Nonprofits exist to advance their mission. That seems simple enough. As does the corresponding statement: the mission is the reason for a nonprofit’s existence.
The public expression of the mission is typically a short, pithy phrase that is part of the leadership’s elevator pitch. Below are a few examples of mission statements from well-known organizations.
Mission Statement Examples
The American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors. – American Red Cross
Goodwill works to enhance people’s dignity and quality of life by strengthening their communities, eliminating their barriers to opportunity, and helping them reach their full potential through learning and the power of work. – Goodwill Industries
To put Christian principles into practice through programs that build healthy spirit, mind and body for all. – The Y
The Arc promotes and protects the human rights of people with intellectual and developmental disabilities and actively supports their full inclusion and participation in the community throughout their lifetimes. – The Arc
To explore, enjoy, and protect the wild places of the earth;
To practice and promote the responsible use of the earth’s ecosystems and resources;
To educate and enlist humanity to protect and restore the quality of the natural and human environment; and to use all lawful means to carry out these objectives. – Sierra Club
Mission and Purpose
To some, there is no difference between mission and purpose. To others, mission may be more expansive than purpose and incorporate values. But to BoardSource and others who have embraced purpose-driven board leadership (PDBL), purpose is more expansive than mission and represents a “melding of the concepts of mission and values in pursuit of vision.” See, e.g., Purpose-Driven Board Leadership (BoardSource); Purpose-Driven Board Leadership, Legally Speaking.
As a BoardSource board member and strong believer in PDBL, I’d like to adopt their nomenclature, but it’s easiest for me, as a lawyer to use the word “purpose” in more limited terms consistent with how the word is widely used in nonprofit and tax-exemption laws.
Under federal tax-exemption laws, a 501(c)(3) organization must be organized exclusively, and operated primarily, for one or more of the exempt purposes listed in the statute: “religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals.” The Organizational Test requires reference to one or more of these purposes in the organization’s articles of incorporation or other formation document.
Under state corporate laws, a charitable organization may also be subject to a requirement that it be organized exclusively for a charitable purpose. In some cases, a charitable organization might simply state in its articles of incorporation that it is organized for a charitable purpose, providing great flexibility in its selection of charitable goals and activities to pursue. In other cases, a charitable organization might be much more specific in defining its charitable purpose to help prevent mission drift. For example, its articles of incorporation might define its specific charitable purpose as to address poverty in a named region (e.g., Orange County). In such circumstance, the organization may only operate insubstantially for any other purpose, regardless of whether it is otherwise consistent with a charitable purpose under 501(c)(3). See, e.g., Starting a Nonprofit: Articles of Incorporation and Specific Purpose Statements; Purpose Statement – Nonprofit Articles of Incorporation.
A board member’s fiduciary duties include acting with reasonable care in the best interests of the organization in light of its purposes. See Restatement of the Law: Duty of Loyalty. From a strict legal perspective, purposes, in this context, may be limited to the definition of the organization’s purposes in its governing documents (e.g., articles of incorporation and bylaws). However, under charitable trust laws, the organization’s purposes may be further defined by the organization’s public representations of its purposes, including on its website, fundraising materials, Forms 990, and other governmental filings. See, e.g., Charitable Trust Doctrine. What may still be missing from the definition of purpose, for strict compliance purposes, is the organization’s values.
The Mission: An Incorporation of Values into Purpose
For charitable organizations that want to ensure that their board members and other fiduciaries must act in the best interests of their organization in light of its purpose and values, they can do so by incorporating values and a specific purpose statement in their governing documents. This might be accomplished by adding a provision in the organization’s bylaws providing for the mission of the organization that captures more precisely the organization’s purposes and values.
For example, the articles of incorporation might still broadly set forth charitable purposes, but the bylaws might provide for a mission that details a more specific purpose with the values that guide the organization’s decisions and actions. Accordingly, an organization whose charitable purpose is to make the lives of a charitable class of beneficiaries more equitable and just through advocacy and the delivery of social services (“Charity A”) might add to its mission statement a phrase like “consistent with the organization’s values.” The next section of the bylaws might then state the organization’s values, which could include diversity, equity, and inclusion (DEI); compassion; dignity; respect for the ecosystem impacted by the organization; transparency; and courage. Those values may significantly change how organizational leaders think about how the organization can best advance its purpose.
Consistent with such values, Charity A might consider whether the locations in which it provides services reaches across different communities in an equitable manner. It might consider how it allocates its resources towards advocacy that might effect substantial benefits to its communities over time even if at the expense of its capacity to address current needs. In addition, Charity A’s investment in technology might factor in its values. How should the quality of service and impact be balanced against the amount of services? Who should be involved in making this decision?
The Board
Nonprofit board members have fiduciary duties. While they may rarely be held personally liable for breaching their fiduciary duties absent some form of self-dealing, nonpayment of employment taxes, or other egregious circumstances, board members should be aware of such possibility.
Of course, they must act with reasonable care, and they must also act in the best interests of the organization. The best interests of the organization are not limited to its existence and viability; they must include how the purposes of the organization are best advanced consistent with its governing documents. Where the purposes also reference specific values, both purposes and values must be considered by a board in determining the best interests of the charitable organization. While not addressed in this post, the vision of the organization may also be incorporated as another guidepost to how the purposes may be best advanced.
If DEI is part of the organization’s core values, and built into the governing documents as described above, the board may appropriately make its decisions guided in part by the equity mindset and authorized voice and power principles described by PDBL.
If respect for the ecosystem is part of the organization’s core values, and built into the governing documents as described above, the board may appropriately make its decisions guided in part by this principle described by PDBL. This also provides justification for an organization to address climate change in its activities even if its purpose statement contains no suggestion of an environmental purpose. See, e.g., Purpose-Driven Board Leadership and Climate Change.
Board membership involves significant work and difficult decisions, especially when adopting values into the organization’s mission and the PDBL framework. Board members who take their roles seriously and who diligently devote the time necessary to fulfill their duties are so appreciated and much needed. Nonprofit boards are a largely untapped power of the nonprofit sector to effect changes that benefit the broader public and why I’m so passionate about good nonprofit governance and a proud member of the BoardSource board of directors.