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Nonprofit Strategic Thinking & Strategic Programming

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Here is an interesting exercise to try.  Go to the Google Image Search tool and type in the words “strategic planning model.”  In .33 seconds one will have over four million images that depict the process of strategic planning in a wide variety of geometric shapes such as flow diagram, pyramid, circles, stairs, clusters, road maps, and a combination of all of the above.  — Okay, you might not see the last diagram but you get the point of the exercise when you begin looking at the content of the varied diagrams.   Strategic planning is a concept that came of age in the mid-1960s and has been the largely implemented as a linear process that includes some variation of the sequence:

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5.  develop action steps, timelines, roles and responsibilities, 6. draft a formal plan, 7.  pronounce it very good and 8. repeat the process every three years.

As strategic planning models became routine and accepted as a standard of practice, those who excelled in project management and repositioning content developed a consultant industry of strategic planners who emerged to bring expertise to “help” organizations create high impact plans.  The secret that few consultants want to admit is that strategic planning is often reduced to a cookbook that illustrated with overused “fill-in-the blank” prescriptions that result in an unimaginative plans.  Quite often, strategic planning is a simplistic reordering and renaming of existing strategy and approaches. Such a focus diminishes the value of strategic planning. This premise of the declining value of traditional strategic planning was identified over a decade ago in the seminal Harvard Business Review article titled, “The Fall and Rise of Strategic Planning” by Henry Mintzberg.  Mintzberg’s main criticism is that strategic planning often stymies strategy. He argues that “sometimes strategies must be left as broad visions, not precisely articulated, to adapt to a changing environment” (p. 112).

Since the appearance of Mintzberg’s article (and subsequent text that reverses the title ), strategic planning has been broadened somewhat to include the concepts loosely termed adaptive planning, opportunity management, or “real-time” strategic  planning.  In essence, the “innovation” of the adaptive strategic planning models is to build into the process  strategies that allow organizations to be responsive to sudden shifts in the operating environment.  Yet the methods employed to get to this more “flexible strategic plan” still reflects the pedestrian process described above.  In other words, the revamped strategic planning model looks more like this:

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5). develop action steps, timelines, roles and responsibilities, 6.  insert opportunity matrix 7. draft a formal plan, 8.  pronounce it very good and 9. repeat the process every three years.

The economic meltdown of recent years that still haunts many nonprofit organizations has been a wake-up call is that business in no longer usual.  The rapidly changing environment require more than a strategic planning process focused on rearranging the deck chairs and adding one more lifeboat christened “opportunity management.”  As Mintzberg suggested over a decade ago, we must liberate strategy from the confines of a constrained and defined planning process and foster a culture that encourages strategic thinking at every level of an organization.  Strategy needs to be unbound from pedestrian and conventional thinking, which many strategic planning consultants fail to recognize and build into their practice.

Let me illustrate.  I was recently reading the retreat notes from what was billed as an adaptive planning process that written by a consulting group, which a nonprofit agency had contracted with.  It is stunning how pedestrian the results were.  Day opens with the typical icebreaker, pages of brainstorm lists are then sequenced and the conclusions are listed as key….yawn…. findings.  these included …yawn… diversify your funding, increase your communications, and invest more in …yawn…(excuse me)…  capacity…  No wonder strategy and strategic planning are undervalued, if not ridiculed by so many nonprofit leaders.

Force marching an organization through a strategic planning process is not the same thing as stepping back and asking the hard questions related to how nonprofit operations are organized around solid business thinking that is resilient and tenable over the long term.  For example, going back to the …yawn… adaptive strategy notes review, one of the most non-strategic statements of the document was this:

“Key Finding #2 – Financial stability/funding is the greatest challenge facing XYZ agency as it plans for its future.” Open-ended answers provided by staff and board focused on identifying XYZ’s greatest challenge included, long-term sustainable funding, limited funding resources, identifying alternative funding sources, lack of diversity in funding.”

This statement is non-strategic on two levels.  At face value, this key finding lacks any basis for action. Every nonprofit’s greatest challenge is to develop long-term sustainable revenues.  So what.  Where is the strategy?  Second, pulling up the most recent IRS Form 990 for the agency shows a revenue pattern that is represented in this graph. This agency not only weathered the downturn but doubled revenues in five years. Indeed, portraying revenue as the greatest challenge for an organization with this revenue profile borders on malpractice.

