Understanding Nonprofit Capital Structure

What are the three key factors that sustain health in a nonprofit organization?

• Mission, organizational capacity, and capital structure

• Program, financial viability, and capital structure

• Leadership, fundraising, and program

• Mission, program, and fundraising

What is capital structure?

• The distribution, nature, and magnitude of an organization's assets, liabilities, and net assets

• The amount of cash a nonprofit organization has

• The number of employees in a nonprofit organization

• The number of programs a nonprofit organization offers

What are some examples of assets in a nonprofit organization?

• Cash, investments, buildings, and equipment

• Programs, staff, volunteers, and donors

• Mission, vision, values, and goals

• Board of directors, executive director, and committees

What are receivables in a nonprofit organization?

• Money due to the organization, such as fees or pledges

• Donations received from individuals or foundations

• The amount of money a nonprofit organization has in the bank

• The value of the organization's buildings and equipment

What is the purpose of capital structure in a nonprofit organization?

• To ensure financial viability and support the organization's mission and program

• To restrict the use of funds and assets

• To increase the organization's revenue and profit

• To provide resources for administrative expenses

How does growth and change affect capital structure in a nonprofit organization?

• It requires expansion of the balance sheet and increased organizational capacity

• It decreases the organization's assets and liabilities

• It has no impact on capital structure

• It increases the organization's cash reserves

What is the risk of an inappropriate capital structure in a nonprofit organization?

• It can elevate fixed costs, freeze resources, and push program growth beyond what is healthy

• It can decrease the organization's revenue and profit

• It can lead to a lack of financial flexibility and liquidity

• It can result in the loss of donors and funding

What is the difference between a nonprofit organization's core business and its program?

• The core business is the underlying business that supports the program

• The core business is the program itself

• The core business is the organization's mission and vision

• The core business is the organization's financial viability

How do donor restrictions on assets and income affect capital structure in a nonprofit organization?

• They can make assets and income illiquid and create risk

• They can increase the organization's cash reserves

• They can decrease the organization's liabilities

• They can restrict the organization's program and mission

What is the impact of an endowment challenge grant on a nonprofit organization's capital structure?

• It can create imbalances and put pressure on unrestricted cash and program

• It can increase the organization's assets and liabilities

• It can decrease the organization's fixed costs

• It can restrict the organization's program and mission