Chapter 6: Ensuring Accountability and Measuring Performance

Test Bank

Multiple Choice

1. Which government entity grants nonprofit charters?

A. city

B. state

C. county

D. federal

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Mechanisms for Accountability

Difficulty Level: Easy

2. According to your textbook author, taking responsibility for one’s actions is being ______.

A. liable

B. mature

C. amenable

D. accountable

Learning Objective: 6-1: Define the concepts of accountability, effectiveness, and performance.

Cognitive Domain: Knowledge

Answer Location: Defining and Ensuring Accountability

Difficulty Level: Easy

3. Upward accountability means being accountable to ______.

A. staff

B. clients

C. donors

D. board members

Learning Objective: 6-1: Define the concepts of accountability, effectiveness, and performance.

Cognitive Domain: Knowledge

Answer Location: Defining and Ensuring Accountability

Difficulty Level: Easy

4. What organization was created in 1918 to educate the public about nonprofit organization behavior in order to reduce incidents of charity fraud?

A. BoardSource

B. Independent Sector

C. Internal Revenue Service

D. National Charities Information Bureau

Learning Objective: 6-3: Summarize the major points included in prominent standards for nonprofit accountability.

Cognitive Domain: Knowledge

Answer Location: Transparency

Difficulty Level: Easy

5. A method used to determine if specific programs are achieving goals is called ______.

A. systems theory

B. program evaluation

C. statistical benchmarking

D. effectiveness evaluation

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Performance Measurement: The Continuing Debate

Difficulty Level: Easy

6. A mechanism for holding nonprofit organizations accountable is ______.

A. lucidity

B. autocracy

C. transparency

D. impenetrability

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Mechanisms for Accountability

Difficulty Level: Easy

7. Measuring program expenses to contributed income is an example of applying a ______.

A. dashboard

B. benchmark

C. logic model

D. financial ratio

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Financial Ratios

Difficulty Level: Easy

8. Which term below defines organizational comparisons?

A. accreditation

B. benchmarking

C. cost–benefit analysis

D. performance evaluations

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Benchmarking

Difficulty Level: Easy

9. Which type of benchmarking is used to identify an organization’s strengths and weaknesses?

A. peer

B. outcome

C. statistical

D. corporate

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Benchmarking

Difficulty Level: Easy

10. Which assessment tool listed below is used to determine an organization’s success in accomplishing its mission?

A. outcomes

B. financial ratios

C. peer evaluation

D. cost–benefit analysis

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Outcomes

Difficulty Level: Easy

11. A tool used to study the links between inputs and outcomes is a/an ______.

A. logic model

B. financial ratio

C. balanced scorecard

D. systems theory model

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Outcomes

Difficulty Level: Easy

12. Which tool below is used to compare financial data with other measurable factors to study organizational performance?

A. logic model

B. balanced scorecard

C. comparison indicator

D. cost–benefit analysis

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Balanced Scorecard

Difficulty Level: Easy

13. A nonprofit manager measures the organization’s performance by monetizing program costs along with created social value. The manager measures the ______.

A. logic model costs

B. social return on investment

C. investment made in employee salaries

D. financial value of volunteer contributions

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Social Return on Investment

Difficulty Level: Easy

14. An alternative approach to measuring social return on investment is a/an ______.

A. input statement

B. social dashboard

C. balanced scorecard

D. stakeholder impact statement

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Social Return on Investment

Difficulty Level: Easy

15. ______ is assessing an organization’s social return on investment along with environmental impact.

A. Blended value

B. Financial ratio

C. Comparison indicators

D. Environmental impact statement

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Blended Value

Difficulty Level: Easy

16. One disadvantage of using the social return on investment measure process is that ______.

A. a cost–benefit analysis cannot be made

B. the analysis process is resource intensive

C. it cannot be used to measure intangible information

D. the data cannot be reported on the Internal Revenue Service Form 990

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Blended Value

Difficulty Level: Easy

17. The concept of investing organizational funds to measure social, environmental, and financial return is called ______ investing.

A. impact

B. benchmark

C. community

D. environmental

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Blended Value

Difficulty Level: Easy

18. According to blended value theorists, value has three components: environmental, social, and ______.

A. artistic

B. spiritual

C. academic

D. economic

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Blended Value

Difficulty Level: Easy

19. A theory that posits that the proposed management practices may generate much attention but not directly impact an organization’s main work is ______ managerialism.

