Nonprofits often point to their mission, their values, and their vision. Under the purpose-driven board leadership (PDBL) model, these three characteristics set an organization’s purpose. The last of these characteristics, vision, is the one that receives the least attention and likely creates the most confusion.
Here’s the definition I like: An organization’s vision is a clear, aspirational description of the future state the organization seeks to create or become.
Vision and Time Frames
In some cases, the vision may represent a final solution to the problem a nonprofit seeks to solve even if it is unlikely to happen for a very long time.
- A cure for cancer.
- An end to extreme poverty.
- An end to racism.
- Free healthcare for everyone in the country.
- 100% literacy rate.
In other cases, the vision may look ahead to a more finite period of time:
- Spend down to advance the nonprofit’s mission over 20 years
- Restoration of Roe v. Wade.
- Preservation of a specific parcel of land.
- Safe drinking water for the community.
- Building of a public library.
Sometimes, the vision may look to ongoing contributions by the nonprofit without end:
- Free weekly concerts.
- High quality senior center services.
- Grants to support foster youth.
- Awards for promoting equity.
- Preservation of wildlife in a sanctuary.
How is Governance Related to an Organization’s Vision?
Nonprofit board members have a duty of care and a duty of loyalty to act in good faith with reasonable care in the best interests of the organization. The best interests of a charitable nonprofit must take into account its mission, values, and vision.
The ALI Restatement of the Law, Charitable Nonprofit Organizations (the “Restatement”) provides: “A fiduciary of a charity has a duty to: … [a]ct in good faith and in a manner the fiduciary believes to be in the best interests of the charity in light of its purposes ….” The Restatement explains:
A fiduciary’s good faith belief in what is the best interest of the charity must be objectively reasonable in light of the charity’s purposes. Thus, the best interests of a charity may not be in its perpetuation; rather, in some instances, a charity’s purposes may be better carried out by its dissolution and the transfer of its assets to another charity to be used for similar charitable purposes.
The best interests of a nonprofit must also be considered across different time-horizons. Actions that address short-term needs at the expense of longer-term needs should be supported by thoughtful deliberation and decision-making. The same can be said about actions that fail to address certain short-term needs in order to maintain assets for future needs.
How to balance short-term and longer-term interests may be informed in part by an organization’s vision, which PDBL would argue is part of the organization’s purpose.
Example 1
Charity’s mission is related to creating a healthier physical environment for a particular community. Its vision is a community with an abundance of open lands, clean water, healthy soil, and ecological integrity. It would seem reasonable for Charity to invest a significant amount of its budget in advocacy to prevent imminent environmental harms that would incur a far greater cost to remediate later. Assuming the probabilities of the success of such advocacy are supportive, this would be more rationale than preserving funds that could be used to address the harms after they have been inflicted. Similarly, it seems more likely to be in Charity’s best interests to allocate some portion of its budget to such advocacy than to spend it all of it on addressing past harms already done to the environment.
Example 2
Charity’s mission is to provide support to children with cancer and their families. Its vision is a world in which children do not get cancer. While it may be compelling for boards to maximize allocation of Charity’s budget on providing current support for treatment, that decision would be at the cost of not advancing the possibility and effort of effecting its vision. If the vision is more than a platitude, the best interests of the organization would seemingly include allocating a significant portion of Charity’s budget on research, prevention, and policy.
More Legal Thoughts
So long as the articulated purpose statement in a nonprofit’s governing documents is not overly limiting, a board’s actions taking into account the nonprofit’s vision can be justified as its interpretation of how to best advance the nonprofit’s purpose. The business judgment rule would generally protect such actions if the board members approved them in good faith with due care believing the actions to be in the nonprofit’s best interests.
If the nonprofit’s immutable vision conflicts with, or is more expansive than, its articulated purpose statement, the board should consider amending its governing documents accordingly. For example, if the nonprofit’s purpose statement in its articles of incorporation is: “to promote civil rights and human rights in Oakland, California,” but its vision is a world in which fundamental civil and human rights are enjoyed by all, the board likely needs to amend its articles before acting to expend a substantial amount of the nonprofit’s resources on protecting the rights of indigenous peoples outside of the United States.
Even if the nonprofit’s vision can be justified as a significant determinant of how to best advance the nonprofit’s articulated purpose, the board can further evidence the reasonableness of its actions by documenting the nonprofit’s vision in board resolutions or in the nonprofit’s bylaws. Similarly, the nonprofit’s core values can also be embedded in formal documentation and not just on the website and donor communications if the nonprofit wants to embrace the guidance that they can provide to the board (but we’ll discuss values in more detail in a future post).
Resources
Restatement of the Law: Duty of Loyalty