deferred, and contingent deferred gifts into one number. Cash is easy to count. Deferred is not as easy. How does one count today produce an irrevocable remainder interest in a unitrust whose value is going up and down daily? As for revocable deferred, how can you reduce to a number the value of a revocable 50% interest in the estate of a woman aged 52 who is in good health? Yet, counting is inevitable. For it to be done right, per the "Guidelines for Reporting and Counting Charitable Gifts, Second Edition," from the Nation Association of Charitable Gift Planners, as seen in Assignment 5, we should report three numbers, each at its face amount. The reluctance of boards and business offices to count in this way and their preference for current dollars is part of what is driving the fusion of major and planned gifts, often to the detriment of planned gift officers. What is the difference between gift counting and gift valuing? A) Gift counting is the process of determining the number of gifts received; gift valuing is the process of determining discounted present value of those gifts. B) Gift counting is the process of determining the nominal value of gifts; gift valuing is the process of determining the discounted present value. C) Gift counting is for internal fundraising and marketing purposes; gift valuing is for the organization's internal cash-flow projections. D) Gift counting is for the comptroller to determine the value of what the organization has received; gift valuing is for crediting the donor with a specific value for donor recognition purposes. - correct answer ✔✔The correct answer is C. Gifts are counted (per guidelines promoted by The National Committee for Planned Giving) in a way that is simple to understand for fundraisers and donors and is motivational. Gifts are counted (on this system) toward campaign totals and donor recognition levels on a simple, three-part system: outright, irrevocable deferred, and revocable deferred. All gifts are counted at nominal value without discounting for time value of money or likelihood of gifts actually coming to fruition. Gift valuation, under the valuation standards promoted by the National Association of Charitable Gift Planners, is done for internal purposes, to help the business office predict and value the
spendable cash flow from a planned gift. Valuation standards take into account when the charity is likely to realize spendable money, how much it will be able to spend, and the likelihood that the money will actually materialize. Which of the following endowments is set up to last for only a certain period of time? A) a true endowment B) a term endowment C) a quasi-endowment D) all endowments - correct answer ✔✔The correct answer is B. A term endowment lasts only for a term of years or set time. Traditionally, the fundraising function in a large organization has been broken down into three areas: annual, major, and planned. In addition, the organization may have short-term campaigns. All of the statements below are examples of what gift planners mean when they write about the fusion of major and planned gifts, EXCEPT A) The departments may be combined or fused. B) Fundraisers may find themselves performing more than one role. C) Fundraisers may ask for more than one gift at a time (major gift commitment and planned gift commitment) in a double ask. D) Increasingly, fundraisers are being encouraged to fuse their work with that of financial planners and others, who look at gifts as financial and philanthropic strategies within a more comprehensive plan. - correct answer ✔✔The correct answer is D. Sadly, fusion is code for cutting planned giving jobs and fusing the staff with major gifts. It has meant spreading the planned giving team out over more cases and getting them to double as major gift officers. It has led to more calls made faster to make sure current dollars come in. This has not been good news to planned gift people. A capital campaign is used for what purpose? A) building unrestricted endowment B) building a building or major new program C) raising money for current budgets D) raising gifts from principal (non-cash assets and appreciated securities) - correct answer ✔✔The correct answer is B. Generally, a capital campaign is to build an edifice—a building or a permanent program (like a center).