To me, strategy would be to ignore the economic angst of the board and staff and build on the organizational strength of the funding model.  Indeed, during a period where many nonprofit agencies were hammered by steep revenue declines, this nonprofit held its own. As a facilitator of such a process, I would be asking the questions, how do we replicate, or at least maintain, the stable revenues patterns that we held through the economic crisis.  How do we build upon the revenue spike of 2009?  What drove the break-out revenue for that year?  What lessons can we learn from how we brought in the additional revenues?

I almost titled this post, “What is Needed Now?” because I am convinced that this is the single most important question that nonprofit leaders must be asking today. For me, the answer to the question, “what is needed now” is not strategic planning but strategic thinking that is supported by clear and strategic program plans. The fact that strategy needs to be a cultural value does not negate the need for strategic planning and the development of clear strategic written program plans. The shift that needs for agencies to think strategically and support strategy with programmatic planning.  This is not a mere nuance but it means abandoning the two million images of a senseless strategic planning model and embrace, focused planning based on strategic thinking.

Elsewhere I have written about the layers of planning and approaches to nontraditional strategic planning and will not belabor the point here. Rather I want to point to three areas where focused planning needs to occur.

Core Social Impact Strategies: A clear and focused organizational model and theory of change, leverage, and scale is the core strategy for an agency.  Without a shared conceptual approach to how an organization fulfills its mission nothing else matters.  Previously, I have explored social impact (here) and social innovation (here) in more detail.

Revenue Strategies: There has been a tremendous amount of recent research that goes beyond the irrelevant and oversimplified model that all agencies need diversified revenue streams and that the board of directors should play a major role in revenue development.  Revenues  strategy should include a customized strategy carved from the careful study of autonomy, reliability and the opportunity costs of diversification. Such strategy planning also includes thinking about investment capital, earned income, and policy approaches to revenue development. Having a clear revenue plan is a second core document (more here).

Operational & Capacity Strategies: Often undervalued in strategy is a clear articulation of the operational capacity that is really required for successfully creating significant social impact. Such strategy requires the consideration of capital investment, breaking the tyranny of starving overhead costs, investing in technology, staff development, building outcome measurement systems, and expanding key staff and external partnerships (more here).

Other common areas that require strategic thinking and planning  include communications and marketing, program evaluation, and board development, to name a few.  The point of this post is not to list every possible strategic planning focus but to point out the fallacy of trusting the arcane strategic planning process while missing the opportunities for strategic thinking and focused programmatic planning.  As the current year ends, and a New Year opens with equal uncertainty, the role of strategy becomes more important than ever.

As Mintzberg, concluded, “Three decades of experience has taught us about the need to loosen up the process of strategy making rather than trying to seal it off by arbitrary formalization (p. 114).”  We are yet a decade and a half beyond Mintzberg’s words and yet many nonprofits continue waste time and resources executing ill-conceived strategic planning sold to us by some book or consultant group. As we reflect on the year past and look forward to the year future, let us commit to thinking strategically first and allow formality to unfold driven by need.

As always, your thoughts are welcome.

 

Continuous Improvement: A Core Nonprofit Organizational Mindset

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Recently, I attended the evening awards ceremony that unveiled the 2011 list of 100 Best Nonprofits to Work For in Oregon.  I chose to attend the event to acknowledge the organizational excellence of the many nonprofits serving Oregon communities that made the list.  The evening reception and dinner gave me an opportunity to congratulate friends I have known for years and to make the acquaintance of numerous other nonprofit professionals, board members, and volunteers.  The evening also gave me a chance to reflect on the culture of organizational excellence.

As with many ranking systems, the 100 Best Nonprofits to Work For in Oregon is a survey-based process. It combines the rankings of self-reported, staff survey responses and an employer benefits survey.  The scores of the organizations are then parsed into categories or small, medium, and large nonprofit agencies.  According to the Oregon Business Magazine, 170 nonprofits participated in the survey with over 5,500 individual employee surveys received from participating agencies.

