Responsibility #1: Mission & PurposeMay 30, 2013
Why it is essential for the board to determine the organization’s mission and purpose.
The number one most important thing for a board is to determine the organization’s mission and purpose. It is the Board’s responsibility to create and review a statement of mission and purpose that articulates the organization’s goals, means, and primary constituents served. The not-for-profit organization doesn’t exist to make a profit like Microsoft does. Rather, it is organized and operated to accomplish its mission. Thus its purpose is mission oriented and not for profit.
Commitment to the organization’s mission and purpose is the quality that drives the Board’s sense of public accountability. The mission and purpose serve as a guide to organizational planning. As the Board faces questions about staffing, volunteer initiatives and setting priorities among competing demands for scarce resources, it is the mission and purpose that will guide the way toward appropriate decisions. I know of some organizations that begin each Board meeting with a reading of the organization’s mission statement just to set the tone and remind all why they are there.
As you know, not-for-profit charitable organizations in America are exempt from Federal and state income tax. In many cases they also do not pay sales tax on their purchases. These tax exemptions are designed as incentives for the creation of these organizations that play such a vital role in our society. Whenever one person or organization is not paying a tax, the lost revenue is made up by the individuals and companies that are paying tax. Therefore, we are all paying more of the income tax requirement than would be necessary if there were not tax-exempt charitable organizations.
What we have done to make sure that our investment in not-for-profit organizations is paying off is to require that these organizations be overseen by a volunteer board made up of our fellow citizens. The Board’s fiduciary responsibility to the rest of us citizens is to make sure that the organization remains true to its mission and operates as efficiently and effectively as possible. This is why adherence to the organization’s mission is the primary Board member responsibility. It is an obligation not only to the organization but also to the Board member’s fellow citizens who are subsidizing that organization with the tax-exempt designation.
Every decision that the Board is asked to make should advance the organization’s mission and purpose. This is the very foundation upon which the not-for-profit organization has been built. This foundation must remain solidly in place for society to benefit. If you are serving on a not-for-profit Board, you should know the organization’s mission and purpose by heart.
Read more on not-for-profit boards:
Board Development Blog Series: 10 Basic Responsibilities of Not-for-Profit Boards
Serving on a Nonprofit Board – Do You Have the Passion?
Lessons from Penn State- Not-for-Profit Board Responsibilities
Should a CPA be on your board?
As one of the largest CPA firms in Boston, KLR is unique because they service over 220 not-for-profit organizations with compliance and consulting services. We have extensive experience helping Nonprofit organizations regarding boards, and board responsibilities, charitable contributions, taxes and 990 filing requirements. The KLR Nonprofit team is active in our local community and not-for-profit organizations, visit our Facebook page to see photos from our latest volunteer event.