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CFRE practice questions

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Question 1Current and Prospective Donor Research

In prospect research, the linkage–ability–interest model is used primarily to do which of the following?

  1. Assess whether a prospect is worth cultivating Correct answer.
  2. Determine the tax deductibility of a planned gift
  3. Measure staff performance in major gift portfolios
  4. Calculate the organization's annual fundraising costs

Explanation

Linkage, ability, and interest are the three tests of prospect readiness: a connection to the organization, financial capacity, and affinity for the mission. Prospects strong on all three are prioritized for cultivation, while gaps point to specific next steps.

Question 2Current and Prospective Donor Research

In donor databases, a prospect's capacity rating most commonly estimates which of the following?

  1. The prospect's estimated maximum gift capacity Correct answer.
  2. The prospect's preferred communication channel
  3. The number of solicitations made last year
  4. The prospect's likelihood to renew an annual gift

Explanation

A capacity rating estimates the largest gift a prospect could reasonably make, based on wealth indicators and known philanthropy. It is distinct from likelihood ratings, contact preferences, and solicitation history, which are recorded in separate fields.

Question 3Current and Prospective Donor Research

Which practice best maintains the accuracy of prospect research data over time?

  1. Limiting record access to a single staff member
  2. Collecting every available data point regardless of its use
  3. Storing research notes only in individual staff email inboxes
  4. Reviewing and updating records on a scheduled basis Correct answer.

Explanation

Accurate prospect data depends on routine verification, standardization, and deduplication. Scheduled record review keeps contact details, capacity ratings, and relationship notes current and supports privacy compliance.

Question 4Current and Prospective Donor Research

Wealth screening of a donor file typically identifies which of the following?

  1. The optimal date to mail each solicitation
  2. Prospects showing high giving capacity Correct answer.
  3. The names of donors who prefer planned gifts
  4. The exact amount each donor will give next year

Explanation

Wealth screening flags prospects whose public assets, business affiliations, or giving history suggest high capacity. It produces indicators for prioritization, not precise predictions of gift amounts or timing.

Question 5Current and Prospective Donor Research

Segmenting donors by recency, frequency, and monetary value (RFM) is primarily used to do which of the following?

  1. Predict the stock market value of a donor's assets
  2. Replace the need for prospect research
  3. Prioritize donors by giving behavior Correct answer.
  4. Verify a donor's employment history

Explanation

RFM analysis ranks donors by how recently they gave, how often they give, and how much they give. Those behavioral scores help segment outreach and identify donors ready for upgrade or stewardship.

Question 6Current and Prospective Donor Research

A prospect pipeline in a fundraising office is best described as which of the following?

  1. A list of every donor who has ever made a gift
  2. The annual budget approved for fundraising events
  3. The software platform used for mass email
  4. A managed pool of prospects at defined stages Correct answer.

Explanation

A pipeline is a managed group of prospects tracked through stages such as identification, qualification, cultivation, solicitation, and stewardship. It is a process and management tool, not a historical donor list or a software product.

Question 7Current and Prospective Donor Research

When collecting personal information about prospective donors, the primary ethical obligation is to do which of the following?

  1. Share data freely with partner charities
  2. Retain all data indefinitely for future use
  3. Gather information from any source without disclosure
  4. Collect only necessary data and be transparent Correct answer.

Explanation

Ethical donor research follows data minimization, transparency, and purpose limitation. Organizations should collect only information relevant to fundraising and explain how it is used and protected.

Question 8Current and Prospective Donor Research

A donor satisfaction survey is most useful for which of the following?

  1. Understanding donor motivations and preferences Correct answer.
  2. Setting the chief executive's compensation
  3. Replacing gift acknowledgment letters
  4. Calculating the organization's audited annual revenue

Explanation

Donor surveys capture motivations, interests, communication preferences, and satisfaction. That insight informs cultivation and stewardship; it does not replace financial reporting or acknowledgment processes.

Question 9Current and Prospective Donor Research

A prospect researcher wants to verify a prospect's current job title. Which source is most reliable?

  1. The employer's official website or filings Correct answer.
  2. An undated personal social media profile page
  3. A rumor shared by a board member
  4. A blog post from five years ago

Explanation

Current employment is best verified through authoritative, current sources such as the employer's own website or regulatory filings. Undated profiles, old posts, and hearsay are weaker and should be corroborated.

