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In my consulting business I get calls from people who say, “I found your name through a search for fundraising consultants. Could you tell me your experience with managing a special event, capital campaign, or ________ (fill in the blank).”  At which time I get to distinguish the concept of sustainability planning from the concept of fundraising planning.   With such potential clients, I try to cut to the chase, saying something like “If you are looking for someone to help you tactically pull off a silent auction or help you move 100 “prospects” up the ladder of engagement, let me refer you to one or two of my colleagues.  However, if you are looking for someone to help you think more deeply about organizational sustainability and resource development planning, then let’s talk a little more.”  While I have written a few other posts on this topic, specifically here, here, and arguably here, in this post I want to help nonprofits to think beyond fundraising and to consider sustainability planning as a potentially more powerful management tool.

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As we get started, I want to be up front and provide my working definition of sustainability.  “Sustainability is the systemic and systematic development of program and agency capacity that produces measurable outcomes, successfully navigates change, and demonstrates rational growth over time.” Sustainability planning therefore is based on four cornerstone concepts:

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Systemic and Systematic Development: Sustainability planning is inherently based on a systems view of the nonprofit agency and the local “ecosystem” in which the agency operates.  Most effective when intentional and thematic, sustainability planning must address the development of the whole organizational ecology. In other words, the external ecology (i.e., local economy, grant-maker funding patterns, the political landscape) and the internal ecology (i.e., employee compensation, technology infrastructure and marketing/communications) directly effect an agency’s ability to design strategies that ensure financial resources needed for program success.

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Measurable Outcomes: A basic premise of sustainability is that the agency and its programs must produce outcomes that are documented, quantifiable, and worth continuing.  Social impact matters and impact alone is the basis for sustainability.  If an agency can’t measure and demonstrate the worth of its programs and services, then it is directly or indirectly violating the trust of these investing in your programs and services.

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Navigating Change:  The pace of change in this new economic “normal” demands that nonprofit agencies’ have the agility to navigate change both in response to and in anticipation of the ongoing and rapid realignment of community resources.  “Demand is up and revenues are stretched taunt” will remain the dominate reality for some time to come. Flexibility and adaptation build on the foundation of strategy is a critical component of sustainability.  Rather than “locking down” a static revenue development strategy, an organization needs to strategically understand  its larger funding model and, within that model, invest in rapid cycle testing (external link) of new resource development strategies.

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Demonstrating Rational Growth: Sustainability is only tenable when the pace of growth can be assimilated by the organization.  Growing too fast or conversely too slow can be detrimental to the health of a nonprofit.  Finding a growth pattern that can be managed in the context and culture of the organization is also important to sustainability.

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In other words,  these four principles that define sustainability move an agency beyond mapping out fundraising activities for the coming year. Sustainability planning is the larger strategic conversation that considers not only revenue projections but also the underlying framework and strategy for maintaining and managing organizational growth.    Unfortunately many nonprofit organizations uncouple organizational strategic planning and fundraising planning –facilitating a separate process for each.  However, it is increasingly less tenable to think about revenues apart from strategy.  Nonprofit leaders must excel at systems thinking and integration.  This challenges the traditional thinking that there are three separate but related processes: strategic planning, operational planning and fundraising calendar development.  Strategic, operational and fundraising planning need to fuse into a single hybrid planning process.  This process sets a clear vision that is supported by integrated outcome driven strategies for program and service delivery; capacity development; and revenue development (fundraising).  Such a plan must be intentional about opportunity management and create the necessary degrees of freedom required for adapting to the changing economic and programmatic landscape.

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In the context of sustainability planning, the facilitation and process leadership that is required is led by a strategy focus and is supported and complemented by tactical fundraising skills. Planning for events, building donor databases, and writing grants are important  fundraising strategies but fundraising strategies should not be confused with sustainability planning.  Rather than such formula-driven metrics as donor conversion or event “return on investment,” a facilitation process for sustainability planning is strategy driven and anchored to the longterm success of the agency. Forward thinking nonprofit agencies are increasingly investing their limited time and resources thinking beyond fundraising to models of sustainability.

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As always, your thoughts are welcome.

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This post is one of a continuing series on strategic planning and is based on my work facilitating strategic planning with nonprofit agencies. In strategic planning one of my initial conversations with an agency executive director will invariably include a discussion about the use of the strategic plan following its development.  The savvy executive director will describe the concrete ways in which the plan will be used to support agency governance.  S/he will describe the use of performance measures connected to the plan goals and strategies and the specific tools that help the board and staff manage their progress on implementing the plan.  More common however, the the executive director that laments how the exercise of strategic planning rarely impacts the agency in a deep and substantive way.  In this scenario, I am often asked, “how can this strategic planning process be different?”  In this post, I wanted to review the fundamentals of how use the process of strategic planning to increase organizational capacity.