Underneath the “contest element” of the 100 Best ranking, is a very important organizational management tool. From the perspective of those I spoke with at the recognition event, the ranking of “100 Best” was, indeed, the expression of an organizational culture of continuous improvement rather than a “bragging rights” contest.

Perhaps this thinking was best captured in a conversation I had with an Executive Director of an organization that has been on the list for three years.  Clearly animated she said, “The survey has each of my employees giving us feedback on our work environment, our management, and communications, along with their opinions about how well we are doing on mission, goals, career development, and compensation. The information is way more valuable to me and my board than the award” (A bit later in the conversation she did concede that the award was also important in fundraising, marketing and her agency was glad to have received it).

As I pondered the “best of event” my mind began to wander into thinking about continuous improvement as an organizational mindset.  As my consulting practice is based on nonprofit performance improvement, my first stop down the road of thinking was to do a quick math calculation.  There are almost 16,000 public charities registered in Oregon (source) and yet only 170 agencies participated in “100 Best” survey process.  That means only 1% of the nonprofit organizations in Oregon were considered for the designation of “100 Best.”  I am not suggesting that only 1% of nonprofits are interested in being named among the “best” but the statistic does beg the question, “how many nonprofits intentionally strive to be among the best?”  In this post, I want to reflect on the role of a “best thinking mindset” for nonprofits and offer some practical strategies for getting started on a continuous improvement process.

Engage Everybody: One of the first principles of continuous improvement is that it is not a “solo practice” or even a top down “management event.”  Continuous improvement is foremost a shared culture and only secondarily is continuous improvement a practice. Here is a simple diagnostic. Stop and think about how often in a board or staff meeting did you hear the question, “What can we do to improve…?”  How many different people ask the question?  Does the question relate to your agency’s programs, operations, evaluation –or all the above?  If your self-reflection suggests that continuous improvement is not as active as a value as you would like in your organization, then start a conversation about the critical need for continuous improvement in the nonprofit sector today.  A few reasons for continuous improvement include: a) growing demands for services require high quality services delivered effectively, b) funders are increasingly demanding continuous improvement, c) high performing organizations are more stable and thriving work environments. (here is an interesting masters thesis on the topic)

Self Assess: Once you have a critical mass of interest in continuous improvement then it makes sense to identify the opportunities for improvement. One way to assess your opportunities is to facilitate a conversation using an appreciative inquire approach that identifies your Strengths, Aspirations, Opportunities and Results (see here & here).  This can be either preceded or followed by a more detailed assessment using more formal assessment tools (great online tool database here).  With an assessment complete, prioritizing your needs is an exercise of determining which of the needs map with your organizational aspirations and hold the greatest potential of a positive return on the invested time and energy required to make the improvement

Develop a Focus: At this stage of the process, it is important to develop a way to focus the energy and attention of the entire organization.  Focusing organization attention can be accomplished using tools such as a written workplan (see here & here) or a visual organizer (see here).  Further, developing a focus includes creating a tracking process to ensure process is being made on performance improvement plans developed.

Rapid Cycle Test: Performance improvement is operationalized with the use of an iterative process to create, measure and monitor changes over time.  One such process is to frame change as a “rapid cycle test” that is a four step cycle of Plan, Do, Study Act (here is a great primer).  In short, this process suggests change is: a) planned, b) implemented as a pilot (do), c) followed by a study of the results, and d) the results acted on (either further implementation of the change or revision of the change in another cycle of piloting).

As this performance improvement cycle becomes an embedded cultural practice, your organization will become stronger. Indeed, operationalizing a performance improvement culture is clearly the mark of a “best of” organization.  I would like to reiterate,  performance improvement is a critical nonprofit management competency to master and increasingly is not optional. The rapidly changing times demand that nonprofit organizations focus myopically on developing the highest level of organizational functioning and still reach higher. Borrowing from the iconic Harry Potter books, getting to where you want to be requires, a clear destination, determination to get there, and deliberate effort.  Performance improvement requires no less.

As always, your thoughts are welcome.