Question 10Current and Prospective Donor Research

In a fundraising campaign, a gift range chart helps do which of the following?

  1. List the names of every prospective donor in the campaign
  2. Calculate the tax treatment of each campaign gift
  3. Rank staff by their solicitation success rate
  4. Show gifts needed at each level to reach the goal Correct answer.

Explanation

A gift range chart translates the campaign goal into a pyramid of gifts, showing how many prospects and gifts are needed at each level. It guides solicitation planning and helps test whether the goal is realistic.

Question 11Current and Prospective Donor Research

A major gift officer's portfolio contains 150 prospects, and cultivation is slipping. What is the best first step?

  1. Pause all contact until the next fiscal year begins
  2. Qualify and tier prospects by viability Correct answer.
  3. Add 50 more names to the officer's portfolio
  4. Send the same appeal to everyone on the list

Explanation

Portfolio management requires qualification and tiering so each prospect receives attention proportionate to capacity and readiness. Adding names or sending undifferentiated appeals worsens the workload without improving results.

Question 12Current and Prospective Donor Research

A predictive model scores donors on their likelihood to give. What is the best use of those scores?

  1. To prioritize outreach and tailor solicitations Correct answer.
  2. To replace all human judgment in solicitations
  3. To publicly rank donors by their generosity levels
  4. To determine the tax deductions for each donor

Explanation

Predictive scores are decision-support tools that help order outreach and customize strategy. They complement, rather than replace, professional judgment and do not determine tax treatment or public rankings.

Question 13Current and Prospective Donor Research

When researching a corporation as a prospective donor, which question is most relevant to ask first?

  1. What is the chief executive's total compensation?
  2. Has the company ever received a grant?
  3. How many employees work in each department?
  4. Is there a giving program aligned with our mission? Correct answer.

Explanation

Corporate research starts with whether the company has a giving program, foundation, or community priorities that fit the mission. Salary, headcount, and grant history are secondary details unless they relate to that fit.

Question 14Current and Prospective Donor Research

Reviewing a foundation's Form 990-PF is useful because it does which of the following?

  1. Guarantees future funding for the organization
  2. Reports the foundation's staff satisfaction scores
  3. Shows prior grant recipients and amounts Correct answer.
  4. Lists the foundation's individual donors

Explanation

Form 990-PF is a public foundation return that reports grants paid, recipients, and amounts. It helps researchers understand a foundation's giving patterns, priorities, and typical grant size.

Question 15Current and Prospective Donor Research

A prospect has strong linkage and ability but has never shown interest in the cause. What is the most appropriate next step?

  1. Solicit immediately at the top gift level
  2. Build engagement and assess affinity before soliciting Correct answer.
  3. Assign the prospect to a volunteer with no relationship
  4. Remove the prospect from all lists permanently

Explanation

Interest or affinity is essential; linkage and ability alone do not justify a solicitation. The appropriate step is to build engagement and test affinity before making a major ask.

Question 16Current and Prospective Donor Research

Under many privacy laws, what is generally required before using a purchased prospect list for outreach?

  1. Publishing the list on the organization's website
  2. Obtaining the seller's marketing materials
  3. Confirm a lawful basis and honor opt-outs Correct answer.
  4. Nothing, because the list was purchased

Explanation

Purchased lists do not eliminate privacy obligations. Organizations generally need a lawful basis for contact, must honor opt-outs, and should be transparent about how data is used.

Question 17Current and Prospective Donor Research

Why is donor lifetime value (LTV) useful in prospect research?

  1. It measures a donor's personal credit score
  2. It sets the interest rate on planned gifts
  3. It estimates long-term donor relationship value Correct answer.
  4. It replaces annual fund reporting requirements

Explanation

Lifetime value estimates the total net contribution a donor relationship may generate over time. It helps justify investment in retention and stewardship, especially for recurring donors.

Question 18Current and Prospective Donor Research

Comparing the organization's donor retention rate with sector benchmarks helps do which of the following?

  1. Reveal individual donors' personal net worth
  2. Determine staff salary levels
  3. Set the price of fundraising event tickets
  4. Show whether performance is typical or needs work Correct answer.