cultivating and soliciting them. The natural partner is a person who is well positioned to get an appointment with the donor and influence the donor. It could be the president, executive director, a board member, or a close friend of the prospect and a fellow donor. The primary player is the natural partner best positioned to make the ask or to support the fundraiser when the fundraiser makes the ask. Which of the statements below represents an ethical dilemma? A) Bill is torn between accepting a bribe and asking for a favor. B) Mary is torn between making a large commission and serving a client appropriately. C) Meg is torn between using undue influence to get a gift and treating the donor as she would wish to be treated. D) Jack is torn between his commitment to the ideals of his nonprofit and his commitment to serving his superior, who takes a dollars-and-cents approach to fundraising. - correct answer ✔✔The correct answer is D. Jack's case is a dilemma with an ethical tug on either end. One tug is toward an ideal. The other tug is toward serving a superior honorably. The other examples show a tug between a good choice and a bad choice. Such a situation is not an ethical dilemma, though it may be a hard choice or temptation. Which statement(s) below is (are) found in the "Model Standards of Practice for the Charitable Gift Planner"? I. Primacy of Donor Intent: The principal basis for making a charitable gift should be a desire on the part of the donor to support the work of charitable institutions. II. Explanation of Tax Implications: Congress has provided tax incentives for charitable giving. The emphasis in this statement on philanthropic motivation in no way minimizes the necessity and appropriateness of a full and accurate explanation by the gift planner of those incentives and the implications of those incentives. - correct answer ✔✔The correct answer is C. These are word-for-word the first two of the ten canons in the "Model Standards of Practice for the Charitable Gift Planner." Donor intent "to benefit the work of a charity" comes first; behind it comes a "full and accurate explanation" by the gift planner to the donor of the tax incentives and their implications. Under the heading "Full Disclosure," the "Model Standards of Practice for Gift Planners" states the following: It is essential to the gift planning process that the role and relationships of all parties involved, including how and by whom each is compensated, be fully disclosed to the donor. A Gift Planner shall not act or purport to act as a representative of any charity without the express knowledge and approval of the charity, and shall not, while employed by the charity, act or purport to act as a representative of the donor, without the express consent of both the charity and the donor. Under this canon, all of the practices below would be prohibited, EXCEPT
A) Joan is a tax attorney who works with gift planning prospects of Mercy Hospital. The donor turns to Joan for legal advice, which Joan provides at no cost as a benefit to donors. Certain donors refer to Joan as their legal advisor for the gifts they make t - correct answer ✔✔The correct answer is B. In all examples other than B, the client/donor may be confused about who is who and how they are paid. In B, the insurance agent does get a commission, and the exact amount is not disclosed, but the client does not doubt that he is working with a life insurance agent and knows that, of course, the agent is paid on commission. What the canon about compensation requires is disclosure of who and what you are, the role in which you are acting, and the role in which you are paid. It does sometimes get murky when professionals are also board members or on staff at a charity. The canon calls for clarity as to who represents whom, how, and for what kind of compensation. This course suggests that Americans have always had two great virtues since the days of our frontier heritage. Which virtue(s) are cited? I. an eye for results II. strategic planning - correct answer ✔✔The correct answer is D. Actually, the two virtues cited are self- reliance and mutual aid. We believe we must take care of ourselves, but we also must take care of one another. These virtues point in different directions but are balanced in actual cases. We teach our children to pull their socks up and solve their own problems, but we also teach them to care about others and to share. We are outspoken about being self-reliant but are among the most generous of nations. Consider the approach taken by the following fictional investment advisory firm: "As a good person you will not want to invest in firms that violate your values. We will examine your portfolio for stock and bonds that do not fit your value system, and we will eliminate those." Which of the answers below best describes this approach? A) impact investing B) investing for social return C) screened investments D) social venture philanthropy - correct answer ✔✔The correct answer is C. This is an example of negative screening. A portfolio is screened for investments that are out of phase with the values of the investor. For example, an investor might object to drinking, smoking, and guns, but his or her portfolio might contain stocks and bonds of companies engaged in these objectionable things. Negative screening can screen out bad stocks and bonds. Positive screening can screen in virtuous ones. Social venture philanthropy connects dollars via gifts to charities who are treated almost as if they were venture capital investments (big gifts, termed investments, accompanied by hands-on attention from the funder). Impact investing generally seeks out smaller, early-stage businesses that may go on to have a disruptive, innovative, and positive social impact (solar panel manufacturing, oil from algae, smokeless cook stoves for the third world.) Screened investing goes back to the 1960s and is associated with progressives who