 

Reflections of a Nonprofit Board Chair

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Last week I facilitated my last board meeting as chair of Resolutions Northwest (RNW), Oregon’s largest nonprofit community mediation center.  With this meeting, I completed five years of service on the board as a member, treasurer and, for the last three years, board chair.  During my time on the board, the darkest days were those when the agency managed a turbulent staffing crisis and again, when it weathered the elimination of a longstanding contracted service program. The brighter days are those of late, where, in the last three years RNW has nearly doubled its revenues, expanded its facilitation and restorative justice programs, and has begun to engage volunteers and donors more deeply in the success of the agency.  With a newly developed strategic plan, solid community partners, and a deep commitment to keeping the strategic plan active and alive, I am leaving RNW as a vibrant organization well positioned for continued growth.  In this post, I wanted to offer some reflections on core attributes of a strong nonprofit board. I talk about these from the “blended” perspective of being both a nonprofit consultant as well as outgoing board chair. The article is a companion to an earlier post I wrote on nonprofit board performance (link here) and represents additional and somewhat overlapping principles that will help boards to be successful.  These principles include:

  • Developing Organizational Depth: Most nonprofit board members are earnest in their commitment to support the organization that they serve.  Indeed the commitment to a mission is often the beginning of service on a board.  Turning commitment into effectiveness, involves helping board members gain organizational depth.  It is my belief that organizational depth is experiential and best gained by engaging board members in the core of the agency’s programs and services. As examples: job shadowing, volunteering at the program level, and conducting joint board/staff training sessions are some ways to provide opportunities for board members to gain organizational depth.
  • Creating a Strong Board Chair – Executive Director Relationship: An anchor to the success of my board service with RNW was my developing a strong productive relationship with the RNW’s Executive Director.  Betsy Coddington and I developed positive working relationship that was, at various times, configured as collegial, coaching, and even confrontational.  The chair should not simply be the spokesperson for the executive director nor should it be vice versa. The relationship between board chair and executive director is based on relational authority and not positional authority. The board chair-executive director relationship is well articulated in a Journal for Nonprofit Management (linked here).
  •  Understand Nonprofit Management: Early in my board experience with RNW, I saw firsthand the challenge of having a board chair who lacked a strong understanding of board governance and nonprofit operations.  Indeed, as a human resource crisis unfolded, the chair abruptly resigned, leaving the executive committee to move forward without him. Fortunately, other and I were able to step in to help. More than any other event I ever came across, before or since, this incidence left an indelible imprint of the importance of having board leadership team who understand principles of nonprofit management and governance.  It also underscored that this resident knowledge needs to be embodied in the entire executive committee and ideally across the entire board.  Indeed, building such understanding is the reason many boards set up mentorship programs, board development workshops and structure succession planning for leadership positions.
  • Building a Board Intentionally: I posted a blog entry almost a year ago that outlined an approach to thinking about board membership (linked here). While today, I might broaden the concept of fundraising to include civic reach and use slightly more refined language (based on my evolving practice and experience) the outline of the post remains useful.  Building an intentional board is an ongoing process of the systematic expansion of a board.  The core expectation for all board members starts with an understanding of governance but beyond that expectation, a board should build membership around an alchemy of operations expertise, content expertise, and development expertise (a mix of resource planning, fundraising, and civic reach). Intentional board building takes longer than accepting any willing volunteer into board service. Intentionality implies that due diligence becomes more refined, recruitment more strategic, and that a board is willing to engage in thoughtful outreach to the community in search of strong board members.
  • Staying Focused on the Strategic: As readers of this blog know, nonprofit strategy is a core theme of my consulting practice. So it should come as no surprise that I believe that effective boards are those organizing around strategy.  At one point in my tenure as board chair at RNW, we decided intentionally not to pursue a formal strategic planning process. We chose instead to spend a fraction of the time we would have spent in strategic planning to create one-two page strategic intentions that defined a short-term strategy across four operational areas.  The board then focused on these intentions and the made significant progress across all four areas that resulted in new programs, revenues, and focus for the organization. The strategic intentions served well as a “bridge strategy ” for a short operational period. Concurrently, we sent time building the capacity of the board and, once in place, we engaged in a formal strategic planning process to guide the organization’s growth over the next 4-5 years.   A relentless focus on the strategic is essential to advancing the capacity of nonprofit agencies.
  • Establishing a Strong Advisory Network: My experience as a board member and consultant suggests that many boards often don’t understand the critical role advisors play in nonprofit management. I have heard many boards oppose investing in basic advisory support such as an accounting firm, information technology (IT) support, or a human resource (HR) service provider, even though such advisors are critical to risk management and effective governance.  Along with IT, HR, and accounting, over my years at RNW we established relationships with consultants for services such as grant writing and fundraising.  While with some initial resistance to overcome, the strategic use of consultants strengthened RNW’s organizational practices.  Effective boards recognize and value the support of external expertise.  Competent staff, an engaged board, and the strategic use of external consultants create a “three-legged stool” of support for an organization’s capacity.
  • Measuring Progress: Effective boards establish clear accountability to themselves, the agency’s staff and to the larger community.  Self assessments, quality benchmarks, performance dashboards serve as tools to increase accountability and transparency.  By periodically stopping, assessing, and reflecting a board is in a stronger position to improve, adapt, and change.  I left RNW’s board just as we completed a board self-assessment that provided rich data to be used by the board as they begin a performance improvement process.
  • Fostering Effective Board Operations. Of course there are other facets of developing a strong board such as creating a good operational structure, documenting relevant by-laws, effectively using of committees and formally evaluating board performance.  Unfortunately, many boards confuse strong board operations with a strong board but as this post illustrates, board operations are just one variable contributing to an effective board.