A. fad

B. ineffectual

C. nonacademic

D. disconnected

Learning Objective: 6-5: Explain the pros and cons of various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Performance Measurement: The Continuing Debate

Difficulty Level: Easy

20. In 2004, the Urban Institute and the Center for What Works identified _____ that could be practical to implement.

A. goals

B. values

C. outcomes

D. objectives

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Outcomes

Difficulty Level: Easy

21. A nonprofit organization placed a Better Business Bureau national charity seal in its promotional materials. The organization is demonstrating ______.

A. efficiency

B. effectiveness

C. transparency

D. performance

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Application

Answer Location: Outcomes

Difficulty Level: Medium

22. Private organizations that evaluate the performance of nonprofit organizations are called charity ______.

A. police

B. monitors

C. observers

D. watchdogs

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Chapter Summary

Difficulty Level: Easy

23. The leader of a nonprofit organization is comparing the costs of conducting a fund-raising event to the amount of funds raised. The leader is conducting a/an ______.

A. logic model study

B. dashboard analysis

C. cost–benefit analysis

D. benchmarking assessment

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Application

Answer Location: Social Return on Investment

Difficulty Level: Easy

24. A leader of a nonprofit organization is electronically filing a Form 990-N with the Internal Revenue Service. The leader is filing a/an ______.

A. e-card

B. e-notice

C. e-return

D. e-Postcard

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Requirements of Law

Difficulty Level: Easy

25. A board of directors hired a consultant to evaluate their nonprofit organization’s legal compliance. According to Paton’s dashboard, the nonprofit is assessing the organization’s ______.

A. risks

B. assets

C. capabilities

D. underlying performance

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Balanced Scorecard

Difficulty Level: Easy

26. A provision of the ______ requires nonprofit organizations with unrelated business income make their Forms 990 public.

A. Sarbanes–Oxley Act of 2002

B. Tax Cuts and Jobs Act of 2017

C. Pension Protection Act of 2006

D. Charitable Solicitation Act of 2016

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Comprehension

Answer Location: Requirements of Law

Difficulty Level: Medium

27. A private sector corporation is making a large donation to a nonprofit organization as a show of community support. This action is an example of ______.

A. self-regulation

B. a financial ratio

C. impact investing

D. applying a logic model

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Application

Answer Location: Blended Value

Difficulty Level: Medium

28. Another name for statistical benchmarking is a ______.

A. logic model

B. social return

C. financial ratio

D. comparative performance measurement

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Benchmarking

Difficulty Level: Easy

29. As a result of his participation in a nonprofit organization’s program to assist underserved youth, Greg graduated from college. This is an example of a/an ______.

A. input

B. activity

C. outcome

D. common indicator

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Comprehension

Answer Location: Outcomes

Difficulty Level: Medium

30. An organization’s financial results are a measure of ______.

A. efficiency

B. coherence

C. effectiveness

D. accomplishment

Learning Objective: 6-4: Describe various approaches to measuring organizational performance.

Cognitive Domain: Knowledge

Answer Location: Measuring and Managing Performance

Difficulty Level: Easy

True/False

1. The three principal mechanisms by which nonprofits are held accountable are the rule of law, self-regulation, and transparency.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Mechanisms for Accountability

Difficulty Level: Easy

2. Requirements of the law covering the accountability of nonprofit organizations are included in the Sarbanes–Oxley Act of 2002.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Requirements of Law

Difficulty Level: Easy

3. There are specific “best practice” standards that nonprofit organizations are required to comply with.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Defining and Ensuring Accountability

Difficulty Level: Easy

4. The Better Business Bureau has standards prescribing how a nonprofit should conduct business.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Transparency

Difficulty Level: Easy

5. A “seal of approval” by a charity watchdog tells potential donors that your nonprofit is beyond reproach.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Transparency

Difficulty Level: Easy

6. How much a nonprofit spends on fund-raising is a method of financial performance measurement.

Learning Objective: 6-4: Describe various approaches to measuring organizational performance,

Cognitive Domain: Knowledge

Answer Location: Financial Ratios

Difficulty Level: Easy

7. Benchmarking is a way nonprofits compare themselves to similar organizations.

Learning Objective: 6-4: Describe various approaches to measuring organizational performance,