II. Planned gifts are often deferred gifts. - correct answer ✔✔The correct answer is C. Both of these statements are true of what are termed planned gifts in the jargon of this field. A planned gift is generally a bequest, a split-interest gift, a life insurance policy, or a qualified plan designation. Bequests are often contingent because the will or the arrangement is subject to change. They are deferred. Life insurance and annuity beneficiary designations are contingent, and the money comes in later (deferred). Even a life policy owned by the charity is subject to the contingency that it might lapse if the donor ceases donating the premium amount. A CRT's charitable beneficiary designation is often contingent. (If the document comes from the client's attorney, he or she will suggest that the beneficiary be left subject to change.) With a CRT, the charity gets the money later. With a gift annuity, it may be irrevocably going to the charity that wrote it, and the charity is holding the money now, but the residuum is not available for deployment for the charity's purposes until later. The point overall is that planned gift money is generally deferred and often contingent. This, in today's world of organizations needing immediate money, makes it hard to sell boards on keeping or growing a planned giving program. Deferred and contingent seems less attractive to cash-strapped organizations than "now money" or irrevocable pledges. With respect to social investing, which statement(s) below is (are) correct? I. Impact investments generally go into startups or early-stage ventures. II. Socially screened funds generally invest in publicly traded securities. - correct answer ✔✔The correct answer is C. Both are correct. Socially screened funds start with the universe of publicly traded securities and throw out the bad ones, the sin stocks, or the environmentally unsound ones. They might also screen in ones that are considered socially conscious. With impact investing, which is a much newer movement, the emphasis is on starting new ventures that actively seek to do good as well as make money. The impact investing world today is embryonic. There are few funds for retail investors because the start-ups are so small. They are more like Mom and Pop businesses in scale, though they may be high tech. There is not much there yet for big funds to invest in. The people who fund these start-ups are, as with Mom and Pop firms, first family and friends and then, perhaps, an angel investor. Building out the financial ecosystem to support these startups through the process of getting started, getting first investors, and all the way up to going public is still a work in progress. Impact venture people talk of a "valley of death" between start up and getting initial investors and a "pioneer gap" in getting money beyond family and friends or one or two angel investors. A donor gives five insurance premiums of $2,000 each to a charity in order to purchase a life insurance policy. The policy has a $100,000 death benefit owned by the charity. With regard to the policy's value, which statement(s) below is (are) true? I. Under the gift counting rules of the National Association of Charitable Gift Planners (CGP), the policy would be credited at face value ($100,000) for campaign totals under the revocable deferred gift category. II. The comptroller will likely value the gift in year one as the premium amount, the amount bindingly pledged, or the surrender value. - correct answer ✔✔The correct answer is C. Both are correct. The CGP
white paper, "Guidelines for Reporting and Counting Charitable Gifts, Second edition," makes it clear that counting gifts for campaign totals and for donor recognition is very different from valuation for purposes of the deduction and very different again from gift accounting under the accounting standards that a comptroller would apply. Following CGP Guidelines for a policy in premium paying mode, the gift is counted at face value in the deferred contingent category. How the comptroller reflects the policy on the books is another matter. While the donor gets credit for a gift of $100,000, the comptroller might only recognize the premium, pledged premiums, or the surrender value as the true value of the gift for the comptroller's own internal purposes. You might say that the gift should be valued for accounting purposes at face amount discounted for the time value of money, but what if the donor does not pay future premiums and the policy lapses? In any case, the point here is that