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The obvious direct impact of strategic planning is the written strategy that is created.  At its most basic level in creation of a strategic plan is the DNA of capacity development.  Done well, a strategic plan offers a roadmap for the growth and  development of an organization. With intentional effort to keep the plan present and alive using simple performance monitoring tools, (like a dashboard or scorecard) an agency directly benefits from its investment in strategic planning.  However, I believe the face value of a strategic plan is only the beginning of the use of a strategic plan. Some other layers of using strategic planning to build capacity include the following:

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Board, Staff and Stakeholder Development: While textbook strategic planning can be a very pedestrian process of assessing the current internal and external environment, developing priorities and strategies, and writing a document, I believe the potential of strategic planning is to use the process to develop the energy, passion, skills and knowledge of board, staff and stakeholders.   Strategic planning is about engagement and focus of people and not just about data.  In planning a strategic planning effort, one of the framing questions should be “at the end of this process, how will out staff, board and stakeholders be different?” If this question is pursued intentionally then strategic planning offers and agency to develop the understanding, passion, and commitment of board, staff and stakeholders.  In this context, the planning process can and should include empowerment and learning community approaches. Indeed, a strategic planning process is successful to the degree that it creates a deeper understanding of the role and function of the agency in solving compelling social needs.

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Strategic Dialogue:  Having facilitated the development of numerous strategic plans, I find some of the greatest energy in the process comes as I work with an organization to gather “outside” perspectives.  While not commonly done, I am a strong believer that  organizations benefit from seeking advice and perspective from outside of the agency.  Insights coming from other agencies working on the same issue, from funders, donors, community partners and even agency clients, yield not only valuable strategic planning insights but often begins the process of dialogue.  Once the strategic plan is developed, I encourage agencies to continue the conversation with their funders, donors, community partners, and clients by sharing the strategic directions of the plan.  Some agencies bristle at the concept of sharing such sensitive, internal knowledge and reference the for profit sector’s contention that strategy is proprietary and needs to be guarded. I would counter that being transparent about strategy is actually strategic in the social sector.  Sharing knowledge about strategy makes explicit the position, direction and focus of an agency and can be used to define a larger community or regional agenda.  Engaging in such a dialogue with partners, funders, donors, clients and the community at large fosters collaboration and increases the potential of creating a network of strategies that can improve the collective social impact of all stakeholders.

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Field Building: Paired with the concept of strategic dialogue, a third use of a strategic plan is that it holds the potential to improve the field of practice.  Strategic Planning offers a unique and compressed exercise in evaluation, innovation and system design.  When strategic planning is resourced, well-designed and not simply a rote exercise it is a laboratory experience that has both internal and external dimensions.  Too often a strategic planning process is myopically inward content with asking the question, “how do we succeed in fulfilling our mission?”  While there is no denying that strategic planning is designed to create an organizational future, strategic planning also influences the collective future of the field of practice in which the agency operates.  In addition to how does the organizational “we” succeed there is also a dimension of how does the collective “we” succeed.  One outcome of strategic planning could be the free sharing of lessons learned.  By giving away your knowledge, you enable the the social sector to collectively enhance the knowledge base and field of practice.

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Taken together, strategic planning becomes a layered process of developing capacity.  Clearly and unequivocally the foundation of strategic planning is the creation of an organizational pathway to the future.  However, if layers of “human capital” development, strategic dialogue, and field building are added to the foundation of strategy, a strategic plan becomes a powerful tool to expand agency capacity. Facilitating a strategic planning process is more than following one of any number of strategic planning textbooks.  Strategic planning is large, shaping and capacity-building and it is the responsibility of facilitators to “bring life” to a strategic planning process.  I believe, it is only through this larger lens of capacity development do nonprofits build meaningful strategic plans.

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As always, your comments are welcome.

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Over the last few months, I have posted a series of articles on strategic planning for  nonprofit and social sector agencies. Not surprising, a number of potential client calls are from folks  looking for facilitation and process support for strategic planning.  Indeed in this anemic economy, many nonprofit agencies find themselves refocusing on strategy.  Many initial conversations with clients fall into one of three groups.  The  first group are those agencies who have been through strategic planning “dutifully” every 3-5 years as “every good nonprofit agency does” and now it that time when the planning cycle has looped around.  The second group are those agencies that have read one or more books on strategic planning or have participated in an onerous planing process and feel daunted by the process.  The third group are agencies who may have been severely impacted by the recent economic downturn and are truly looking for fresh ways to think about how to move forward. While all three groups may have different motivations and perspectives related to  strategic planning, all  share in common a desire to improve the social impact of their organizations.

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Based on literally dozens of conversations with nonprofit leaders, I find that many organizations are looking for a simpler framework for strategic planning.  In this post, I want to outline a strategic planning process that is versatile enough to guide an organization or team as they seek to engage in the thoughtful work of strategy.   In summary, the framework that I most often follow, is the process of 1) establishing the critical social need, 2) creating a compelling vision of how your agency can create a positive social impact by addressing that social need, 3) developing a relevant organizational mission, 4) developing system’s focused program strategies, and 5) creating measures and  outcomes to guide the plan implementation.

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Establishing the Critical Social Need:  Every nonprofit should exist only in response to an unmet critical social need.  Unlike the private sector where the market may support companies selling consumables that may have little value, no value, or even a negative value, the nonprofit sector can only afford to support organizations that are positively impacting compelling social needs.  As a result, strategic planning begins by defining the unmet social need.  Such a community needs assessment can be based on existing data, expert opinion, surveys, a systematic environmental scan, or ideally some combination of these data points.