As the current political landscape continues to promise economic uncertainty and possibly even deep cuts to the social service infrastructure, nonprofits will need to adapt and change. For many nonprofits this ability to adapt and change will be directly correlated to the focus and strength of the agency’s board. Indeed, I suggest that only a strong and effective board is capable of designing and delivering the kind of strategic guidance that will be required to navigate the uncharted waters ahead.  While the list of effectiveness indicators in this blog is not necessarily complete, it does represent focused, actionable touch points that can serve as the basis of assessing the strengthening the effectiveness of a nonprofit board.  For any agency thinking about the future, these principles of effectiveness give a point of reference by which an agency can judge the strength and direction of its board.

As always your thoughts are welcome.

 

Resources:

Companion 12 page PDF:  Ten Steps for Building an Effective Nonprofit Board: A Checklist for Action

Further Study: To help think about board development, I would point you to a recent eNewsletter where I highlighted board development resources (link here).

 

Post Script: I would be remiss not to thank the current and former staff and board members of Resolutions Northwest who have helped shaped the organization as a power for good in the community.  And in appreciation to their dedication I encourage you to support the organization by making a one time or monthly gift to support peacemaking and conflict resolution in the greater Portland area.  You can donate here.


Strategic Nonprofit Resource Development Planning

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As I write this post I am sitting in the main session of a two-day ReVV2011 conference (here in Portland) dedicated to exploring the themes of social innovation, enterprise and impact. As I think about this conference in the context of two recent strategic plans that I completed, I am struck at the disconnect between nonprofits and potential funders around the language and ideas related to resource development. While there is this growing number of thinkers, funders, and policy makers using terms like social innovation, impact investing, and venture capital, the average nonprofit continues to think about resource development from the perspective of “seeking support for programs.”  While many nonprofit agencies can likely tell you what percentage of agency revenues come from grants versus donations, there are not enough nonprofit leaders who can discuss resource development as strategy.

graph of growth of philanthropy word useStepping back to a few posts ago, I used Google’s Ngram Viewer to illustrate the idea of nonprofit program accountability. I again wanted to again use the tool to create a visual of an idea. Inset is an graph showing the growth in the use of some philanthropy terms including: public-private partnerships, strategic philanthropy, venture philanthropy, and social return on investments. While I will disclaim that the graph is not scientific, it visually suggests that somewhere in the mid-nineties there was dramatic parallel increase in the use of all of these terms. The disconnect that emerges is that many nonprofits are still talking about “finding resources to support programs” while the world of philanthropy is increasingly talking about “philanthropy as investing.”

As I am coming back to typing this post, midday through the ReVV2011 conference, I am sitting in a conversation about nonprofit revenue streams and the contrast is startling. While the conversation is about thinking about revenue expansion, the discussion has degenerated into “Does anyone have any additional ideas for fundraising that are less intense than…?” Another comment, “I maintain small bank accounts with several local banks so I can hit each one of them up for $200-500 donation each year.” Disconnect. Asking for small random amounts of money from multiple sources is not investment thinking. So the question remains, how do we create a strategic shift in thinking at the nonprofit organizational level? I would like to suggest the following actions.