gift counting and gift valuing are not the same and can diverge dramatically. An investor invests $1 million in a charity that works with homeless people, getting them off the street and into gainful employment. The charity commits to saving the local government $2 million in the cost of caring for the homeless. If the charity reaches its goals, the local government agrees to pay the investor $1.5 million. According to this arrangement, which statement(s) below is (are) true? I. Such arrangements are often called social impact bonds (SIBs). II. Such arrangements are not bonds. - correct answer ✔✔The correct answer is C. These pay-for- performance arrangements are called social impact bonds, but they are not bonds as the term is understood. They are like calculated bets. The investor bets that the charity will perform. It makes the bet by investing in the organization. The investment is repaid by (for example) a governmental body, with an agreed on gain to the investor only if the charity accomplishes the agreed upon goals. Bonds, by contrast, are generally a promise to pay the holder a stated interest rate, and they mature at a certain date in the future. According to the way the term is used by a planned gift officer, all of these are considered planned gifts, EXCEPT A) a gift to a family foundation B) a charitable remainder trust C) a bequest D) a gift annuity - correct answer ✔✔The correct answer is A. Traditionally, gift officers do not like to have a donor-controlled entity between them and the gift. A family foundation may require planning, but it is not considered a planned gift, as the term is used by most charities. A gift to a foundation does not come to the charity itself. Instead it goes into a charitable bucket from which the charity may or may not receive a grant in the future. A nonprofit board is held to a prudent person standard. Which of the statements below is the best definition of the prudent person standard?
D) foundations - correct answer ✔✔The correct answer is A. Earned revenue is the greatest, then government, then individuals, then foundations. This may seem to be just data for test purposes, but it is also helpful in understanding why fundraising today is under such extreme pressure to generate quick results. Fundraisers work with the individuals who are now being expected to take up the slack as government funding at both state and federal levels declines. This is "the play" that Mario Marino sees unfolding today before it happens, the play that will determine the survival of many charities. Fundraising will have to step up as government funding declines and as foundations are pulled to serve so many deserving organizations. This can lead to desperate short-term fixes that may work against the CAP® approach. Which statement(s) below is (are) true? I. 501(c)(4) organizations are increasingly being used for lobbying. II. Through a 501(c)(4), a donor can receive an income tax deduction. - correct answer ✔✔The correct answer is A. Yes, the 501(c)(4) is becoming notorious as a way for donors to fund political candidates and lobbying. But, no, they do not get a tax deduction. The charitable income tax deduction is limited to the public charities, also known as 501(c)(3) organizations. They are called public charities because they are designed to serve the public. They are in contrast both to c(4)s and also (c)(5)s. The (c)(5)s are business and professional organizations serving members whose payments are not deductible for charitable purposes. It is worth noting that today's big donors are sometimes considering the (c)(5) for their social good dollars. By influencing legislation, they may further their own business and personal interests but may also believe that they are steering the country in a better direction. Salamon lists solidarity among the five functions of the nonprofit sector. Solidarity isn't a word most Americans commonly use. Each of these is an example of what Salomon means by solidarity, EXCEPT A) fellowship B) community C) impact D) brotherhood/sisterhood - correct answer ✔✔The correct answer is C. Solidarity is fellowship, community, civic friendship, and brotherhood/sisterhood. It is what leads us, in contexts larger than the family, to call one another neighbor, citizen, brother, or sister. You might think of the languages of the nonprofit sector as what was once called a palimpsest, a parchment written upon, then written over again layer by layer until the earliest layers are barely legible. The language of love, charity, kindness, fellowship, camaraderie, and solidarity reflects the earliest ages, perhaps before money, markets, or even written language. That layer has been over-written for generations. Now, for most people in a market society, the language of markets, investment, and of business is the primary (or only) language for understanding and communicating who and what we are as beings living in community. Impact, along with social investing, social entrepreneurship, inputs/outputs/outcomes, social return, and social return on investment all represent the newest layer in the palimpsest. Solidarity also has political implications: arms linked in solidarity, standing as one people, one tribe, or a community of identity.