Cognitive Domain: Knowledge

Answer Location: Benchmarking

Difficulty Level: Easy

8. The logic model is a method used to measure a nonprofit’s financial management capabilities.

Learning Objective: 6-4: Describe various approaches to measuring organizational performance,

Cognitive Domain: Knowledge

Answer Location: Outcomes

Difficulty Level: Easy

9. The acronym SROI stands for “standard run on inventory.”

Learning Objective: 6-4: Describe various approaches to measuring organizational performance,

Cognitive Domain: Knowledge

Answer Location: Social Return on Investment

Difficulty Level: Easy

10. Performance measurement is one way a nonprofit can ensure it is achieving its mission.

Learning Objective: 6-4: Describe various approaches to measuring organizational performance,

Cognitive Domain: Knowledge

Answer Location: Measuring and Managing Performance

Difficulty Level: Easy

Short Answer

1. Name and explain three principal mechanisms used to hold nonprofits.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Comprehension

Answer Location: Mechanisms for Accountability

Difficulty Level: Medium

2. Identify and differentiate the types of watchdog organizations that monitor nonprofit organizations. Are their effects positive or negative? Why?

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Analysis

Answer Location: Transparency

Difficulty Level: Hard

3. Name and define the Principles for Good Governance and Ethical Practice categories.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Knowledge

Answer Location: Self-Regulation: Standards and Accreditation

Difficulty Level: Easy

4. Examine and explain best practice accreditation programs. What are the positives and negatives, if any, of such programs?

Learning Objective: 6-5: Explain the pros and cons of various approaches to measuring organizational performance.

Cognitive Domain: Analysis

Answer Location: Self-Regulation: Standards and Accreditation.

Difficulty Level: Hard

5. Compare and contrast the terms “effectiveness” and “efficiency.”

Learning Objective: 6-1: Define the concepts of accountability, effectiveness, and performance.

Cognitive Domain: Analysis

Answer Location: Measuring and Managing Performance

Difficulty Level: Hard

6. Identify the four key variables of the United Way outcomes model. Select a nonprofit organization and demonstrate how the United Way may or may not apply the variables.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Application

Answer Location: Outcomes

Difficulty Level: Medium

7. Identify the four perspectives used on a balanced scorecard to analyze an organization. Explain the pros and cons of using these four perspectives as discussed in the text.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Comprehension

Answer Location: Mechanisms for Accountability

Difficulty Level: Medium

8. Identify the components of the McKinsey & Company assessment model for nonprofit organizations and apply each of the components to a nonprofit organization that you are familiar with.

Learning Objective: 6-7 Identify appropriate performance metrics related to an organization’s mission.

Cognitive Domain: Application

Answer Location: Performance Measurement: The Continuing Debate

Difficulty Level: Medium

9. Draw a basic logic model for a program that is offered by a nonprofit organization that you are familiar with. Label and explain each part of your model.

Learning Objective: 6-6: Create a basic logic model for a program.

Cognitive Domain: Application

Answer Location: Outcomes

Difficulty Level: Medium

10. Explain the advantages and disadvantages of applying a financial ratio performance assessment model.

Learning Objective: 6-5: Explain the pros and cons of various approaches to measuring organizational performance.

Cognitive Domain: Comprehension

Answer Location: Financial Ratios

Difficulty Level: Medium

11. Compare and contrast the terms “performance measurement” and “performance management.”

Learning Objective: 6-1: Define the concepts of accountability, effectiveness, and performance.

Cognitive Domain: Analysis

Answer Location: Measuring and Managing Performance

Difficulty Level: Hard

12. Simplify the social constructionist approach to understand the effectiveness of nonprofit organizations. Explain your response.

Learning Objective: 6-2: Explain current mechanisms for ensuring the accountability of nonprofit organizations.

Cognitive Domain: Analysis

Answer Location: Performance Measurement: The Continuing Debate

Difficulty Level: Hard

13. Explain Schambra’s “empire of empiricism” and take a position agreeing or disagreeing with Schambra’s argument. Explain your position.

Learning Objective: 6-5: Explain the pros and cons of various approaches to measuring organizational performance.

Cognitive Domain: Analysis

Answer Location: Performance Measurement: The Continuing Debate

Difficulty Level: Hard