Explanation

Benchmarks provide context for interpreting retention and acquisition results. They show whether the organization is performing in line with peers or whether a trend warrants investigation.

Question 19Current and Prospective Donor Research

After a wealth screening, what should happen to high-scoring prospects who have no prior relationship with the organization?

  1. Delete them to avoid any privacy risk
  2. Verify the data and route them for qualification Correct answer.
  3. Treat them as confirmed major donors
  4. Add them only to the annual fund mail stream

Explanation

Screening scores are indicators that require verification and qualification before solicitation. High-scoring prospects with no relationship should be researched and routed into cultivation rather than treated as confirmed donors.

Question 20Current and Prospective Donor Research

A board member offers to share a prospect's confidential financial details learned through a private club. What is the best response?

  1. Share the details with other board members
  2. Record the details in the database immediately
  3. Use the information quietly without documentation
  4. Decline it and use only lawful sources Correct answer.

Explanation

Prospect researchers should rely on lawfully available sources and avoid confidential information obtained improperly. Accepting or recording such details can create ethical and legal risk for the organization.

Question 21Current and Prospective Donor Research

A prospect research team is asked to rate 2,000 donors for major gift potential with limited staff. Which approach is most efficient?

  1. Manually research all 2,000 donors in detail
  2. Skip research and solicit the largest past gifts
  3. Rate everyone as a major gift prospect
  4. Screen first, then verify a priority subset Correct answer.

Explanation

With large files, a screening model efficiently narrows the pool, and staff then verify and qualify the highest-priority segment. Manual research on every record is rarely feasible or necessary.

Question 22Current and Prospective Donor Research

Which combination is the strongest evidence of philanthropic capacity?

  1. Regular attendance at charity events and a newsletter subscription
  2. Real estate holdings, securities, and prior charitable giving Correct answer.
  3. A large social media following and a luxury car
  4. A prestigious job title and a college degree

Explanation

Capacity is best evidenced by concrete financial and philanthropic indicators, especially combinations of assets and a giving history. Social prominence, job titles, and event attendance alone are weak proxies for wealth.

Question 23Current and Prospective Donor Research

Which category of information falls outside the scope of legitimate donor research?

  1. Protected personal characteristics Correct answer.
  2. Publicly filed real estate property records
  3. Published nonprofit board memberships
  4. Documented prior charitable gifts

Explanation

Legitimate donor research focuses on information relevant to capacity, linkage, and interest. Protected personal characteristics unrelated to giving should not be collected because they pose ethical and legal risk.

Question 24Current and Prospective Donor Research

A campaign feasibility study interviews community leaders. Its main purpose is to do which of the following?

  1. Test the case, leadership, and gift support Correct answer.
  2. Set the interest rate for multiyear pledges
  3. Replace the need for prospect research
  4. Finalize the construction contracts for the project

Explanation

A feasibility study tests whether the case for support, leadership, and prospect base can sustain the campaign goal. It informs planning before contracts, rates, or solicitation schedules are finalized.

Question 25Current and Prospective Donor Research

Which data field is most useful for identifying planned gift prospects?

  1. Volunteer shift attendance
  2. Number of event tickets purchased
  3. Age and asset indicators Correct answer.
  4. Preferred email format

Explanation

Planned gift prospects are often identified through age and asset ownership indicators, such as real estate, securities, or retirement assets. Communication format and event attendance are engagement data, not strong estate-planning signals.

Question 26Current and Prospective Donor Research

Prospect research that is carried out in response to a specific request from a gift officer is best described as which of the following?

  1. Benchmark analysis
  2. Reactive research Correct answer.
  3. Predictive screening
  4. Proactive research

Explanation

Reactive research is triggered by a request from a gift officer or development staff member and usually profiles a named individual or organization. Proactive research originates with the research team and scans the wider database or public sources to surface new prospects before any request exists.

Question 27Current and Prospective Donor Research

In prospect research, a capacity rating represents which of the following?