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Creating a Compelling Vision of Tomorrow:  I have written before about the relationship between vision & mission and critical social needs.  Within the nonprofit sector and the philanthropy community that supports the nonprofit sector, there is an increasing trend towards defining and working towards a compelling social impact.  The focus on social impact makes it  increasingly less tenable for agencies to simply run “good programs” without creating social change. In this context of strategic planning,agencies should ask themselves, “what is the better, more just, and equitable tomorrow we are tying to create?”  A vision, in essence is the BIG WHY that defines the reason for the existence of an organization.

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Developing a Relevant Mission:  An agency’s mission statement should represent a the “tactical  orientation of the organization that is closer to the social need being addressed address.   The questions that get to the heart of an agency mission might include ones such as: What programs and services is our agency trying to excel at?  What qualities of culture and community are we seeking to create?  How do we want to be known in the community? If folks seek us out, what are they seeking us out for?  By creating a clear mission you are answering the fundamental questions of the “What and How”  of the agency.

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Designing System’s Level Strategies:  In between your vision of tomorrow and the mission you declare today is the “white space” of programs and services.  Strategic plans are not intended to the entirely fill the white space by fully designing programs  but rather is the space where an organization declares its commitment to strategies designed to create its vision of tomorrow.   The strategy “challenge” is to think systematically and systemically about the opportunities to foster change at the individual, community, and policy level to create a synergistic effect that magnifies the benefits of each individual program. It is also important for an agency to develop capacity strategies that will grow the organization’s ability to create a larger social impact.  For many organizations that implement “programs” the shift to thinking about community impact and public policy can be an exciting process of discovering new potential.    Indeed, the creative energy of designing solutions to compelling social needs has the potential of giving renewed inspiration and aspiration to an organization.

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Creating Performance and Outcome  Measures:  It is only worth the time and energy to create a strategic plan if an agency is willing to ensure that the document is living, breathing and is used as the organizational compass guiding and anchoring decisions.  Ideally, as program strategies are created, the organization also takes time to establish  corresponding performance and outcome measures.   Answering the question of how an agency will monitor progress toward the objectives should be integral to strategic planning.  Similar to developing program strategies, the purpose at this level is not to create the actual performance measurement system (i.e., dashboard or report card) but to establish the benchmarks that will help provide assurance that the agency activities will stay focused on the strategic design. Later you can fully develop programs and outcome measurement more precisely based on further study and design.

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I purposefully presented in this post a simplified strategic planning process. Unfortunately, on more than one occasion, I have seen (and heard from frustrated potential clients) how an overly complex process of strategic planning gets in the way of successful strategic planning.  Too often the textbook approach to strategic planning is cumbersome and emphasizes precise sequential steps, prescribed analysis measures (i.e., SWOT), meaningless revenue projection exercises and other artificial exercises that constrain thinking.

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Don’t get me wrong, I believe that strategic planning is a process that requires intentionality, reflection and analysis –none of which are easy. However, I am a firm believe that social sector strategic planning requires a simpler more aspirational framework as represented by the five slightly imprecise and  iterative steps identified above.  Unlike a standardized corporate strategic planning approach Nonprofit and social sector agencies requires a social impact planning model that can dynamically address a wide range of social needs and accommodate a variety of organizational cultures.

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A strategic plan that reflects the process from need to to vision and offers specific strategies and measures to guide implementation, will establish a framework to help an agency achieve success.  To be useful in creating such a strategic plan, a facilitator needs to, as Simon Sinek (external link), so clearly articulates create a compelling why, a disciplined how and a consistent what.  Applied to a strategic planning framework it suggests that a simplified approach to strategic planning coupled with a systemic facilitation process can assist nonprofit agencies to improve the social impact of their organizations.

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As always, your thoughts are welcome.

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Typically, my posts try to capture original thoughts related to facilitation and process.  This week, however, has been one of rich discovery and learning from the words of others.  In this post, I am lacing together the knowledge of others in a synthesis of ideas to reinforce my practice foundation of process design and facilitation.  I hope you enjoy the related links embedded in this post. –m

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This week I had the privilege of attending a community lecture for regional Arts organizations by Michael Kaiser, President of the Kennedy Center.  His topic was the economic challenges being faced by arts organizations and framed the lecture as the Arts in Crisis.  I went into the packed theatre expecting to hear the fairly familiar terrain that corporate donations are down, retaining major donors is more important than ever, diversifying your funding base is critical, and board involvement is key.   Some of that familiar ground was covered but Kaiser left the road and rose like a kite into the air. He first caught the gentle breeze and higher up leaped onto the mighty winds.  While he never directly said it, his is message was clear.  The crisis in Arts Organizations is not an economic crisis but it is a “crisis in thinking” and leadership.  He argued that strength and stability during these challenging economic times comes through transformative creativity and not through cutting budgets (For an awesome summary of the entire presentation check out Lisa Radon’s excellent blog).

