Many times, organizations "morph" as the realities of actually operating sink in, or as the external environment changes. Your original mission statement may need to be tweaked or even completely rewritten, depending on the circumstances.
When and How to Update Your Mission
In any case, your charitable nonprofit organization's mission statement should be revisited periodically to see if it still fits your work. It is also imperative that you reconsider the mission statement as part of any new planning you may do, such as putting together or changing your strategic plan.
When reconsidering your mission statement, you will want to ask questions such as:
- Is the original problem we tackled still an issue?
- Should we narrow or broaden it?
- Does our mission statement give us enough flexibility so we can to change and grow?
A mission statement is your organization's touchstone for everything beginning with your application for a 501(c)(c3) tax exemption as a charity . The IRS only grants that exemption for specific purposes, such as charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals . That purpose should be embodied in your mission statement.
Always, as you develop programs, apply for grants, and pursue your goals, ask yourself if what you're doing still fits with your original exempt purpose and your mission statement.
An Example: The March of Dimes
An example of a changing environment occurred when polio was eradicated in the U.S. by the Salk vaccine. The March of Dimes had been set up specifically to serve polio victims and search for a cure. As polio was gradually beaten back, the March of Dimes faced an evolving identity crisis. Should they go out of business or change the mission? The organization chose to change the mission, a wise decision since there was a robust infrastructure in place. The March of Dimes re-focused on preventing birth defects, premature birth, and infant mortality.
An organization must have one or more qualifying exempt purposes to be eligible for 501(c)(3) tax-exempt status. The exempt purpose should be embodied in a mission statement, which may be found in an organization’s bylaws and its articles of incorporation.
Amendments to an organization’s mission statement will usually not jeopardize the organization’s 501(c)(3) tax-exempt status so long as the mission statement remains consistent with a tax-exempt purpose and the change is disclosed to the IRS on Form 990 or 990-EZ along with the amended organizational documents.
Impact on Donations
A related consideration is the charitable trust doctrine. The charitable trust doctrine requires that a gift accepted by a charitable corporation must only be used for the expressly declared charitable purposes of the charitable corporation at the time of the acceptance.
This restriction applies regardless of whether the donor expressly imposed such restriction or the corporation later changes its purpose, transfers those assets, or dissolves. Therefore, if the change to the mission statement is substantial, use of the charitable contributions received and perhaps even revenues generated before the change may be limited to furthering only the pre-amended mission statement.
When and How to Change a Name
An incorporated nonprofit organization files articles of incorporation with the Secretary of State in its state of incorporation. The name on the articles of incorporation is the business name kept on file with the state. Thus, any subsequent legal name change should be appropriately amended on the articles of incorporation and filed with the state for a small fee.
The organization must also report the name change to the IRS on Form 990 or 990-EZ and attach a copy of the certified articles of incorporation reflecting the name change. If the organization is not required to file an annual return because its revenue falls below the filing threshold, it may still report the change to the EO Determinations Office. It is also advisable, but not required, for the organization to request an updated determination letter showing the organization’s new name.
If an organization seeks instead to use a fictitious business or 'doing business as' name for purposes of operating under an alternative name, this will not result in a legal name change of the organization. In such a situation, the organization must file the appropriate paperwork with the state for registering a fictitious business name. The organization must also disclose the alternate name to the IRS on Form 990. If the organization is not required to file a Form 990, it may still report the alternate name to the EO Determinations Office.
This communication was not written or intended to be used, and may not be used, by any taxpayer for the purpose of (i) avoiding any tax-related penalty under the Internal Revenue Code, or (ii) promoting, marketing or recommending a tax-related transaction described herein.