Nonprofit Name and Mission Changes
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Nonprofit Name and Mission Changes
Most nonprofit organizations experience some type of change or evolution in their mission and activities as they grow. The change may be subtle, such as a slight geographic shift or expansion, or very impactful, such as providing not only shelter, but also job training and financing higher education for the homeless. When deciding whether to simply re-name and re-brand the organization versus starting an entirely new organization, nonprofit leaders should consider the extent of the mission shift, as well as any change in who the mission benefits and who is likely to financially support the mission. In this article, I’ll discuss how to choose between changing the nonprofit’s name and branding only, or to launch a new nonprofit, as well as the next steps for each choice.
The Birth of a Nonprofit
When a new 501(c)(3) organization is recognized as a nonprofit by the IRS, it is identified as having a specific charitable purpose. The charitable purpose must fall into at least one of these categories:
Religious
Scientific
Testing for public safety
Literary
Educational
Fostering national or international amateur sports
Prevention of cruelty to animals and/or children
The IRS has an 8th category of charitable purpose, with a redundant name: Charitable. As described by the Foundation Group, “charitable” is a “roll-up category,” meaning that the IRS includes it as a way of capturing activities that may not fall neatly into the above categories but do follow the spirit of a 501(c)(3) organization. Examples may include benevolent giving per the criteria of the organization’s choice, grant-making foundations, charity hospitals providing free or low-cost care, groups seeking to reduce neighborhood and living condition struggles, eliminating prejudice and discrimination, or defending/promoting civil rights.
But you’ve already established your original nonprofit, so why are we discussing the original charitable purpose? It’s important to identify your nonprofit’s original charitable purpose and compare it to how the mission has evolved.
If the nonprofit’s mission has deviated from the original charitable purpose, it’s time to consider establishing a new nonprofit. If the nonprofit’s mission has evolved but can still be housed under the same charitable purpose, the nonprofit can file for a name change under the same EIN.
Examples of Mission Changes and Impact
Here are some examples of changes that might warrant a name change and re-branding only:
A nonprofit focused on promoting literacy among adult immigrants expands their programs to include ESL classes in local primary schools.
A nonprofit focused on establishing clean water practices in Buffalo, NY expands their programs to include cities across the United States.
A nonprofit focused on providing mental health support for veterans adds a program to provide mental health support to veterans’ families as well.
A nonprofit providing free and low-cost health screening adds a program to connect patients to long-term health care advocates.
A nonprofit focused on testing consumer products like toys and electronics for child safety expands their programs to test environmental factors and public spaces such as air quality and public playgrounds.
In all the examples above, the nonprofit remained in their original charitable purpose category. Here are some examples of changes that would warrant an entirely new organization:
A nonprofit focused on providing public safety testing such as air quality and water safety shifts their mission to improving water quality. This moves the nonprofit’s charitable purpose from “testing for public safety” to “improving human conditions.”
A nonprofit focused on preserving local ecosystems establishes a program to end animal cruelty. This represents a shift from “environmental preservation” to “prevention of cruelty to animals and/or children.”
A nonprofit focused on rescuing and rehabbing wildlife establishes a program to research the source of and develop a treatment for certain animal diseases. This shifts the nonprofit’s mission from “animal welfare” to “scientific research.”
A nonprofit dedicated to promoting civil rights among the underprivileged shifts focus to provide literary education to families immigrating to the US. This represents a shift from “social welfare” to a “literary” charitable purpose.
In all the examples above, you can see where the original mission may have morphed into the new mission, and the connection between the two. However, the new mission or program is likely to be established and operated with a different target audience, and a different set of grantors and donors. As you can see, determining if a new program or a mission shift warrants an entirely new organization, or if a new name and branding update is sufficient, can be quite challenging.
How to Change Your Nonprofit’s Name
If you determine that your nonprofit’s evolved mission or new program is covered by a simple name change, the simplest way is to file the name change with the annual Form 990. The annual Form 990 includes a check in the top left of the form to indicate if there is a change in the name (or address). Check the box and use your new name on the form for the year when the name change takes effect. This may be done via e-file. This method of name change does NOT provide you with any kind of tracking or confirmation that the IRS has accepted the name change; however you can use the IRS Tax Exempt Organization Search tool to look up the IRS’ record of the name associated with your EIN.
Note that you may need to describe significant changes to your programs, including the purpose of your name change, on Schedule O of the same Form 990. Use this as an opportunity to promote your nonprofit’s accomplishments and growth to public users of your 990.
If you need to change the name before you file your next 990, or if you need an official letter from the IRS confirming the name change, you’ll need to contact the Exempt Organizations (EO) Customer Account Services.
Tracking a name change can be tricky. Please be aware that the IRS may be slow to recognize your name change, especially if it is filed with an e-filed 990. If it’s been a few months since you changed your name, and you’re still not seeing the new name populate with the EIN when you use the IRS Tax Exempt Organization Search tool, it may be worth reaching out to Customer Account Services directly.
Establishing a New Nonprofit
In cases where the new program activities are dramatically different from the original organization’s nonprofit purpose, or it’s simply more beneficial to establish a new organization to attract the right donors and audience, you’ll establish a new nonprofit organization with a new EIN. To get an idea of the process or if you’re ready to do this on your own, the Council of Nonprofits provides a great How to Start guide outlining the steps for a new incorporation. Note that the state in which you establish your organization will impact the filing requirements, outside of applying for exempt status with the IRS.
Financial, Legal, and Social Implications
When a new nonprofit organization is established, there are no legal impact to the original nonprofit. However, leadership should consider whether the original nonprofit should be continued and funded as originally intended, or if it should be wound down and closed as an organization.
When a nonprofit is rebranded, the only legal implications are properly establishing the new name with the appropriate taxing and charitable solicitation agencies.
Financial implications of either choice will vary by organization and where the organization(s) is(are) established.
However, there are social and marketing implications that should be addressed if a name change is implemented. A name change must be properly communicated to existing donors and grantors. This process may be delicate, so it’s important to have a re-branding strategy that tactfully manages your nonprofit’s social presence. (We can help!!). With proper communication to the public and a strong marketing plan to increase brand awareness for the new name, a name change is typically easier for existing donors to accept and integrate than an entirely new organization. Despite the name change, you should be able to convey that the organization deserves the same trust and rapport. How you communicate the name change to the public depends on your organization’s existing presence in the community and brand identity, versus where you want to position the new brand. Our Marketing team can help you execute the best strategy for your nonprofit to see you through this transition.
A new organization will likely have a separate set of donors and grantors from the original organization. A branding and launch strategy are still very important, as the brand and social presence are established.
We Can Help
Whether you need help deciding if a name change or a new nonprofit is right for you, or if you need help executing the change, Aldridge Borden – OneSource can demystify the process. We also offer marketing services to help you manage your name change or launch your new brand. Contact us to get connected with an advisor.