Not-for-profit Organizations Derives Quiz

20 Questions | By Mstewart21 | Last updated: Mar 20, 2022 | Total Attempts: 300

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1.

State regulation of not-for-profit organizations derives from the state's power to:
- A.
  
  Grant exemption from income taxes
- B.
  
  Give legal life to a not-for-profit corporation
- C.
  
  Grant exemption from sales taxes
- D.
  
  Grant licenses for charitable solicitation
2.

To be legally recognized as a not-for-profit organization, the Save the Local Trees Association should:
- A.
  
  Apply or register with the state government where it operates
- B.
  
  Register with the IRS
- C.
  
  Apply or register with the local government(s) where it operates
- D.
  
  All of the above
3.

Federal regulation of not-for-profit organizations derives from the federal government's power to:
- A.
  
  Grant licenses for charitable solicitation
- B.
  
  Grant exemption from federal income taxes
- C.
  
  Grant exemption from sales taxes
- D.
  
  Give legal life to a not-for-profit corporation
4.

The "ongoing compliance" stage of the life cycle of a tax-exempt organization that interacts with the IRS includes:
- A.
  
  Notifying the IRS about a merger
- B.
  
  Application for exempt status with Form 1023
- C.
  
  Meeting public disclosure requirements
- D.
  
  Filing unrelated business income tax returns
5.

Under the IRC, public charities are allowed to conduct direct lobbying activity. What, if any, limit is placed on such lobbying?
- A.
  
  There is no limit provided no propaganda is distributed by the charity
- B.
  
  There is no limit provided no individual or group contributes more than $500 to lobbying activity in any one year
- C.
  
  There is no limit provided the lobbying activity directly affects the NFP's charitable purpose
- D.
  
  There is a limit of up to $1,000,000 a year based on the size of the NFP's exempt program costs
6.

A not-for-porfit organization that is exempt from federal income taxes under IRC Sec. 501(c)(3), exists to make grants to public charities, and receives its support from a small number of individuals or corporations and investment income rather than from the public at large is called a:
- A.
  
  Private foundation
- B.
  
  Public charity
- C.
  
  Nongovernmental organization
- D.
  
  Public foundation
7.

A measure of performance of a not-for-profit organization that captures the efficiency of raising contributions is:
- A.
  
  Unrestricted net assets divided by operating expenses
- B.
  
  Revenues divided by expenses
- C.
  
  Fund-raising expenses divided by public support
- D.
  
  Program expenses divided by total expenses
8.

An example of unrelated business income for which a tax-exempt entity may have to pay taxes at corporate rates is:
- A.
  
  An environmental organization that offers advertising to nonmembers in its annual catalog
- B.
  
  A university that offers computer services to students and faculty for a technology fee
- C.
  
  A credit union that offers members safety deposit boxes for a nominal fee.
- D.
  
  All of the above
9.

The tool the IRS most likely will use when key officers in a tax-exempt entity receive excess economic benefits from transactions with the not-for-profit organization is:
- A.
  
  Fines and forfeits
- B.
  
  Revocation of the organization's tax-exempt status
- C.
  
  Intermediate sanctions
- D.
  
  Public display of offenders on the IRS's Web site
10.

When a tax-exempt organization dissolves, the managers must ensure that:
- A.
  
  All assets are appropriately transferred to another tax-exempt organization
- B.
  
  All creditors get paid
- C.
  
  All federal, state, and local taxes are paid
- D.
  
  All of the above
11.

Tax-exempt organizations must complete a Form 990 and send it to the Internal Revenue Service:
- A.
  
  Only if they have unrelated business income.
- B.
  
  If they are nongovernmental and not a church.
- C.
  
  Whether they are governmental or nongovernmental.
- D.
  
  Only if they are a private foundation, not a public charity.
12.

The Internal Revenue Service may impose intermediate sanctions on all of the following transactions between a not-for-profit organization and its executive officer except:
- A.
  
  Excessive compensation.
- B.
  
  More than the fair rental value for property owned by the officer.
- C.
  
  A bargain on the sale of assets.
- D.
  
  Fringe benefits comparable to those given to all employees.
13.

A tax-exempt organization that receives its support primarily from a large number of individuals or corporations and a relatively small amount from investment income is called a:
- A.
  
  Public charity.
- B.
  
  Private foundation.
- C.
  
  Public foundation.
- D.
  
  Voluntary health and welfare organization.
14.

Public disclosure rules require that a tax-exempt not-for-profit organization:
- A.
  
  Make available a copy of its Form 990 to the public for a period of up to three years.
- B.
  
  Post a copy of its articles of incorporation and by-laws on its Web site.
- C.
  
  Provide a copy of the minutes to all board meetings to any person who requests the minutes within 90 days of the board meeting.
- D.
  
  Make available a copy of its Form 990-T, but not its Form 990, to the public for a period of up to two years.
15.

A good measure of whether a not-for-profit organization is operating its programs efficiently is:
- A.
  
  Fund-raising expenses as a percentage of public support.
- B.
  
  The ratio of program expenses to number of clients served.
- C.
  
  Total revenues divided by total expenses.
- D.
  
  Percentage of total expenses spent on the program function as opposed to support function.
16.

Which of the following statements most accurately describes joint costs?
- A.
  
  Costs that are identifiable with a program, management and general, or fundraising function.
- B.
  
  Staff costs related to fundraising events or campaigns.
- C.
  
  Costs associated with an activity that includes a fundraising component that may be allocated to two or more functional expenses categories if certain criteria are met.
- D.
  
  Costs shared by two organizations conducting a fundraising event or activity in tandem.
17.

A state has the obligation to monitor and regulate a not-for-profit (NFP) organization because it granted the NFP tax-exempt status through the not-for-profit corporation laws.
- A.
  
  True
- B.
  
  False
18.

Not-for-profit corporations cannot lobby or attempt to influence legislation or politicians.
- A.
  
  True
- B.
  
  False
19.

If a tax-exempt organization dissolves and goes out of business, it must distribute its assets to another tax-exempt organization or a governmental entity.
- A.
  
  True
- B.
  
  False
20.

A 501(c)(3 ) organization must provide donors with a written disclosure of the amount of the donation if the donation is $1,000 or more.
- A.
  
  True
- B.
  
  False