A nonprofit’s mission describes the purpose and reason for being of the organization. Although a mission statement should always be consistent with the nonprofit’s “specific purpose statement” described in the Articles of Incorporation, the mission statement is generally crafted with an eye to the public. A well-conceived mission statement motivates donors, inspires volunteers, and encourages support.
An organization’s mission is often articulated on its website, marketing materials, and other publications. When an organization decides to change its mission, legal issues may be triggered depending on the significance of the change and also where the mission is stated.
For example, when considering an overhaul of organization’s mission, a threshold consideration is whether the change remains consistent with tax-exempt purposes specified in Section 501(c)(3) of the Internal Revenue Code (the “Code”). Below are some additional considerations when changing a nonprofit’s mission:
Governing Documents. Generally, the board must approve changes to an organization’s mission. If the nonprofit’s mission is stated on its Articles of Incorporation and/or Bylaws, and the new mission statement is substantively different from the existing one, board action must be taken to amend those documents and, in the case of the Articles, the amendment must be filed with the Secretary of State.
Consistency. An organization’s mission should remain consistent in all publications. Thus, if a nonprofit decides to amend its mission, the change should be implemented everywhere– including on its website, a letter to a donor, and a grant application. Consistency promotes good governance by keeping the organization’s mission clear and focused.
- Charitable Trust Doctrine. A change to an organization’s mission may affect donations received by the organization. Use of charitable funds is generally limited to the activities specified in the corporation’s governing documents and possibly on its solicitation materials at the time such funds were received. If an organization’s mission broadens, for example, from supporting musical education, to fostering all arts education programs, contributions received under the original mission are limited by the charitable trust doctrine, and may only be used pursuant to those limitations.
A nonprofit’s mission should be specific enough to provide organizational clarity and prevent mission drift. Most changes to the mission should be approved by the board, as any change may affect public perception and support. Keeping the above considerations in mind will allow an organization to change its mission thoughtfully and strategically and anticipate the consequences of such change. Any substantial change to the organization’s mission must also be reported to the IRS on its Form 990 annual information return.