Staying True to Mission

by Anne Yurasek on August 08, 2008

Recently, I have worked with two very different organizations. One organization has been operating for over 20 years offering theatrical productions to raise cultural awareness and support Spanish-speaking playwrights and actors. The organization has sustained itself through the donations of time and energy of those who were passionate about the organization’s mission. The organization received tax-exempt status one month ago. The board is now required to formalize how it operates as a governing board, including asking the paid actors who were members to step down, hiring and providing a salary to the Executive Director, and formalizing the financial management processes to support tax-reporting. The other organization has also been operating for over 20 years – receiving its 501(c)3 status towards the beginning of the organization’s inception. The organization offers programs on a fee-basis – and at the moment, 90% of the organization’s revenues come from program fees. They do offer some scholarships for programs, but offer no other programs on a charitable basis (either free or targeted at low-income populations). In terms of growth, the current management wants to grow by adding more fee-based programs, increasing participants in programs, and expanding the physical space used for programs.

In the first instance, having 501(c)3 status is a major milestone in the life of the organization – by acquiring tax-exempt status, the organization is exempt from paying any federal income tax and it allows individuals and corporations to make tax-deductible donations to the organization and other tax-related exceptions. Achieving the status means that the Board of the organization must hold the organization accountable for staying true to mission – and for not exploiting this new status or using it unethically. In the second instance, it struck me that in the name of growth, the philosophical responsibilities of being a 501(c)3 may have been left behind at some point. If growth solely comes from increasing revenues from programs, is the organization operating as a non-profit or as a business?

I find myself reminding Board members of their responsibilities—their legal responsibilities to ensure that the 501(c)3 status is not being exploited, their role as stewards that requires them to ensure that the organization’s programs are in line with its mission, and their dedication to ensuring that the mission of the organization is being realized. I am curious though if other organizations or Boards struggle with this issue… how does your organize honor its 501(c)3 status? How does your organization continually stay true to mission?

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