Salomon is unique in being able to help us see how many of these languages (some rooted in our political traditions, some in our faith traditions, some in our business traditions, some in our expert professional traditions, some in our our traditions of activism, and some in our shared humanity) are still operative in the way we live within the nonprofit realm(s). With respect to giving as a percentage of GDP, which statement(s) below is (are) correct? I. Giving has varied from 1.5% to 5% of GDP. II. Giving as a percentage of GDP rises and falls in proportion to the rise and fall of the markets. - correct answer ✔✔The correct answer is D. Actually, giving as percentage of GDP stays remarkably constant at about 2%, regardless of the markets. Salamon's survey includes all the values that make the nonprofit sector unique, EXCEPT A) a values guardian B) a service provision C) an expressive function D) effectiveness and efficiency - correct answer ✔✔The correct answer is D. The five values that he found were solidarity, a values guardian, an expressive function, advocacy, and a service provision. Service provision might connect to effectiveness and efficiency, but those terms are drawn primarily from the language and value-system of business. When nonprofits compete with for-profits on effectiveness and efficiency alone, they may lose. What makes nonprofits special, to Salamon, is that they go beyond effectiveness and efficiency to embody, or live up to, the other values he sees as most characteristic of the sector. Which list correctly shows the seven values that Salamon's survey indicates are the founding values of the nonprofit sector? A) productive, empowering, effective, enriching, reliable, responsive, and caring B) profound, elevating, inspiring, loving, dedicated, transcendent, and devoted C) traditional, uplifting, rooted, humane, ethical, spontaneous, and authentic D) informed, capable, kind, healing, personal, resilient, and sustainable - correct answer ✔✔The correct answer is A. Salamon's list includes productive, empowering, effective, enriching, reliable, responsive, and caring. Anomie is an academic term for social isolation and the tendency of a community to crumble out into a collection of alienated, lonely, fearful, self-regarding individuals who do little for one another. A more
Planned giving $.20 -. Historically, what organization(s) has (have) succeeded in planned giving? I. a large, stable organization with access to an older donor base of loyals II. a young organization with access to affluent younger donors and their advisors - correct answer ✔✔The correct answer is A. Advisors may initially find it counterintuitive that planned giving does not generally work out well with donors who are younger and organizations that are newer. Planned giving is not defined as gifts that require advisors to plan them, but as a list of specific tools, the most important of which is bequests. Bequests generally are put in place by older donors and come in when death occurs. Beyond those, planned gifts are generally comprised of split-interest gifts that provide the donor with income (CRT and gift annuities, in particular). These appeal to an aging donor base. Since planned gifts are often deferred, it takes an established, successful organization to undertake a new program. They have to be willing to invest time and money now for a future result that remains uncertain. The older and more established the organization and the older and more loyal the donors the better. In gift planning circles, what is meant by the term "the spend"? A) the annual gift planning budget B) the annual cost of hiring vendors C) the dollar amount or percentage that can be spent from an endowment D) the amount spent in acquiring a gift - correct answer ✔✔The correct answer is C. The spend or spend rate refers to what can be drawn from a restricted or endowed gift to support programs. A $1,000, restricted endowed gift might throw off a spend of 5% or $50,000 that can be spent on the delivery of a program. Sustaining gift, special gift, and ultimate gift are terms used by William Sturtevant and others following in the tradition of Dave Dunlop. With respect to this terminology, which statement(s) below is (are) correct? I. This terminology leads to more commonly used terms: annual gifts, major gifts, and planned gifts. II. Sturtevant's terminology is donor focused. - correct answer ✔✔The correct answer is C. Both are correct. The point is that the language of planned giving is institutional. Planned giving is what planned gift officers solicit with specific tools within a specific institutional department. Planned gifts are on the third floor, so to speak, major gifts are on the second, and annual gifts are on floors one and two. Donors don't talk like that. Sustaining gifts is a wonderful way to say, "Your annual gift sustains our organization. We treasure it because your wonderful gift goes to keep our organization humming." For an annual donor to step up and write a larger gift, even if small to the charity, is special to the donor. The term ultimate gift is tactfully ambiguous. It means the single largest gift, and it hints that it may be the last one, the one made in the light of mortality. On a side note, it is interesting to think back to GS 839 and