Informed thinking There are a number of contemporary philanthropic books and articles that should be on the library shelf of every nonprofit executive director. Three basic texts include the following (external links) Essence of Strategic Giving, Money Well Spent, and Driving Social Change. Coupled with these resources are a series of articles and monographs referenced below that will help in creating a deeper understanding of capital nd philanthropy.  Together, they are a critical starting place for reframing the conversation of nonprofit resource development.

Taking stock The next stage of shifting thinking is to create a basic profile of your organization’s current and historic revenue and cost model. Along with defining the cost structure of programs and services, a nonprofit also needs assess the variables of revenue reliability, autonomy and revenue concentration (see resources below). Taking stock is a strategic conversation that, depending on the size of the group, might involve such methods as scenario planning, assumption-based planning, or even open-space technology. The goal of the ‘taking stock exercise’ is to create a shared understanding of the organizational financial baseline, its strengths and weaknesses and how well the “load-bearing” fiscal assumptions might hold under a variety of scenarios.

Understand Your Capital Needs Related to the “taking stock exercise” is the next step, which is creating a clear understanding of your capital needs. Oversimplifying the discussion a bit, capital needs can be sorted into three buckets:

Operating Capital: Most nonprofit organizations focus on operating capital almost to the exclusion of any other forms of capital. Operating capital is the revenue required to support the organizations programs and services. Clearly this is the major focus of nonprofit organizations as it represents the capital required to keep the doors open.

Infrastructure Capital: Less common as strategy is an organization’s Infrastructure capital needs. When it does appear, it is most commonly related to bricks. When a nonprofit seeks to build or buy a building, the infamous capital campaign is launched and the entire focus of the organization is on soliciting financial resources to pay for building, construction or renovation. However, I would like to suggest that nonprofits need to think infrastructure capital beyond bricks. Beyond buildings, nonprofit agencies need to consider infrastructure from the standpoint of evaluation systems, databases, technology infrastructure as well as resources to enter into meaningful collaborative relationships with other nonprofit organizations (such as shared space or shared back-office functions). By identifying infrastructure as separate from operations, it creates opportunities to bundle capital needs differently. Infrastructure capital might be sought as major gifts, restricted capital grants or low (or no) interest loans.

Expansion Capital: The third bucket of capital is that used for growing programs and services. I intentionally placed infrastructure capital in between operating and expansion capital because there is space in between the two. Unfortunately in seeking operating capital, many nonprofits blur sustaining existing programs and services and developing new ones as a way to create stable revenues.  All programs are lumped together and funding is sought for a bundle of related programs and services, some established, some new and some sorta new. However, sustaining existing programs and expanding or creating new programs are distinct functions and imply different motivations and risks for the funder. Ideally operations and expansion should be viewed as separate functions.

When an organization goes through the exercise of exploring capital needs, the connection between capital and strategy becomes clear. Indeed, I would argue that without a clear strategy that the exploration of capital is challenging. Conversely, by connecting strategy with capital needs an organization not only can categorize capital needs but also begin to think about staging capital needs.

Assessing the Capital “Market:” The next step is to begin to assess you options for capital. It is critical for nonprofits to understand the capital sources available to them and the drivers for accessing capital. Most nonprofits have figured out the basics of where financial resources come from, primarily: a) grants and contracts, b) donations, and/or c) earned income. However, as an advanced understanding, nonprofits would do well to study the subspecies of philanthropy. While texts referenced above offer clear outlines as to different funding vehicles, as recently as last week, philanthropists and advisors (external link) were still discussing the taxonomy of philanthropic giving (as if there are still significant questions about the subject). While the difference between a heartfelt connector and a venture philanthropist may seem a bit esoteric in reading the back and forth of a blogger and respondents, an understanding of the different values and motivations attached to philanthropy will assist the savvy nonprofit in aligning their capital needs with the right markets.

