“Purposes Drift” in Not-for-Profits

When a group of people decide to form a not-for-profit entity there are many things to consider, such as whether the entity should be a charity or society, what sort of constitution will suit it, and what its purposes should be. My experience indicates that too great a degree of rigidity in defining the purposes (whether of a society or a charitable trust) will cause problems. Conversely, too great a degree of flexibility may also cause problems. There has to be a “happy medium” somewhere. Tightly confined purposes Having very restrictive purposes will prevent many not-for-profits evolving with experience, with changes of personnel, and by adapting to changes in society. I recall one charity formed almost than 40 years ago, where the original motivation for its formation was to provide support for single unmarried mothers. The purposes adopted were somewhat broader than that, and that charity’s actual activities have evolved over time to provide a broader range of social and counselling services for adults and children struggling to cope in different ways. Subsequent amendments to the charity’s purposes have extended them to cover charitable purposes in New Zealand whether relating to the relief of poverty, the advancement of education, the advancement of religion, or any other purpose beneficial to the community, followed by examples reflecting the original more confined objects as well as specific, broader purposes. Flexible purposes The converse is to adopt purposes that are very flexible and possibly rather vague, but this means a not-for-profit may lack a defined focus for its activities, and may also enable hijacking of the entity by folk wanting to pursue their...