Management in the Not for Profit Organization

Dedicated to Exploring the Philosophies and Techniques of Management in the Non-Profit Sector

When Should a Nonprofit Cease to Exist?

Mission Accomplished, Mission Impossible


On the surface, those would appear to be the shortest, best answers. The razor is sharp.  Ockham would be proud.


In most cases, not-for-profit organizations were created to satisfy a community need that was unmet by government or for-profit entities.  The particular unmet need provided the mission for the non-profit.  So when the unmet need is satisfied, or when it is proven that the need cannot be met, the not-for-profit should disappear.  Right?

Yes, except for one thing:

The mission almost always changes.


I can still remember Mr. Chase, my Social Welfare Institutions prof telling us the real facts of life:

1) Regardless of what its original mission, before long virtually every non-profit’s primary mission becomes “This organization must grow”.  And,

2) Within approximately their first two years of employment in a non-profit, the values of nearly every staff member will more closely resemble those of their employer than those provided by their previous education, training, and experience.

This information is not new.  The class to which I am referring was taught over twenty years ago.


So, if a stated mission is accomplished or impossible one merely changes the stated mission.  Please note that the stated mission is different from the underlying mission to grow.  Political acceptability is still important, and growth for the sake of growing is unlikely to be popular. Particularly if it is accessing tax dollars, depriving the community coffers of money via tax-exempt status, or directly competing with tax paying companies.


The most commonly used solution seems to be to choose a vague mission statement.  Faber College of Animal House fame comes to mind.  Remember their school motto?  “Knowledge is good.”  Difficult to argue with that one.  (Okay, some people would.)

The point is that if you keep your mission and infrastructure generic enough, you can easily adapt to the changing winds of political priority, competition, regulation, and state of the art.

All of the above describe why and how non-profits seldom “go out of business”.  But when should they cease to exist?  Here are a few suggestions:

Inadequate finances.  This usually arises because of one or more of the following:  Lack of community support, poor fiscal management, non-compliance with regulations, better value available from competitors, and loss of market niche.  In this writer’s view, all of these are good reasons for elimination of the organization except the last one.  That is, if competitors have taken the client population through expensive advertising efforts, then the non-profit should be allowed to continue to operate long enough for the customer base to make a true and accurate judgment of value.

Cost/Benefit ratio.  A threshold can be chosen beneath which the organization ceases to be tax-exempt and is no longer defined as non-profit.  Of course, gray areas in expense definition would have to be eliminated.

Seeking to run the community rather than serve it.  When a non-profit, tax-exempt entity uses its privileged financial position and resources to force its belief system upon others it has betrayed the community and no longer deserves its privilege.  This does not include a balanced presentation of differing opinions (equal time).