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As a performance improvement facilitator who works with a wide range of nonprofit agencies, I have seen this “crisis in thinking” over and again. Many nonprofit agencies are in their second and third consecutive years of budget cuts. Increasingly stressed staff (who can vaguely remember the concept of pay raises or benefit increases) are being asked to do more and more with the proverbial less and less. The gap between service costs and traditional revenues continues to widen and the compounding effects of sequential years of consecutive 3, 4 or 5% budget cuts are fracturing the integrity of many organizations.  Senior management and Boards of Directors in these organizations are becoming equally fatigued by constantly responding to an anemic resource environment.  So it is understandably challenging to walk into an organization and say, “stop trying to defend the gains you have made and start thinking using transformative creativity.” Yet this is the critical message for the nonprofit sector today.  Trying to reduce your way fiscal health undermines the organizational core and is the equivalent of burning your furniture to keep warm.  Unless you have lots and lots of furniture, in the end, you will be both cold and have nothing to sit on.

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At the same time, I am not suggesting that conservative management of expenses is imprudent.  Indeed, I have seen innovative nonprofit agencies, gain efficiencies by renegotiating leases on space and/or equipment, outsourcing back office functions, and redesigning technology expenses at a considerable savings.  However, there comes a time and place where program effectiveness and, more importantly, the larger social impact of an agency is undermined by a myopic and relentless focus on reduction.  A theme that continues to serve my clients well is that success looks beyond the crisis at hand and stakes out ground in the future social impact of the organization. As I have written before, envisioning social impact requires intentional design of the “tomorrow” that an agency wants to create.

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Helping nonprofit organizations get beyond the “crisis in thinking” requires a facilitator to work with teams across several domains that include the following:

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Focus on Participatory Leadership:  My guess is that is that if I searched the web for the term participatory leadership, I would find that some consulting group has probably trademarked the concept.  However, what I refer to is not something out of a box or training program but is a the commitment to the ongoing study of leadership from the perspectives of vision, equity, culture.  Transformative creativity (or getting beyond the crisis) requires a compact between the layers of an organization where there is cooperative ownership, participatory systems and a learning culture.  I was recently reading a study by McKinsey & Company on successful transformations that described the critical role of balancing top down leadership with a culture of participation, equity and ownership across the staff and board.  Such cultures need to be seeded as a “big idea” and then cultivated by skill development and supporting systems. Indeed, I have facilitated more than one board-staff retreat where the primary outcome was to begin the development of a participatory culture.

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Focus on Outcomes:  One of the revolutions within the nonprofit sector and philanthropy is a growing discontent with producing good results.  Philanthropists and leading nonprofit organizations want to make a larger social difference.  The coming wave of change (that will swell to a tsunami) is an increasingly myopic focus on social impact and outcomes rather than program impact.  This week I read a fantastic article by the Board Chair of Venture Philanthropy Partners (this article is the third article in a series he has been writing). In this article he minced no small words as he wrote: “Let me say this as bluntly as I can to nonprofits and funders alike: The challenge of managing to outcomes has little to do with systems, processes, or technology. The real challenge is that organizations cannot hope to manage to outcomes unless they have in place an engaged board; leadership with conviction; clarity of purpose; and a conducive, supportive performance culture.” The organizations of tomorrow are those who are focusing on creating social change that is larger than the results generated by programs.  A focus on outcomes asks, “How can we create a sum that is greater than the total of our parts?”

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Focus on Mission, Vision and Margin: In my last post, I detailed the concept of mission and vision in strategic planning and in creating social impact models.  The point that I was making in that post was was underscored in an article on the Acumen Fund’s blog that discussed the role of mission, margin and mandate as levers to scale interventions and create social impact.  If you want a much lengthier discussion on the relationships of these concepts, I highly recommend the study of the book Strategic Giving: The Art and Science of Philanthropy by Peter Frumkin.  While I will warn you that Frumkin’s book is over 400 pages, it provides a depth of understanding about social impact and is a must read for any organization serious about transformative creativity. By focusing on the larger vision and placing mission and mandate in the context of a clear vision, organizations will, by default, move into strategic thinking rather than crisis thinking.

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Organizations in the social sector face unique challenges in this lackluster economy.  Agencies that are focusing on defending their core also need to make room to think about how to increase capacity and effectiveness.  In seeking to navigate the twin challenges of maintaining and being strategic, facilitators need to realize that leadership, outcomes and the design process (in between the leadership and outcomes) comprise the foundation for transformative creativity.

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As always, your thoughts are welcome.

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Recently, I have been working on several different projects that involve nonprofit board development issues ranging from staffing a board, to recruiting board members, and improving the effectiveness of boards.  My recent work has led me to filter my experience through a review of the literature on the characteristics of an effective boards and  strengthening  nonprofit board performance.  So this post is one more installment of my occasional series on nonprofit board development.

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As I have written previously, a functional board is comprised of members capable of serving four functions that include 1) governance, 2) capacity support, 3) content expertise, and 4) resource development.  This is a critical framework to understand as it serves as the foundation of a functional board. However, a high performing board requires a different level of operating. High performing boards are based on “the highest and best use” of the talents and skills of board members.  Most nonprofit organizations seek to recruit board members who are talented individuals who are often business leaders, critical thinkers, and community activists. Unfortunately, more often than we would like to admit, the use of such  talented board members is limited to review of policies and procedures, looking over budget reports for accuracy and assisting in fundraising events. While such board activities might define some of the duties of a functional board, a high performing board is defined by engagement in ongoing strategic thinking and strategic action. Reviewing meeting minutes, agency financial reports, and blessing changes in HR policy are necessary duties of a Board but if the balance of board meetings is consumed with such pedestrian administrative tasks, then the “highest and best use of board talent “is likely missed.

