Principle 19: Review of Mission Goals

Principles for Good Governance and Ethical Practice

Principle 19: Review of Mission Goals

Principle Statement

The board should establish and review regularly the organization’s mission and goals and should evaluate, no less frequently than every five years, the organization’s programs, goals and activities to be sure they advance its mission and make prudent use of its resources.

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Introduction
As stewards of the public’s trust and the resources invested in the organization, board members have an obligation to ensure that the organization uses its resources as effectively as possible to advance its charitable mission. Every board should therefore set strategic goals and review them annually, generally as part of the annual budget review process. This review should address current needs and anticipated changes in the community or program area in which the organization operates that may affect future operations. It should also consider the financial and human resources that are needed to accomplish the organization’s goals. Such periodic performance reviews and assessments are a common feature of many self-regulation, accreditation and funding programs in which nonprofit organizations participate.
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  Although discussions of individual program activities and accomplishments are typical of most board meetings, these are not a substitute for a more rigorous periodic evaluation of the organization’s overall impact and effectiveness in light of goals and objectives that the board has approved.
  
  Because organizations and their purposes differ, it is incumbent on each organization to develop its own process for evaluating effectiveness. Most organizations should have at least an informal review of their progress on goals and objectives annually, but, because of the time and cost involved, they may choose to conduct a more rigorous evaluation less frequently. Even for organizations whose work is not properly measured in one-year increments, such as scientific research or youth-development programs, interim benchmarks can be identified to assess whether the work is moving in the right direction.
Core Concepts
- The board is the guardian of the organization’s mission and should review the mission periodically.
- The board should approve the organizational strategic plan or framework and ensure that the operational plans derive from the strategic plan.
- Periodic evaluations provide critical information for the board to fulfill its oversight role and ensure resources are being used to advance the mission.
Legal and Compliance Issues
- IRS Form 990 requires a description of the organization’s board-approved mission.
- IRS Form 990 asks which programs are new, changed, or discontinued.
- Changes in mission or purpose may affect the organization’s tax-exempt status.
- Restricted endowments must be used in accordance with original donor intent.
Legal Background

Some legal scholars argue that a board member’s duty of loyalty to the beneficiaries of a charitable organization requires that he or she ensures that the organization’s purposes are carried out effectively.¹ If it becomes impractical or no longer feasible to carry out the purposes of the organization as outlined in its articles of incorporation, the board should take appropriate action to amend the articles and to file the amended articles with state officials, as required. Changes in the articles of incorporation or other governing instruments must also be reported to the Internal Revenue Service.

(From The Principles for Good Governance and Ethical Practice: Reference Edition,
Published in 2007)

¹ Marion Fremont-Smith, Governing Nonprofit Organizations: Federal and State Law and Regulations, The Belknap Press of Harvard University Press (2004), pp. 225-226.
Discussion Points
These questions – from the Principles Workbook (PDF) – are intended to prompt discussion about the principle, assess the polices and practices of your organization, and encourage your organization to take steps to identify where improvements should be made.
1. Do we have an effective process to establish strategic goals and an operational plan that is tied to our mission?
2. The board not only has a responsibility to approve the strategic plan but to consider whether the budget provides adequate financial and human resources to accomplish its goals. Did we adequately assess this as part of the budget approval process?
3. What methods have we established to assist us in anticipating change either in the community or in our program area as it may affect our mission or programs?
4. What is our short- and long-term plan for reviewing programs, goals, and activities? Do we have a good model that shows us how similar organizations review their activities?
5. Do we receive adequate information about the effectiveness of programs and activities to make informed decisions about the organization and to fulfill our oversight role?