how often donor-advisors disparage "checkbook giving" as "spray and pray giving," or as low on the philanthropic learning curve. What Sturtevant's phrase "sustaining gift" honors is the importance of gifts that are unrestricted and can be used to maintain the overall operation of the organization. Which of these would be considered a principal gift? I. $100,000 from the donor's money market account II. $1,000,000 in a closely held business interest - correct answer ✔✔The correct answer is B. The terminology is sometimes a bit hazy, and not all nonprofits use the terms exactly the same way. But as a rule of thumb it would be $1,000,000 or more and most likely from a noncash asset. Principal gifts are sometimes treated as a separate department in large nonprofits or as part of the planned gift function. They are broken out and treated in this way because they are defined as tricky, particularly large, or requiring special expertise. A $100,000 gift of cash is not likely to require special handling. A gift of land, a working business interest, an odd asset like a collection, patents, royalties, Bitcoins, cattle, or timber might be broken out and treated as principal gifts and get pushed onto a specialist on staff. The reason very large gifts are often made from non-cash assets is because that largely is what rich people own! Considering this course in whole, each of these factors are driving the fusion of major and planned gifts, EXCEPT A) a desire to reduce costs and staff B) the urgent need for current dollars C) adverse demographics D) a preference by boards and leadership for a predictable process and results - correct answer ✔✔The correct answer is C. The demographics of the aging baby-boomer population actually favor planned giving. The other factors are driving organizations to pull back from staffing a full-time planned giving function because it is costly, takes time to get results, and the money flow is unpredictable in the short term with gifts that are often contingent and deferred. What is meant by the phrase "the fusion of major and planned gifts"? A) Planned gifts are becoming larger (more major). B) Major gifts now require more planning. C) Major and planned gifts are solicited as part of a lifetime giving plan. D) Planned gift officers are being merged into the major gift role and asked to raise current dollars. - correct answer ✔✔The correct answer is D. Unfortunately, the trend, based on bottom-line pressures, is towards fewer planned gift officers and more emphasis on short-term results through transactional asks.
What is mission drift and how can it be a result of a donor-restricted gift? A) The donor's mission may be in writing in a gift agreement, but the donor's mission can shift and drift over time. B) The organization may sign a gift agreement with the donor but can drift from it over time. C) The donor and charity may agree on a restricted gift, but that gift can lie outside the charity's core mission. D) Both donor and charity have missions and both can drift together or apart. - correct answer ✔✔The correct answer is C. This question is meant to flag an important point that surfaces from time to time in CAP®. We try to take a donor-focused perspective or encourage personalized philanthropy. Yet the risk is, in serving the donor and bringing in a large restricted gift, the fundraiser may hurt the charity by putting the charity off mission. In the charity's eagerness to get the gift, hit campaign totals, or keep an important donor happy, the charity may make promises it cannot keep (leading to law suits). It may find itself putting its energies and even its own funds into a donor-restricted and perhaps under-funded program of little relevance to its purpose. These are sometimes called "gifts that eat." Dr. Steven Meyers is emphatic that, though he engages in personalized philanthropy to serve donor's highest aspirations, he is working for a specific charity. A good gift must meet both the compelling interests of the donor and the compelling needs and capacities of the charity. If the gift causes the charity to drift from mission and flounder in performance, it is a bad gift no matter how large it is. What are the three categories used to sort and report gifts in the "Guidelines for Reporting and Counting Charitable Gifts, Second Edition," by the National Association of Charitable Gift Planners (CGP)? A) current, future, and contingent B) small, medium, and large C) annual, major, and planned D) outright, revocable deferred, and irrevocable deferred - correct answer ✔✔The correct answer is D. The underlying issue here is "the tyranny of one number," as Steven Meyers calls it. Often you will hear that a campaign raised $100 million dollars or some other amount, but, if you break it down, that number might consist of apples, oranges, and marshmallows. For example, it could consist of $10 million in cold cash, $40 million in irrevocable future commitments, and $50 million in revocable deferred money. Perhaps $50 million is in a life insurance face amount that might lapse, bequests that may never happen, and CRT designations that can be changed. How much did the campaign raise? Who knows? Yet, can we say that the $50 million revocable deferred is trivial, funny money, or not worth mentioning? The way these questions get answered affects the job duties, evaluations, and security of planned gift officers (who are the ones raising the deferred gifts and deferred revocable gifts). It is important to count the gifts raised in this way, but it is clearly impossible to add those gifts to cash and get one number. The right way is to report the three numbers by category. But, admittedly, that is more complicated and less inspiring to the board and external constituencies who are more impressed with the $50 million number.