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A classic Harvard Business Review article published over a decade ago, suggests that high functioning boards, discover, focus and organize around “what matters” (External Link).  According to this article, what matters is “harnessing the collective efforts of accomplished individuals to advance the institution’s mission and long-term welfare.”  It goes on further to suggest that the board’s contribution is meant to be strategic, “the joint product of talented people brought together to apply their knowledge and expertise to the major challenges (and I would add, opportunities) facing the institution.”  So, if this is the description of a high performing board, what does it take to create such a board?  From my experience and a review of the literature, I would suggest five starting points.

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Assess where you are and define where you want to be.  The first task of developing a high performing board is to figure out where are the gaps in performance.  A Google Search will unearth several board self-assessment tools that range from overly simplistic to overly complicated. Such tools might be useful to help a board think about its governance functions, member commitments, or help identify “holes” in a board’s operating structure.  Such a self-assessment can be a good place to benchmark the strengths of your board operation but many of these assessments do not have a strong strategic intent.  An alternative assessment would be to benchmark practices against the variables presented in the Grant Thornton 2009 National Board Governance Survey for Not-for-Profit Organizations (External Link).  In my opinion, this survey offers a timely and more strategic perspective on board operations. A third approach to assessment is to shift away from a narrow assessment of the board and conduct a larger capacity assessment.  I have written elsewhere about capacity assessments and in that article I linked to a useful assessment spreadsheet (External Link).  A capacity assessment would help the board not only reflect in its strengths and opportunities but would also be useful in discovering the “what matters.”  Whichever route you take, knowing where the board is now will help identify the performance gap related to where you want to be.

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Build the Board’s Skills:  I have argued before that board development starts at a board orientation but continues as an ongoing process of raising the skills and competencies of board members.  The reality is that board members become effective as they engage their heads, hearts and hands in the work of the organization.  To me, this calls for a meaningful development agenda that includes a) ongoing board training on topics related to governance and strategy, b) opportunities for boards to get their “hands dirty” in the work of the organization, and c) learning about the larger service context in which the nonprofit agency works.  Building board skills is a strategic and long-term process that is not segregated into an annual or semi-annual training event.  Ideally, participating in a strategic agenda for board skills building should be built into board practices and be built into the expectations of board service.

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Engage Strategically:  A simple yet useful exercise to help gauge the strategy of a board is to do a quick content analysis of two sources.  First, examine the pre-meeting packets sent out to board members for the last three or four months and sort the contents into the two piles of administrative and strategic.  Second, review the meeting minutes for the same time period and highlight everything that is strategic in yellow.  The balance of the piles and the presence or absence of yellow highlights will give a board a good indication of how much of the board’s time is spent in administrative review and how much of the time is spent engaged in strategy.  The second part of the exercise is to ask the question, how much of the historic content was actually dependent upon face to face meeting?  For example, could board members review and approve fiscal statements and other administrative approvals after a simple review of emailed documents?  The answer is likely to be yes.  I am not suggesting that boards should conduct business by email rather I wanted to create a perspective of time.  If board members can read and approve by reviewing email attachments, then the time allotted at board meetings should be proportional. Simple administrative review should be done in advance of meetings and, when there are no concerns about the subject matter, such tasks should take relatively little time at a board meeting. Unfortunately, too many boards are conditioned to process the nuances of organizational administration, mistaking such administrative processing for strategy.  Board meetings need to be oriented around strategy and board members engaged in the work of solving big challenges of the agency and thinking strategically two and three years out.   Performance of boards would improve dramatically if administrative review were limited to a tightly narrated quarter or a third of a total board meeting time.

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Measure Performance:  Another starting point for improving board effectiveness is to measure performance.  Too often a board will measure the performance of the agency and neglect measuring their own performance. At best, many boards’ self-performance evaluation is limited to evaluating the start and end time of meetings or the quality of the takeout food served at the event.  High performing boards create meaningful measures of board performance. While it might be tempting to measure performance by attendance, percent of board members donating to the agency, and the on-time completion of the executive director performance evaluation, these are fairly un-strategic measures. Strategic measures go further and might track such benchmarks as the regularity and content of executive or planning sessions, engagement of members outside of board meetings, or the percent of meeting time spent in strategy versus administration. Additional measures might be tracking the time required to recruit skilled board members or membership retention.  For many boards shifting to performance-based board management can represent a sea change in culture and is likely only achieved after carefully facilitated strategic conversations and thoughtful planning.

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Get the Right People on Board:  A final starting point is to conduct a thoughtful review of board recruitment strategies.  Does the agency have clear board member job descriptions?  Are members sought out individually for skills and expertise? Do board members invest time in cultivating potential board members?  Many small to midsized nonprofit agency have difficulty staffing their boards let alone staffing their boards with highly qualified community leaders.  Having worked with many such boards, I will not underestimate the challenge of this task.  However, establishing a clear recruitment strategy and creating a meaningful board structure with the expectations of continual learning, performance-measurement, and strategic engagement will become reinforcing cycle that raises expectations and organizational optimism.   Energy and engagement creates energy and engagement.

