Characterising and Changing Charitable Purposes: Theories of Organisational Purpose

The last decade has witnessed material interest in the relevance of organisational purpose to organisational governance for both for‐profit corporations and charities. A purpose‐focus promises greater clarity for responsible person duties, as well as motivational benefits. However, despite its centrality, the nature of organisational purpose remains under‐theorised. This article first explores theoretical understandings of organisational purpose to provide a robust base for purpose‐based governance theories and to provide potential methods for identifying organisational purpose. This is a descriptive project. Second, it examines the extent to which that theoretical understanding is reflected in charity law. This is a mildly normative project – all else being equal, there are rule of law reasons (greater clarity and stability) for the law to reflect our best understanding of a phenomenon, such that theory may help guide choices between divergent legal approaches to matters like the relevance of organisational values and activities in characterising purpose. Third, the article employs organisational purpose theory to understand the duties applying to charity governors in the context of a change of purpose. This is a mildly normative step again – all else being equal, it would benefit the rule of law if governance obligations reflect our best understanding of organisational purpose.