Intense competition for grants and donations has prompted some nonprofit organizations to help support their missions by generating revenues in...
GMAT Reading Comprehension : (RC) Questions
Intense competition for grants and donations has prompted some nonprofit organizations to help support their missions by generating revenues in the marketplace. Generally, however, these groups are led by people who, though entrepreneurial, have never launched a competitive venture. One way for nonprofit organizations to learn from the for-profit sector is to enter business plan competitions, whose sponsors, such as universities, provide free business consulting to entrants and offer awards based on the strength of the business plan developed. The process of developing the plans helps participants understand economic realities and foresee conflicts with their core mission.
For example, CIPO Productions, the 2001 winner of Brazil's Social Entrepreneur Award, was created in 1999 by journalist Anna Penido. The organization offers impoverished young people in northeastern Brazil training in media skills such as journalism, photography, and video production. Recognizing that CIPO's video and computer equipment was in use only part-time, Penido believed she could exploit the idle capacity and sell communications services to other organizations. By producing educational brochures, magazines, and Web sites, CIPO could generate income to supplement the donations that financed its educational work. It would also give its graduates an opportunity to continue their professional development. Realizing that accomplishing these objectives required a viable business plan, Penido submitted a general description of her business idea and its objectives to the competition and was one of 80 applicants accepted in 2001.
Based on the passage, which of the following can be most reasonably inferred about the contestants in business plan competitions?
1. Passage Analysis:
Progressive Passage Analysis
| Text from Passage | Analysis |
|---|---|
| Intense competition for grants and donations has prompted some nonprofit organizations to help support their missions by generating revenues in the marketplace. | What it says: Nonprofits are facing tough competition for funding, so some are trying to make money by selling things/services. What it does: Sets up the main problem/situation the passage will address Source/Type: Author's factual observation about current trends Connection to Previous Sentences: This is our starting point - no previous context to connect to Visualization: Traditional nonprofit funding: Grants + Donations = $100,000 budget NEW approach: Grants + Donations + Marketplace Revenue = $150,000 budget Reading Strategy Insight: This opening sentence tells us exactly what the passage will be about - nonprofits making money through business activities. We should expect examples and explanations of this trend. What We Know So Far: Nonprofits are trying new revenue strategies What We Don't Know Yet: How exactly they do this, what challenges they face |
| Generally, however, these groups are led by people who, though entrepreneurial, have never launched a competitive venture. | What it says: The problem is that nonprofit leaders are business-minded but lack actual business experience. What it does: Identifies the main challenge/obstacle to the solution mentioned in sentence 1 Source/Type: Author's analytical observation Connection to Previous Sentences: - Sentence 1 told us: Nonprofits want to make marketplace revenue - NOW Sentence 2: BUT there's a problem - their leaders don't have business experience - This creates tension that needs resolution Visualization: Nonprofit Leaders: Good intentions + Creative thinking + Zero business competition experience = Need for business education/support Reading Strategy Insight: This is classic RC structure - Problem (sentence 1) + Complication (sentence 2) + Solution coming next. We should expect the author to propose a way to bridge this experience gap. |
• The passage only provides one example (CIPO), which happens to offer educational services
• No evidence suggests "most" contestants provide educational services
• The passage discusses business plan competitions generally, not specifically education-focused ones
Common Student Mistakes:
- Assuming the single example represents all contestants?
→ Remember that one example cannot establish what "most" participants do - Generalizing from CIPO's educational mission to all nonprofits?
→ The passage discusses nonprofits broadly, not just educational organizations
• The passage clearly states sponsors "provide free business consulting to entrants" - all participants get this benefit
• "The process of developing the plans helps participants understand economic realities" - this applies to everyone in the process
• Benefits come from participation itself, not just from winning awards
Key Evidence: "One way for nonprofit organizations to learn from the for-profit sector is to enter business plan competitions, whose sponsors, such as universities, provide free business consulting to entrants"
• CIPO didn't revise its core mission - it found ways to support and enhance it
• The passage shows how business activities can align with existing missions
• No evidence suggests contestants typically change their fundamental purposes
Common Student Mistakes:
- Confusing adding revenue streams with changing core mission?
→ The passage shows organizations can generate revenue while maintaining their original mission - Misreading "foresee conflicts with their core mission" as indicating mission changes?
→ This phrase means learning to avoid conflicts, not changing the mission itself
• The passage discusses nonprofit organizations that want to remain nonprofits while adding revenue
• CIPO stayed nonprofit - it just found ways to supplement donation income
• No evidence suggests contestants want to abandon nonprofit status
Common Student Mistakes:
- Thinking "generating revenues in the marketplace" means becoming for-profit?
→ Nonprofits can earn revenue while maintaining tax-exempt status - Assuming business activities require changing organizational structure?
→ The passage shows nonprofits learning from for-profits, not becoming them
• The passage focuses on learning business skills, not attracting donors
• Competitions provide consulting and planning expertise, not donor connections
• No evidence suggests contestants use competitions for fundraising purposes
Common Student Mistakes:
- Confusing business plan competitions with fundraising events?
→ These competitions focus on business education and planning, not donor cultivation - Thinking all nonprofit activities are about finding donors?
→ This passage specifically discusses generating earned revenue, not soliciting donations