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Developing a high performing board is not a trivial task.  Indeed, I would contend that for many agencies, creating a high performing board may an intentional process that spans a year or more. However, despite the challenges of reinventing a board, facilitating a process to develop a high performing board is critical as nonprofits seek to thrive in the continuing economic uncertainty and instability.  High performing organizations of  tomorrow are those that develop and maintain high performing boards today.

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As always, your comments are welcome.

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For many nonprofit organizations this is time of the year where the board and staff turn their attention to drafting a budget to guide business operations for the next fiscal year.  For many agencies, this annual ritual simply starts with taking last year’s budget and incrementally scaling the numbers up or down depending on the known and likely commitments of funding for the next year.  While this method is reliable when continuity between years is strong, an increasing number of nonprofits are still facing volatile economic environments.  For organizations confronting “revenue uncertainty” cutting and pasting from last year’s budget is likely inadequate preparation for the year, or years, ahead.  Organizations’ seeking not only to survive but thrive need to develop an intentional process to facilitate the development of a long-term budget strategy.  Having many years experience creating and managing budgets in career, consultant, and volunteer positions (across nonprofit agencies of all shapes and sizes) I would like to suggest five elements of a facilitation process that will strengthen a strategic budget planning process.

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Define your Funding Model:  It likely comes as no surprise that the agency budget framework for many small to midsize nonprofit organizations is simply the amalgamation of the individual program budgets that have been built in response to specific grants and/or contracts received by organization.  Unfortunately, even some larger organizations fall prey to this “Lego Approach” to budget development.  As new grants, contracts or donations are obtained, the resources are snapped into place to fill budget holes or to expand programs as required by the funding restrictions tied to the new revenues.  Agencies that would raise their hands if asked if they use the “Lego Approach,” would do well to consider convening their board for a strategic conversation about developing an intentional framework to guide the budget process.

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In recent years, there have been a number emerging perspectives in nonprofit fiscal management and philanthropy that, taken together, help nonprofits develop a strategic perspective for long-term revenue development.  Several articles and books are referenced at the end of this post, however, some of the key concepts that form the basis of the conversation should include: a) a review of Pratt’s funding archetypes and the ten funding models recently presented in an article in the Stanford Social Innovation Review; b) exploration of revenue autonomy, reliability and concentration, and c) operational overhead.  The goal of this conversation is to develop a working understanding of the concepts and prepare the board to apply these principles to creating a strategic framework for their organization.

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Assess your Overhead Costs:  One unfortunate legacy that plagues nonprofit organizations is that efficiency is often measured by overhead cost. The assumption is that nonprofit overhead is a proxy measure of efficiency, in essence, suggesting that the lower the nonprofit overhead costs, the more efficient the nonprofit is assumed to be.  This perspective is reinforced by many funding agencies who cap operational overhead at an arbitrary number (like 8%, 10% or 15%) when awarding grants and contracts.  However, over the last few years several studies have begun to challenge this conventional thinking with a growing chorus of voices suggesting that the antiquated approach to efficiency actually sets up a nonprofit “starvation cycle.”  Creating a strategic approach to resource development and budgeting will require boards to develop an accurate administrative overhead budget. This exploration by the board will need to account for both current administrative costs and costs associated with capital investments that need to be made in such areas as human resource, technology, fiscal, that have been deferred expenses.  The resources listed below offer several good starting places for developing an accurate administrative overhead budget.  Having a realistic understanding the true agency overhead costs will help your organization develop realistic plans to align revenues with true costs.

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Value your Staff:   A third component of a strategic budget process is to create a compensation system that values and rewards staff.  Much akin to the under-investing in agency overhead and infrastructure, under-investing in staff is another strategic hurdle that nonprofit agencies need to understand and overcome.  Again, conventional wisdom suggests that nonprofit employees work for intrinsic rather than extrinsic value, which translates into lower salaries and benefits.  Unfortunately, when a critical mass of nonprofit agencies operates under this assumption it creates a market that supports under-compensating staff.  On more than one occasion, I have heard a well-intentioned board member say, “Our employee pay and benefits are at the market rate.” Unfortunately the benchmark should not be “market rate” but should be oriented around the equity of a living wage and incentives that foster the recruitment and retention of high performing employees.  Again, the goal of building a compensation model is to create a resource development goal for an organization that can be supported by intentional objectives to be pursued in a priority sequence.  For example, I know of an agency that laid out a strategic agenda to sequentially develop a living wage structure, strengthen the insurance options, increase retirement contributions and add an employee assistance program and educational benefits.  The organization is supporting this strategy with a specific multi-year resource development plan focused on strengthening compensation.

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Start from Zero:  For those organizations locked into program grants and contracts, many budget decisions were established when the grant or contract proposal was submitted. For those programs that have been funded over multiple funding cycles, the budgets (and ideally work scope) have expanded or contracted based on available funds. However, even if a program budget is set, it is a very productive exercise to start from zero and rebuild a program budget.  In other words, suspending the current program budget, if you were to create an ideal budget for the program services being delivered, what would that budget look like?  If staff compensation was fully loaded and the appropriate overhead was charged to the program, how much money would it really take to run the program?  Creating a zero-based budget allows you to compare where you should be (relative to the revenue and expenses) to where you actually are today.  The variances identified are the program budget gaps that are being absorbed or ignored at the peril of your agency’s fiscal health.  Creating zero budget comparisons across program areas would help bring into focus the gaps between revenues and expenses and would become the groundwork for a facilitated discussion about program priorities and where your agency is appropriately investing, over-investing and under-investing in programs that help the organization meet its social goals and objectives.