Consider the following scenario: Twenty years ago, a donor, Sam, funded a chair in psychoanalysis at his medical school with $3 million. Fewer students specialize in psychoanalysis, and the medical school would like to reposition the dollars or the chair's duties. The vice president says to the dean, "Just do it. I looked at the gift agreement, and it was all done on a handshake, with some letters back and forth about Sam's goals, with a very clear agreement detailing Sam's financial obligations to us but nothing about our obligation to him other than naming the chair. He made a gift; he got a deduction. It is now our money, and we have to use it for the betterment of our medical school and our students." The dean asks, "What will we tell Sam?" The vice president says, "He is 87; just send him a holiday card or whatever." With respect to the position taken by the vice president, which statement(s) below is (are) true - correct answer ✔✔The correct answer is C. This scenario raises a host of issues that you will find coming up in any number of cases during your career. Perhaps the gift should never have been accepted (mission drift, a gift that eats). Perhaps the gift was once a good gift, but times have changed. Perhaps the school has a divided responsibility: to their mission and to the donor. Maybe those responsibilities have gotten harder to meet. Perhaps the donor would be willing to renegotiate and perhaps not. Perhaps the charity can ignore the original mutual understanding since it was not in an iron clad agreement, and perhaps the charity can get away with it. But the risk to reputation is real, and the agreement or mutual understanding may in fact be enforceable, even if it is based only on the history of the solicitation and that informal paper trail. A moral person is to be careful in making promises. For both the donor and the charity it might be wiser to think about how the gift can be reworked if times change. Or, perhaps it would be wiser to have the gift for a program that runs for only a term of years. Alternatively, if the donor demands perpetual performance and does not trust the charity to do it, perhaps the money should be held in what Steven Meyers calls a virtual endowment, a foundation donor-advised fund or their account held by the donor and paid out over time as the charity performs. Under appropriate circumstances and set boundaries, which of these legal doctrines allows restricted gifts to be repositioned? I. cy pres II. the Uniform Prudent Management of Institutional Funds Act (UPMIFA) - correct answer ✔✔The correct answer is C. Both offer some limited circumstances in which it may be possible to reposition a restricted gift. Cy pres applies when it is no longer possible to meet the terms of the gift (a scholarship for apprentice typesetters, a maintenance fund for a building that has been torn down, medical research fund for a disease that has been cured, and so on). Then the gift may be repositioned with permission of the court to something that is "near enough," or "as close as possible." UPMIFA provides for limited relief when the gift is old enough and cold enough. Old is over 20 years since inception. Cold is a small fund of less than $25,000. "UPMIFA adds a new provision that allows a charity to modify a restriction on a small (less than $25,000) and old (over 20 years old) fund without going to court. If a restriction has become impracticable or wasteful, the charity may notify the state charitable regulator, wait 60 days, and then, unless the regulator objects, modify the restriction in a manner consistent with the charitable purposes expressed in any documents that were part of the original gift."
