Modifying a Nonprofit's Original Mission

How does a nonprofit stay within its original mission but remain relevant?

Petersen Automotive Museum is trying to do just that. It is liquidating nearly 1/3 of its 400 classic cars in order to finance a major reconfiguration of the organization, including a greater emphasis on motorcycles and French art deco vehicles.

According to a recent LA Times article by Jerry Hirsch, Petersen Automotive Museum’s current Executive Director, Terry Karges, said “the sales will provide millions of dollars to fund improvements to the museum, including new exhibits and interactive displays…” Former employees, however, are criticizing the move. They say the changes threaten the organization’s original mission “to present the history of the automobile and its impact on American life and culture using Los Angeles as the prime example.”

Remember that a nonprofit’s Articles of Incorporation may effectively limit the activity the organization may undertake. If at any time a nonprofit wants to engage in activity that advances purposes that cannot be described by its Articles, then the Board of Directors should first amend the Articles accordingly. Even then, it may be legally impermissible for the corporation to expend funds raised to accomplish pre-amendment purposes in pursuit of new activities.

If your organization is considering starting a new activity that may fall outside the scope of its original purpose, discuss any changes with competent legal counsel before undertaking them.

If you’re interested in purchasing a car, 107 Petersen Automotive Museum cars will be offered at an Auctions America event in Burbank starting August 1. To see what’s left of the collection, plan a visit to the Petersen Automotive Museum here.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits, 4705 Laurel Canyon Blvd, #306, Studio City, CA 91607

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