Not-for-profit Organizations Derives Quiz

20 Questions | Total Attempts: 262

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Organization Quizzes & Trivia

Questions and Answers
  • 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. 
    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

  • 4. 
    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

  • 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. 
    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

  • 17. 
    Not-for-profit corporations cannot lobby or attempt to influence legislation or politicians.
    • A. 

      True

    • B. 

      False

  • 18. 
    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

  • 19. 
     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

  • 20. 
    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.

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