  1. The prospect's verified net worth at the time of the research
  2. An estimate of the largest gift a prospect could make in a set period Correct answer.
  3. The maximum amount a gift officer may request without approval
  4. The amount a prospect has given to the organization over their lifetime

Explanation

A capacity rating is a forward-looking estimate of the maximum gift a prospect could reasonably be asked for within a defined time frame, usually derived from indicators of assets, income, and giving patterns. It is a judgment range, not a verified figure or a record of past giving.

Question 28Current and Prospective Donor Research

An organization receives a wealth screening file in which 40 percent of prospects are flagged as high capacity. What is the most appropriate next step?

  1. Discard the file because a 40 percent flag rate is too high to be useful
  2. Validate a sample of flagged records against known data first Correct answer.
  3. Send all flagged prospects a major gift proposal within the same month
  4. Assign every flagged prospect to a major gift officer immediately

Explanation

Screening scores are modeled estimates, so a sample of flagged records should be checked against information the organization already trusts before staff time is committed. Validation reveals whether the vendor's model is calibrated to this organization's donor base and where manual review is needed.

Question 29Current and Prospective Donor Research

A prospect briefing prepared for a gift officer before a solicitation visit should primarily do which of the following?

  1. Reproduce every document the researcher gathered on the prospect
  2. Record the researcher's personal impressions of the prospect's character
  3. List every donor in the organization's database for comparison
  4. Summarize capacity, linkages, interests, and a recommended ask range Correct answer.

Explanation

A briefing is an analytical synthesis: it condenses verified information about capacity, connections to the organization, philanthropic interests, and past giving into guidance for the visit. Supporting documentation is retained in the research file rather than attached wholesale.

Question 30Current and Prospective Donor Research

A prospect is the sole owner of a privately held manufacturing company. Which approach best estimates their philanthropic capacity?

  1. Triangulate ownership records, industry benchmarks, and comparable valuations Correct answer.
  2. Use the value of the prospect's primary residence as a proxy for total wealth
  3. Assume the company's value equals its most recent reported annual revenue
  4. Rely on the net worth figure the prospect mentioned in a brief public interview

Explanation

Private company ownership is opaque, so capacity estimates are built by combining ownership filings, industry revenue and margin benchmarks, and valuation multiples for comparable firms. Converging independent sources produces a defensible capacity range rather than a single guess.

Question 31Securing the Gift

Which statement best describes the primary purpose of an annual fund?

  1. To build a permanent endowment that funds future generations
  2. To provide recurring, largely unrestricted revenue for operating needs Correct answer.
  3. To secure a single transformational gift from the top prospect
  4. To finance a one-time facility construction project

Explanation

The annual fund exists to generate predictable, repeatable support that covers ongoing operating costs such as programs, staff, and overhead. Endowment building, capital construction, and transformational gifts are pursued through separate programs with different timelines and solicitation strategies.

Question 32Securing the Gift

A donor names a charity as a beneficiary in her will. This gift is best classified as:

  1. A matching gift
  2. A life income gift
  3. A bequest Correct answer.
  4. A bargain sale

Explanation

A bequest is a gift made through a will or living trust that takes effect at the donor's death, and it is the most common form of planned gift. It costs the donor nothing during life and is revocable until death.

Question 33Securing the Gift

A company agrees to double the amount of any gift its employees make to a nonprofit. This arrangement is known as:

  1. A corporate sponsorship
  2. An in-kind contribution
  3. A challenge grant
  4. A matching gift Correct answer.

Explanation

A matching gift program is an employer benefit under which the company matches charitable contributions made by its employees, usually dollar for dollar or at a set ratio. Organizations should identify eligible donors and prompt them to submit the match paperwork.

Question 34Securing the Gift

The primary function of a written gift acceptance policy is to:

  1. Set minimum gift amounts for each donor category
  2. Provide consistent criteria for accepting or declining gifts Correct answer.
  3. Guarantee that the organization accepts every gift offered to it
  4. Replace board review with a staff approval process

Explanation

A gift acceptance policy gives staff and volunteer leadership agreed standards for reviewing unusual assets, restricted gifts, and gifts that carry risk or cost. It protects the organization, supports consistent decisions, and should require board review of gifts outside the stated criteria.