B) PRI
C) ESG
D) SRI - correct answer ✔✔The correct answer is A. A SIB is special arrangement in which investors bet on a program by a nonprofit to materially improve outcomes in which the government has a big financial stake. A contract is written under which the private investors fund the program. If the program is successful, the government pays a good return to the investor. "Pay for performance" is the mantra. What is GIIRS? A) a global investment rating service that tracks and rates firms for social impact B) a new form of socially screened investment funds that emphasizes global impact investments C) an initiative designed to test the theory that socially responsible firms significantly out-perform a comparable global index D) a mechanism by which a foundation can make a recoverable grant - correct answer ✔✔The correct answer is A. GIIRS is a global investment rating service that tracks and rates firms for social impact. The point is that investors increasingly want a reliable and reputable intermediary to rate investments for impact as well as for return. GIIRS is one of a number of intermediaries springing up to meet this need. What is SASB? A) a standards board geared toward social accountability B) a socially conscious investment fund geared toward fair trade products C) a socially conscious investment product geared toward foundations D) a form of investment in which the government, private investors, and for-profit companies coinvest to create shared value - correct answer ✔✔The correct answer is A. The Sustainability Accounting Standards Board (SASB) is an independent 501(c)3 non-profit. SASB's mission is to develop and disseminate sustainability accounting standards that help public corporations disclose material, decision-useful information to investors. That mission is accomplished through a rigorous process that includes evidence-based research and broad, balanced stakeholder participation.
- "SASB Conceptual Framework," by the Sustainability Accounting Standards Board (SASB), February 2017 The acronym SASB echoes FASB, which is the well-known Financial Accounting Standards Board. The idea is to go beyond purely financial accounting to get companies to account for and disclose their performance against social impact standards.
What for-profit organization makes its money by providing an online platform for those who want to circulate petitions? A) Mightycause B) Change.org C) Indiegogo D) KIVA - correct answer ✔✔The correct answer is B. This is what change.org does, and it has become a big and growing business, with tens of millions of dollars invested by sophisticated, high-wealth impact investors. Deana has significant wealth and a social conscience. She is willing to invest $1 million in a start-up devoted to creating eco-friendly products for use in the third world. Her donation is for the replacement of products that cause environmental degradation in third world countries. She is willing to accept a submarket return, but she is not willing to, as she put it, "wake up one morning and find that the firm I funded has sold out to Wall Street and is going to become just another profit maximizer." What business form was created specifically to address such issues for investors like Deana? A) an LLC B) a B Corp. C) an L3C D) an entrepreneurial social venture - correct answer ✔✔The correct answer is B. A B Corp. is certified as meeting certain socially conscious standards, having been reviewed by B Labs. A B Corp. may commit, in its governance documents, to remaining true to those standards. In effect, the B Corporation framework wires the mission of the company into its governing documents in such a way that the mission cannot be nullified by future managers or owners. With respect to planned giving versus gift planning, which statement(s) below is (are) true? I. Planned giving, as that phrase is traditionally used, is one of three functions or subdivisions within a nonprofit fundraising department: annual, major, and planned, with campaigns as episodic additions. II. Gift planning is a phrase used to describe a donor-centered approach by fundraisers who use major and planned gifts holistically to serve both donor and institution with input from advisors as appropriate.
- correct answer ✔✔The correct answer is C. Both statements are correct. The term "planned giving" is, in a way, institution-centric terminology. Its meaning can only be understood within an institutional division of labor, often expressed in departments and job descriptions where planned giving is one department, major is another, and annual is a third. This could be called bureaucratic. The term gift planning, by contrast, implies that the fundraiser is centered on helping the donor match up the donor's goals with the mission and capacities of the organization. In doing so, the gift officer acts, in part, as a donor consultant and donor advocate, as well as an advocate for the organization. A wide variety of gift tools are used across the various divisions and departments within the nonprofit to obtain a gift.