Creating a Resource Development Plan: I would argue that it is only in the context of understanding your capital needs and the capital “market” that a truly useful resource development plan can be created. In other words, it is only as an agency strategically “buckets” and “stages” their capital needs can they begin to create an investment plan. From that strategic vantage point, a nonprofit can then intelligently have a conversation with potential investor/donors who have been matched by their motivation and strategic philanthropic intent.

I have worked with many organizations where the starting point for resource development planning is next year’s budget. However, a “seeking support for programs” approach to resource development is an increasingly less durable way to raise revenues that support programs and program growth and an abysmal way to consider infrastructure needs. As I have been arguing in my recent posts, strategy is increasingly important to nonprofit agencies. Strategic planning needs to include strategic resource development planning as well. By aligning nonprofit strategic planning with impact philanthropy planning, there is the potential to create more rational and sustainable funding models for nonprofit organizations.

As always, your comments are welcome.

Resources


The Critical Need for Program Accountability & Evaluation

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Lately, I have been doing a lot of thinking and reading about nonprofit evaluation. As part of an evaluation team for a project, I have also been working directly with a range of nonprofits, providing coaching and guidance on evaluation design. I have come to believe that program accountability and evaluation is an area of conceptual and practical disconnect both within nonprofit agencies and between nonprofit agencies and the government and philanthropic organizations that fund them. In this blog I want to begin a conversation about the role of evaluation & program accountability in nonprofit organizations and in the next blog discuss how nonprofits can (and should) use evaluation to achieve greater social impact.

nonprofit accountability word trendAs a starting point, I want to create a visual for the concept of nonprofit program accountability. Among the technology assets in the empire of Google is a tool called NGram Viewer. Using this tool, one can enter a word or concept and graph the use of the word over time (using as a reference the database of Google Books). I recently used NGram Viewer to graph the concept of nonprofit program accountability. As you can see in the figure, nonprofit accountability first emerged as a concept in the late 1970’s and bumped along until the early 2000’s. It was at that point that the term began a steep incline with nonprofit program accountability becoming a living, breathing, much talked about idea. Note: please don’t overestimate the value of this word picture as I am not suggesting there is any rigor to the underlying data –its just a illustrating concept. With such a steep growth, one would expect nonprofit program accountability and evaluation to be a priority within nonprofit organizations. Enter conceptual and practical disconnect.

Quick story. I was once talking with a nonprofit board about program accountability and evaluation. At one point in the conversation, a board member sitting back with his arms crossed asked, “is there any reason to think our funders have a problem without performance?” The response was “no, our funders are happy.” The second question of the board member was, “Does the agency staff think we’re doing what we need to be doing?” The response to this question was definitive, “Yeah, we’re doing great work.” The third question began to sound like the case was being built question by question, “So, is anyone asking us for greater program accountability and evaluation?” The third answer was more tentative, “um, no, we aren’t being asked for anything new.” With an air of pronouncement came the board members final rhetorical thought. “So why are we having this conversation about program accountability and evaluation?” Needless to say, program evaluation got little traction that evening.

When we turn to the literature, we fare no better. For example,  a series of articles published by smart academic  Joanne G. Carman and her colleagues, support the notion that the practice of program accountability and evaluation varies tremendously among nonprofits. Abstracting one statement from the studies illustrates the theme of her and her colleagues work.

“The picture that emerges is one that is decidedly mixed, illustrating a range of behaviors that challenges the current perception that most, if not all, funders are asking nonprofit organizations for more evaluation and performance measurement data.”(1) - emphasis mine

Even more recently, The Center for Effective Philanthropy published a report titled, “Grantees Report Back: Helpful Reporting and Evaluation Processes” that concluded, “On average, grantees do not find current reporting and evaluation processes to be very helpful in strengthening their organizations and programs.” In differentiating the use of evaluation and reporting, the study concluded that “Grantees who report discussing their report or evaluation with their funder perceive the reporting or evaluation process to be more helpful — yet nearly half of grantees say no discussion occurred.” -emphasis mine.

The conceptual and practical disconnect between program accountability and evaluation and the perceived usefulness of such efforts is clear. While we talk about nonprofit accountability and evaluation, the practice of such efforts is uneven and inconsistent. If this is the state of field practice, the next logical question we need to ask is “what are the barriers that get in the way of program evaluation?”

