Changing Your Mission Statement

Posted by npocpas1 npocpas1

In the world of nonprofit organizations, adaptation is a necessary skill for survival. Change is an inevitable aspect of life and there are a variety of factors that may cause a nonprofit organization to change. Some of these possibilities include leadership changes, a shift in the demand for specific services, world events (such as a pandemic, a weather disaster, ect) or even just an extended length of time. With the evolution of an organization should come a refreshed mission statement. A mission statement outlines the purpose or goal of a business or organization, what they intend to do for the community and whom they intend to serve.

One reason a nonprofit organization may need to change their mission statement would be to better articulate the goal of existing programs. It’s possible that not much has changed about the organization and the programs themselves have not changed, but there was a realization that the mission statement does not accurately or fully reflect your current operations. During this change, there are some factors you will need to consider:

1. Once the refreshed mission statement has been approved by the nonprofit board, the bylaws and articles of incorporation should be evaluated to determine if they need to be updated. There should also be a full “rebranding” launch of the website, social media and any marketing materials.
2. All changes to the mission statement must be reported to the IRS on Form 990 annual information report.

Another reason an organization may need to update their mission statement would be to reflect any changes to a program or the development or a new program. Steps one and two above will need to be taken. Furthermore, if the mission statement needs to be updated because the operations of the organization are changing in some way, you have two options on how to communicate with the IRS.

3. Tell the IRS directly (if you are confident that the changes are in line with your approved tax-exempt status as specified in Section 501 (c)(3)). This can be done by answering “yes” to Part III Line 2 of the Form 990, which asks if the organization undertook any significant program services during the year which were not listed on the prior Form 990. Fill out an explanation on Schedule O.
4. Ask for approval from the IRS (if the changes are not within the scope of the original tax-exempt purpose). You can request a private letter ruling in accordance with IRS rules and formatting.

If you are considering changing your mission statement, we hope this is helpful to you. When in doubt, consult your CPA!!