Domain 2: Fundraising and Resource Development
What the exam tests
Fundraising and Resource Development tests the donor cycle, gift vehicles, restricted giving, ethical standards, and how fundraising fits the annual plan.
Core rules
- Donor cycle: identify, qualify, cultivate, solicit, and steward. Stewardship-acknowledgment, impact reporting, and thoughtful re-solicitation-is part of the cycle, not an afterthought.
- Channels: annual fund (broad and repeatable), major gifts (relationship-managed), planned giving (bequests, charitable gift annuities, charitable remainder trusts, donor-advised funds), grants, corporate sponsorships, and in-kind gifts.
- Restricted gifts are legally bound to donor intent. The organization needs a gift acceptance policy, a process to accept or decline, and accounting that tracks restrictions. Using a restricted gift for another purpose requires donor consent or a legal release.
- Sponsorships purchase visibility and may trigger unrelated business income; charitable gifts carry no substantial return benefit. A quid pro quo contribution over $75 requires a disclosure statement.
- Ethics: AFP's Code of Ethical Standards prohibits percentage-based compensation for fundraising, requires confidentiality and honesty, and requires respect for donor intent. The Donor Bill of Rights is a useful framework.
Worked example
A donor gives $50,000 "for the new playground." Midyear, the organization has a salary shortfall and the finance director moves the funds to payroll. That is a breach of donor restriction and of the duty of obedience. Correct handling: keep the gift in a restricted net asset account, report the balance to the board, and ask the donor in writing to modify the restriction. If the donor refuses and the project is canceled, the organization may need to return the funds or seek court approval under state law.
Traps that cost marks
- Calling a sponsorship a "gift" when it includes advertising benefits.
- Accepting a restricted gift the organization cannot administer.
- Paying a fundraiser a percentage of gifts raised.
- Skipping stewardship and reporting after the gift is booked.