Mission drift is common in not-for-profit organizations, particularly if they’ve been active for a long time. Your local community probably has grown, the issues surrounding your mission may have evolved and new nonprofits may be addressing some of the same problems. In such circumstances, it makes sense to shift your focus and use your funds where they’ll do the most good. But don’t drift too far without formalizing the changes. You’ll need to notify your stakeholders, as well as the IRS, about a significant mission shift.
Taking a long, hard look
Sometimes organizations have no choice but to shift their mission. For example, perhaps you’ve championed a cause that has been successfully resolved. Or maybe the population you’ve served is no longer present in your community.
Other times, the decision isn’t as clear-cut. Your board should look at where you’ve been and where you’re heading. Members should ask whether the services you currently provide are still needed and, if your mission has drifted, whether it’s now focusing on what you consider the most critical issues. Your board may decide to expand, contract or modify your nonprofit’s existing mission.
Drawing up a new statement
It’s generally easy for 501(c)(3) organizations to change their mission statements without major disruption. You just need to make sure your new mission qualifies as tax-exempt.
Your board should develop a new mission statement following procedures similar to the ones used at inception. The statement should be descriptive, but not so detailed that it limits your nonprofit and its growth. Once the board approves the new mission statement, your bylaws and Articles of Incorporation should be amended according to your existing bylaws. Unless otherwise stated, bylaws may be amended by a vote of at least a two-thirds majority.
Notifying supporters and the IRS
You can notify the IRS immediately about a change in your organization’s mission or bylaws, but there’s no legal requirement to do so. You can instead wait until you file your annual Form 990. At that point, the IRS will contact you if it has any questions.
On the other hand, don’t delay notifying donors and grant makers. In general, nonprofits must use donations for the purpose specified by donors. If you’ve accepted a large donation intended for a program that’s discontinued after you change your mission, contact the donor immediately. After you explain the change, this supporter may allow you to use the donation for another purpose consistent with your new mission. If not, you’ll need to return the funds.
To get the word out to stakeholders and your community, use your website, newsletter and social media accounts. Large nonprofits with wide regional or national appeals generally distribute formal press releases. Smaller nonprofits may want to contact local media outlets. Finally, review and, potentially, revise all public communications to ensure they reflect your new mission statement.
Avoiding old attitudes
You’re not done yet! You’ll need to monitor your programs and initiatives to ensure they’re consistent with your new mission. To that end, you may want to provide retraining for staffers to help ensure they all understand the current focus and are carrying out your mission with a fresh attitude. If you have questions about how changing your mission could affect your tax-exempt status, contact us.
DISCLAIMER:
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The services of an appropriate professional should be sought regarding your individual situation.
