Final answer:
A nonprofit organization seeking to fund a building project without offering collateral could issue debentures, which are backed by the organization's reputation. This type of funding allows the nonprofit to maintain control without involving shareholders, unlike equity shares.
Step-by-step explanation:
If a nonprofit organization needs to raise funds for a building project, it could issue debentures, which are backed only by the organization's reputation. The correct answer to the provided question is D) Debentures.
Debentures are a type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. For a nonprofit organization looking to fund a building project, debentures offer a way to borrow money without giving up control of the organization, as they would not be involving shareholders in the same way that issuing equity shares would. This differs from bonds, which might be backed by specific assets or revenue streams.
When firms opt to raise financial capital, they have different methods available, such as borrowing from a bank, issuing bonds, or selling equity. Debentures represent a way to access capital through debt while maintaining organizational control, as opposed to selling equity, which involves selling ownership and becoming accountable to shareholders.