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Think About Governance:  Another part of the process is to be intentional about governance.  At the most basic level, governance asks the big three questions is a) is it allowable, b) is it approved and c) is it something that will advance your mission?  In more detailed thinking about governance, your board needs to create a process to ensure that the budget process protects donor intent, appropriately allocates expenses and ensure the agency’s fiscal and legal advisors review the budget strategy for accuracy and legality.  Finally the governance component of budget planning requires attention to risk management and contingency planning, to minimize disruption of programs and services should budget projections not be met.

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Taken together, these five facets of strategic budget planning suggest a staged process that includes:  a) coming to agreement on a funding model for your agency that serves as the organizer for strategy, b) being clear about the true cost of your services, c) recognizing your resource gaps, and d) creating a strategic resource development plan to address the resource gap.  It is important to recognize that re-engineering an agency’s approach to resource development will take time and the first iteration of a strategic budgeting process will likely yield two working documents.  The first document is the strategic resource development plan is a long-term (3-5 years) that defines how your agency will reshape its approach to growing revenue streams over time.  The second working document is the short-term “compromised” budget to address the coming programmatic year that juggles the anticipated expenses with your projected committed and likely revenues.  However, this initial mixed result of “the  pragmatic” and  “the strategic” will only be a temporary stage as the subsequent iterations of the strategic budget process will be oriented more and more toward the strategic goals and objectives of your plan.

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What is becoming clear in the social service sector of today is that that nonprofit organizations can’t simply rely on the momentum of the past.  Strategic thinking and systems thinking need to be core competencies of the leadership and boards of nonprofit organizations.  Even as I write this blog, a new resource came through a “tweet” that made this statement, “Leaders who are determined to have their organizations thrive in these new and challenging times must reevaluate their potentially outdated ways of thinking, prioritizing, investing, and acting. (external link)”  For budget planning and the larger concept of strategic resource planning, I could not agree more.

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As always your thoughts are welcome.

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Resources:

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• Kramer M. (Fall, 2009) Catalytic Philanthropy. Stanford Social Innovation Review
• Landes Foster, W., Kim, P., & Christiansen , B. (Spring, 2009). Ten Nonprofit Funding Models. Stanford Social Innovation Review
• Pratt J. (Summer 2004). Analyzing the Dynamics of Funding: Reliability and Autonomy. Nonprofit Quarterly
• Companion spreadsheet to Pratt Article
• Raymond S (2010) Nonprofit Finance for hard Times. John Wiley & Sones, Hoboken, NJ.
• Sussman C. (N.D.) Building Adaptive Capacity: The Quest for Improved Organizational Performance.
• Goggins &  Howard (Fall 2009) The Nonprofit Starvation Cycle. Stanford Social Innovation Review
• Urban Institute & Center on Philanthropy at Indiana University.  Fundraising and Administrative Costs Website

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The economic downturn that occurred in the last couple of years has been unquestionably harsh on most nonprofit agencies.  The increases in service demand, coupled with the decreases in revenues have created organizational strains and fractures that will linger for years to come.  If there is any silver lining to this recent crisis, it is that has it forced many nonprofits to question their very foundations of mission, vision and operation.  In this context, the exploration of capacity and capacity building has increased in prominence and profile across many organizations. To that end, innovative and adaptable organizations are using this crisis to fundamentally rethink capacity and are linking strategy to capacity.

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I recently attended a panel discussion geared towards grant makers on the topic of nonprofit capacity building.  The panel discussed capacity assessments, the role of training, coaching and consulting and evaluating capacity building efforts.  As with many lunch presentations there was much more content than time, however, it was interesting to hear the “30,000 foot view” of capacity from funding agencies’ perspectives.   As one who has worked with nonprofits in capacity building for many years, the discussion of tactics by the panel revealed little new information.  However, what was interesting in the presentation was the discussion of the “disconnect in thinking” between funding agencies and nonprofit agencies around the concept of capacity.  The disconnect in thinking can be summed up in this way:  When nonprofit agencies think about capacity building, especially in the context of seeking a capacity building grant, they really are asking for operating support for specific projects.  When grant makers talk about capacity building, they are talking about developing infrastructure.  Adapting an illustration that one participant gave, it is like a vegetable garden where the nonprofit is concerned about a particular plant in the garden and the grant makers are increasingly interested in the root system and soil that supports the entire garden.  In previous posts I have discussed the concept of initiating a capacity building conversation and also discussed capacity building in the context of resource development planning. In this post I want to discuss facilitating an organizational capacity planning process.

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Before discussing the process, we first need to define what is meant when we discuss capacity and capacity building. As we are reminded in that now classic primer on nonprofit jargon “in other words,” (external link) capacity is one of those “vague, quasi-occult terms” that evokes the need for outside “expert” consultants who understand the deep mysteries of the concept.  The unfortunate byproduct of such a misunderstood word is that the ambiguity of the term makes the concept of capacity and capacity building seem daunting to an organization.  So as an opening premise, I would like to suggest a clear and concise definition of capacity as “the sum total of the  strategy, management, staffing, infrastructure, resources and operation of an organization.” The process of capacity building then becomes the deliberate assessment and improvement of those core elements of capacity.  The following is a suggested facilitated process for capacity building.

