Non-Dues Revenue and Mission Creep
Mission Creep: The gradual broadening of the original objectives of a mission or organization.
As associations continue the ever increasing quest for consistent non-dues revenue streams, boards and executive staff must also keep in mind potential unintended consequences. Embracing the ethos of an entrepreneurial nonprofit organization can bring significant benefits. However strategic challenges can arise if an association drifts from its original calling.
From a strategic-operational perspective, highly entrepreneurial associations can sometimes unintentionally lessen operational focus on essential directives, promoting the organizational mission and serving the needs of its membership. Of course, associations rarely make a conscious determination to take their “eye off the ball”. Rather, each successful new revenue stream comes with temptations to modulate organizational priorities. Just as long-term military engagements seek to avoid mission creep in theaters of battle, associations, even as the necessary work of becoming less membership dues reliant continues, must resolve to maintain their primary focus — the reason(s) for which they were formed. The consequences of not doing so can be the alienation of members, stakeholders and constituencies.
An additional consequence of revenue driven mission creep is the Unrelated Business Income Tax (UBIT). Enacted in 1950 to prevent nonprofits from having a competitive advantage over for profit entities, the UBIT taxes income that derives from activities not related to a nonprofit’s basic exempt activities. The baseline for gross income generated by non-exempt activities is $1000. Income which rises beyond that level may be taxed at a corporate rate.
The key to avoiding revenue driven mission creep is to continuously assess strategic goals and objectives and to cultivate priorities, both financial and non-financial, through the prism of those core values.
At Agentis, we serve our clients by focusing on mission driven processes and developing creative solutions that translate values into action.