Question 35Securing the Gift

Stewardship in fundraising refers to:

  1. The systematic identification of new prospects from public records
  2. The activities that thank, inform, and engage donors after a gift Correct answer.
  3. Internal review of a proposal before it goes to a funder
  4. The legal transfer of assets from a donor's estate

Explanation

Stewardship covers everything that happens after a gift is received: prompt acknowledgment, reporting on how funds were used, recognition, and continued engagement. Good stewardship builds the trust that leads to renewed and increased giving.

Question 36Securing the Gift

A case for support is best described as:

  1. A roster of donors who have agreed to serve on a campaign committee
  2. A budget narrative attached to a foundation proposal
  3. The document that articulates why a donor should invest in the organization Correct answer.
  4. A written record of every solicitation made during the fiscal year

Explanation

The case for support states the need, the organization's credible response, and the results donors make possible; it is the core message underlying every solicitation. It is adapted in length and emphasis for different audiences but remains consistent in substance.

Question 37Securing the Gift

A donor signs a written commitment to give $5,000 per year for five years. This arrangement is called:

  1. An in-kind gift
  2. A restricted gift
  3. A pledge Correct answer.
  4. A planned gift

Explanation

A pledge is a formal commitment to pay a specified amount, often in installments over several years, and is typically documented in writing. Because pledge payments arrive in future periods, organizations should track fulfillment and build reminder and stewardship steps into the schedule.

Question 38Securing the Gift

Cultivation of a major gift prospect is best described as:

  1. Building the relationship and interest that precede an ask Correct answer.
  2. Verifying a prospect's real estate holdings and stock portfolio
  3. Thanking the donor and reporting on the use of the gift
  4. Asking for a specific dollar amount at a face-to-face meeting

Explanation

Cultivation is the deliberate sequence of contacts, information sharing, and involvement that deepens a prospect's understanding of and commitment to the organization before solicitation. Rushing from identification to solicitation is a common cause of declined or undersized gifts.

Question 39Securing the Gift

A gift officer screening prospects for a capital campaign should treat which characteristic as the strongest evidence of financial capacity?

  1. A long history of volunteering for local nonprofits
  2. A small but consistent record of online giving
  3. Ownership of significant real estate and marketable securities Correct answer.
  4. Frequent attendance at the organization's cultivation events

Explanation

Capacity is assessed from indicators of wealth such as real property, securities, business ownership, compensation, and prior gifts to comparable institutions. Attendance and volunteer history demonstrate affinity, which is valuable but does not by itself indicate ability to make a major gift.

Question 40Securing the Gift

In a major gift solicitation meeting, best practice calls for the solicitor to:

  1. Offer a menu of amounts and let the donor pick
  2. Let the donor name the first dollar figure
  3. Ask for roughly the amount the donor gave last year
  4. Propose a specific amount grounded in the prospect's assessed capacity Correct answer.

Explanation

An effective solicitation includes a specific, well-researched request that reflects the prospect's capacity, linkage, and interest in the project. Asking for a concrete figure gives the donor something to respond to and avoids the ambiguity that produces undersized gifts.

Question 41Securing the Gift

When preparing a budget for a foundation grant proposal, the development office should ensure that the budget:

  1. Shows only the costs the funder has said it will cover
  2. Rounds all line items up to create negotiating room
  3. Reports prior-year actuals in place of projected costs
  4. Aligns with the narrative and follows the funder's required format Correct answer.

Explanation

Reviewers check whether the budget and narrative describe the same program with the same numbers, and whether the applicant honored the funder's formatting and eligibility rules. Inflated or internally inconsistent budgets undermine credibility and often disqualify a proposal.

Question 42Securing the Gift

What distinguishes a corporate sponsorship from a corporate charitable gift?

  1. The nonprofit issues no acknowledgment for the payment
  2. The sponsor receives specified marketing or promotional benefits Correct answer.
  3. The sponsor claims a charitable deduction for the payment
  4. The company must be a publicly traded corporation

Explanation

A sponsorship is a business arrangement in which the company pays for visibility, access, or other promotional benefits, so it is not purely philanthropic. The charity must tell the sponsor the value of the benefits provided, since only the amount above that value may be treated as a deductible contribution.

Question 43Securing the Gift

Which feature distinguishes a charitable gift annuity from a charitable remainder unitrust?

