Tish, that's French! Cy pres for no mission drift at your nonprofit.

Foundations are not inherently glamorous. When it holds up a house, the kind of foundation made of poured concrete or cement blocks is easily the most boring thing about the building. No homeowner ever decides to spruce up the building and includes the foundation.

No visitor to a newly redecorated house ever gushes: "I love your foundation!" And eventually the foundation becomes an expensive nuisance if the building ever falls down or is taken down. The temptation is to fill in the cellar hole and move on, such is the durability of a good foundation.

The nonprofit world has many foundations of its own, no pun intended, because these foundations are all either conceptual or legal doctrines or both. Fiduciary duty is one of the most enduring. The prohibition against private inurement is another. But one of the true legal foundations of the nonprofit world is also one of the most obscure--the doctrine of cy pres.

THE MEANING OF CY PRES

The term cy pres (sigh pray) is derived from French words meaning "as near as" and that is still at the heart of its meaning today. The application of the doctrine is simple. When assets find their way into a nonprofit public charity to support its mission, those assets must eventually be spent (or retained) for a cause as close as possible to the original.

This isn't a problem in the ordinary course of things. For many nonprofits, the challenge is getting the assets into the organization to spend them on the mission, not being vigilant enough to spend them on the mission.

But what happens if that organization does go out of business? If there are assets left over after the liabilities are satisfied, who gets them? This is where the doctrine of cy pres comes in.

In effect, the doctrine says "if the original recipient can't use the assets, they should be used for a purpose cy pres, or as close as possible." This is the underlying theory behind how assets are handled in nonprofit bankruptcies or dissolutions, and it is embedded in the Internal Revenue Service (IRS) tax regulations determining how nonprofit corporations are to be set up and approved by the individual states. Assets remaining from an environmental group's demise ought not be used for the prevention of child abuse, no matter how worthy the goal. The message is to be faithful to the original donors' intent.

Cy pres also has an application in the world of trusts. A trust created 100 years ago to provide a type of service that still exists today will generally be upheld by the court system. Bequests are the same. This has to be one of the underlying reasons why the Salvation Army thought long and hard before accepting the terms of the enormous donation that Joan Kroc's will granted them. It was for a service model that they did not then employ.

In recent years cy pres has been the reason that funds went to certain groups as the result of class action settlements. In some instances, the adjudged offending party, often a corporation, is directed to make a monetary settlement to those that it wronged. But what if it isn't practical for some reason to pay such a settlement directly to the victims?

Attorneys Paul Bland and Arthur Bryant use the example of a settlement involving predatory lending policies that caused consumers to lose their homes. If one can't track down--or perhaps even prove--every single consumer of that lender who lost a home was a victim of predatory lending practices, then cy pres says settlement distributions should relate to the particulars of the case. In this example, a cy pres settlement might be given over in total to nonprofits that attempt to solve housing problems.

THE ANSWER TO MISSION DRIFT

But there is a more mundane application of the cy pres doctrine that should get most streetsmart managers' attention. It's often known as mission drift. You know the syndrome. The nonprofit starts out with a nice mission, gathers some funding, builds a solid organization, and after several years it's clear that a subtle transformation has taken place. The entity, which started out attempting to provide economic development in a low-income area, has become a major provider of ... day care.

Typically, they still do something that could be construed as economic development but there is no doubt in the average person's mind that they are now first and foremost a day care provider.

How did they get this way? The charitable interpretation is that their strategy evolved over time, and they made adjustments to the operational details of how they carried out their mission. The uncharitable interpretation is that they chased the money and day care is where it led them.

Here's the problem. The building that their capital campaign donors gave them years ago was intended to be a hub for economic development. That major bequest for jobs training ended up supporting training for supervisors of the day care centers. They have violated the doctrine of cy pres.

Here's the minor problem that's really a major one in disguise. No court is likely to get involved in this matter. It's too small, perhaps too vague, and who is going to press the issue anyway? But in this not-uncommon illustration of mission drift there has been a small loss of faith with the donors. This loss of faith might or might not wind up hurting the offending organization, but it will weaken just a bit the society-wide bond between donor and nonprofit. Multiplied many times over, it hurts the whole sector.

The further problem is that mission drift has its own internal costs, whether it's a court matter or not. The internal confusion and conflict associated with clear deviations from mission just to capture a buck is powerful and enduring.

The solution is intuitive, but difficult. The first part is to have a clear strategy and a clear plan for executing that strategy. That's easy, or at least understandable. The second part is the hard one. Have the discipline to say "that's not us" to every unrelated dollar dangled in front of the organization, even if it means foregoing short- term boosts ("we need the overhead money the new project brings"). Scramble hard for the dollars that are a bull's-eye for the mission. And, have the institutional courage to make reductions and other adjustments if they're necessary.

Cy pres is not just a legal doctrine, it's part of the nonprofit world's social contract with donors. Ask yourself if any big decision related to your assets would pass the cy pres test. Even if you're sure no court is listening.

Thomas A. McLaughlin is a national nonprofit management consultant with Grant Thornton in Boston. He is the author of the book Nonprofit Strategic Positioning (John Wiley and Sorts, 2006). HIS email address is thomas.mclaughlin@gt.com