First is the wall. Money –or more appropriately the lack of it. Many will say that the disconnect between evaluation talk and practice is directly connected to the lack of resources. “We can’t afford to do evaluation.” is the typical response to the lack program accountability and evaluation data. However, I suggest that you can’t afford not to. I personally believe that the day is rapidly approaching when funding agencies and donors begin to say, “The emperor has no clothes.” I have written before that, at the organizational level, transparency and accountability are becoming increasingly important. Without supporting program level accountability and evaluation data, I also believe that nonprofit organizations will come under greater and greater skepticism. So while at face value the barrier of “no money” may be true, the wall must come down and every organization must make it a priority to dismantle this barrier. A final thought is that the wall of “no money” actually hides the real barriers to program accountability and evaluation, of which, I believe there are three:

Skills, Support, Confidence & Value: I believe that a significant barrier that prevents many organizations from seriously addressing program accountability and evaluation is found in the alchemy of “lacking skills” in evaluation and “lacking the support” to conduct evaluation. Too often the leadership of organizations fails to invest in developing the organizational skills and support to conduct evaluation. Skill development and support does not have to be costly. There are a variety of online resources that are a Google search away. Relationships can be built with local colleges and universities or seek out a qualified consultant.  Finally, if you need money, then raise it. Enough of the excuses.

The second part of this barrier is the lack of confidence and values. Some have labeled these two variables as core motivation. If one understands the value of a task and has confidence that they can do the task then there a greater likelihood that the task will become a priority. Putting these pieces together, to overcome this barrier, an organization should develop an approach to understanding and resourcing evaluation that builds confidence and create a culture and an organizational value that supports evaluation and the use of the resulting data.

Missing or Misaligned Incentives Another barrier to program evaluation and accountability is found in the area of incentives.  To start, ask yourself some inquiry questions such as

  • When was the last time that your organization celebrated a data report that demonstrated program effectiveness?
  • When was the last time you presented program evaluation results in a public venue?
  • When was the last time that your major funder provided you with adequate resources to conduct an evaluation?
  • Have you ever been penalized for having or not having evaluation and accountability results?
  • Has anyone ever asked for your program accountability and evaluation results?

These are a just a sample of questions that can be used to probe where the incentives for evaluation are (and are not) for your organization. Exploring the incentives, lack of incentives, or misalignment of incentives is another way to, not only identify an evaluation barrier, but to dismantle it. As a result of this inquiry, an agency should clearly be able to identify positive incentives for program evaluation and, if they can’t be identified, they should be created.

Fear that We are the Emperor: Perhaps the largest barrier to program accountability and transparency is the fear that evaluation outcomes would reveal that we are the proverbial emperor. “What if we measure and the results are negative?” can be a paralyzing specter if our mindset is one of fear. However if we want to develop ourselves into a socially innovative nonprofit organization we must dismantle fear and embrace inquiry. We need to understand that program accountability and evaluation is the source of power and empowerment. Without evaluation how can we improve or measure progress? Program evaluation is the stuff that makes program giants, changes things, and disrupts unmet needs.   Conversely the lack of data simply perpetuates the myth of nonprofits as nice organizations doing good in the community.

What I am arguing for this is post is the need for nonprofit organizations to consider their relationship to program accountability and evaluation. The literature and practice might suggest that the field of the social-citizen sector talks about accountability and evaluation but at the same time, also suggests that we have been less than successful at operationalizing that talk with any consistency. However, I would argue that this is case where field practice does not matter. I believe that socially innovative nonprofit organizations are those that invest in the development and implementation of a solid plan for program accountability and evaluation. As illustrated by the Venn diagram, organizational strength and impact is more durable in the presence of a solid evaluation and accountability approach that is connected to strategic and resource planning.

Program accountability and evaluation strengthens internal practice as a focus of continuous improvement and serves as an external benchmark to proclaim an organizational commitment to excellence. As nonprofit agencies continue to look for ways to innovate in a resource-constrained environment, building and implementing strong strategic plans, resource plans, and evaluation plans will position agencies well to effectively meet compelling community needs.

A always, your thoughts are welcome.

(1) Carman, JG. (2009). Nonprofits, Funders, and Evaluation Program Accountability in Action. The American Review of Public Administration 39: 374-390.


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