  1. The annuity may be revoked if the donor's circumstances change
  2. Only the annuity provides the donor with a charitable deduction
  3. Only the annuity can be funded with appreciated securities
  4. The annuity pays a fixed dollar amount for life Correct answer.

Explanation

A charitable gift annuity pays a fixed, guaranteed sum set at the time of the gift, so the donor's income does not vary with investment performance. A unitrust pays a fixed percentage of the trust's assets as revalued each year, so payments rise and fall with the portfolio.

Question 44Securing the Gift

Which statement accurately describes a donor-advised fund?

  1. The fund must distribute its entire balance within the same tax year
  2. Grants may be recommended only to the sponsoring institution itself
  3. The donor deducts immediately and recommends grants over time Correct answer.
  4. The donor retains legal control of the assets in the fund

Explanation

A donor-advised fund is maintained by a sponsoring public charity; the donor receives an immediate deduction when the fund is funded and thereafter recommends grants, which the sponsor approves and pays. Legal control of the assets rests with the sponsor, not the donor.

Question 45Securing the Gift

The primary purpose of a fundraising feasibility study is to:

  1. Solicit the first major gifts for the campaign quietly
  2. Test the case, leadership, and capacity before launch Correct answer.
  3. Calculate the exact cost of the planned construction
  4. Draft the campaign brochure and pledge materials

Explanation

A feasibility study interviews prospective major donors and volunteer leaders to test whether the case is compelling, whether leadership is willing to give and solicit, and whether prospect capacity is sufficient. Its findings inform the goal, timetable, and campaign structure before public launch.

Question 46Securing the Gift

A direct mail program's performance is best evaluated by:

  1. Net revenue returned per dollar spent on the program Correct answer.
  2. The average length of time donors take to respond
  3. The percentage of mailed pieces that generate a gift
  4. The total number of gifts received during the appeal

Explanation

Net revenue per dollar spent combines response rate, average gift, and cost, so it shows whether the appeal actually advanced the organization's finances. A high response rate can still be unprofitable if the average gift is small relative to production and list costs.

Question 47Securing the Gift

Which action is most likely to increase the share of first-time donors who give a second gift?

  1. Adding more donors to the monthly newsletter list
  2. Expanding the number of new names acquired annually
  3. Raising the suggested gift amounts listed on the reply form
  4. Prompt personal thanks and a specific impact report Correct answer.

Explanation

First-time donors are the most likely group to lapse, and the quality and speed of acknowledgment strongly influence whether they return. A timely personal thank-you plus concrete evidence that the gift mattered converts a transactional first gift into a relationship.

Question 48Securing the Gift

A moves management system tracks prospects through which sequence?

  1. Solicitation, identification, stewardship, cultivation, qualification
  2. Cultivation, solicitation, identification, qualification, stewardship
  3. Qualification, cultivation, stewardship, identification, solicitation
  4. Identification, qualification, cultivation, solicitation, stewardship Correct answer.

Explanation

Prospects are first identified, then qualified for capacity and interest, cultivated toward a solicitation, asked for a gift, and stewarded afterward so the cycle can begin again. Tracking each prospect's current stage allows managers to forecast solicitations and allocate gift officer time.

Question 49Securing the Gift

A challenge grant is designed primarily to:

  1. Allow a foundation to make a loan rather than a gift
  2. Fund a program that no other donor has supported
  3. Stimulate giving by matching others' contributions Correct answer.
  4. Replace the organization's annual fund appeal

Explanation

A challenge grant releases funds only when the charity secures specified gifts from other sources, creating urgency and leverage that can prompt new or increased giving. The organization must plan carefully because the challenge money is contingent on meeting the stated conditions within the deadline.

Question 50Securing the Gift

A donor asks that her gift be used anonymously and gives no other restriction. The organization should:

  1. Thank her publicly but withhold the amount of the gift
  2. Omit her name from all public listings while stewarding her privately Correct answer.
  3. Decline the gift since anonymous gifts cannot be stewarded
  4. List her as anonymous publicly but tell the board who gave

Explanation

A request for anonymity is a donor condition the organization is obligated to honor in external communications, while internal records and stewardship contacts continue. Confidentiality should be limited to the smallest possible group of staff and volunteers who need the information to do their jobs.