7.3.1 Basic Quiz -- Charitable Corporate Formation and Management Issues

The advantage of an unincorporated association is that its members are not personally liable for the obligations of the association.

True False

Just like a charitable trust or unincorporated association, a corporation does not need to file any documents with a state agency to be created.

True False

For a limited liability company created by a tax-exempt organization to be tax exempt itself, the limited liability company must submit its own application for tax-exempt status.

True False

In a fiscal sponsorship scenario, the sponsoring organization cannot act merely as a conduit to channel funds to the sponsored organization.

True False

While Sec. 501(c)(3) organizations are discouraged from having a substantial part of their activities consist of the influencing of legislation or the carrying on of propaganda, there are no negative tax consequences for doing so.

True False

Private foundations are absolutely prohibited from lobbying.

True False

Very few not-for-profit entities must abide by state-law fiduciary standards when it comes to operating and managing affiliated entities.

True False

There are no particular restrictions or requirements imposed upon functionally integrated Type III SOs compared to Type I, Type II or Type III non-functionally integrated SOs.

True False

For private foundations, program-related investments do not count towards the foundation's annual distribution requirement.

True False

If a program-related investment begins to generate a high rate of return on the investment, the investment may be disqualified.