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Assessment:  As with most organization development and performance improvement projects, the first step in the process is to take a systematic assessment of where you are right now.  There are several nonprofit organizational capacity assessment tools that can be found with a simple web search.  The grandfather of tools was developed for Venture Philanthropy Partners by the mega consulting firm of McKinsey & Company (external link).  This tool has been adapted by Marguerite Casey Foundation (external link) and has also been adapted by Social Venture Partners International (SVPI) and is available as an Microsoft Excel spreadsheet (external link). Taking the SVP tool as an example the rubric addresses: financial management, fund development, information technology, marketing and communications, program design and evaluation, human resources, mission, vision, strategy and planning, legal affairs, leadership development, board leadership.  Future versions of the SVP tool will address cultural competency and policy advocacy as additional areas.  My experience (and the experiences of a few colleagues) in using the SVP tool has been that the level of depth of the tool may be less relevant for smaller or grassroots organizations.  In these cases, another useful tool to consider is a “Tool for Assessing Startup Organizations” that was designed to be a due diligence supplement for grant makers (external link).  As I suggested, a web search will help identify additional approaches to capacity assessment. The point of drawing attention to several tools is less about “what  tool  to use” and is more about illustrating the need for a framework for systematically assessing your agency capacity.

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Once you decide on an approach, implementing a capacity assessment ideally takes a 360 degree approach that solicits relevant input from staff, board, clients, funding agencies and other stakeholders. The wider and more inclusive the process, the wider and more inclusive will be the insights on capacity.  Note:  I would be remiss to point out that online surveys can be an effective way to conduct an assessment.

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Dialogue and Planning:  The second stage of a capacity building process to create and intentional dialogue around the findings with three important goals that include: a) creating a shared understanding of where the agency is starting from and where it is going, b) deepening the spirit of community and commitment to strengthening the organization, and c) creating workplans that support capacity building.  While workplan development can be a time intensive process as I have suggested elsewhere I do want to underscore that reflecting on a capacity assessment should also be a time of building community and commitment.  The dialogue and planning process lends itself well to an “intensive” like a board and/or staff retreat, but also could be the basis for a “learning community” process that spans 4-6 months and includes spaces for homework and reflection.

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Action:  The third stage of is the action stage of implementing capacity building workplans.  Recognizing that capacity building is an ongoing commitment to continuous improvement, there needs to be the intentional structures to manage and monitor progress over time. Since capacity building is really about improving an entire system is also useful to think of implementation as a series of “rapid cycle tests” using a model such as the Plan, Do, Study, Act (PSDA).  There are a number of good primers for this model online, (external link). Finally, it is important to keep in mind that the action stage will likely taking an agency into new organizational territory and will likely require some investments in the professional development of the agency’s staff and board.

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Leverage:  The final step in a capacity building process is to be intentional about leveraging your efforts for capacity building.  This brings us back to my opening discussion of grant makers’ perspectives on capacity building.  The organization that invests in the systematic planning for capacity building is uniquely positioning itself to pursue a capacity development grant.  For example, I know of one agency that received a three-year capacity building grant after taking an entire year to asses and begin to implement a plan to build capacity that the entire board stood behind. Based on the demonstrated movement towards capacity, the agency was well positioned to seek a capacity building grant. A grant-writing acquaintance once stated that when it comes to capacity building grants that funding agencies “want to improve organizations –not rescue them,” and so it is imperative for organizations to start from a position of strength.  I believe that the leverage of capacity building grants is most effective when agencies are already engaged in the forward motion of capacity building.

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I recently read a great article titled “On not letting a crisis go to waste: an innovation agenda for Canada’s community sector” (external link) that reinforced the concept that the nonprofit community/social sector is being tempered as we continue to struggle out of the economic recession of the last several years. Implied and stated in the article is that agencies demonstrating vision, leadership, adaptability and innovation are the ones who will not only strengthen themselves but help strengthen and reinvent the social service and community sector.  For many nonprofits this journey of innovation and opportunity begins with an intentional facilitation of a capacity building process.

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As always, your thoughts are welcome.

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I will confess that I am a visual learner.  I like to not only see the big picture but to be able to draw it as well.  This inclination towards a visual process has served me well in facilitation.  In fact, I have staked out the position that visual learning is a critical facilitation skill.  Recently, I have been thinking about the use of visuals to convey Social Impact. If asked, how many agencies could draw a clear relationship between  the programs and services they offer  and the social impact that is created as a result of what they do? While visualizing social impact may seem like a fairly simple concept it is under-utilized as a tool to communicate the core social change embedded in the mission, vision, programs and services of organizations.

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Recently, I have been working on several projects that involve helping agencies articulate a plan for growth and sustainability.  None of these groups have visual models of impact and it becomes a powerful exercise to help these teams create a visual representation of their social impact. While there are likely many paths to creating a visual social impact model, I would like to outline four models to introduce the concept.

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Pathway Model:  One of the more generic processes of creating a social impact model is to describe the pathway between the current reality and the future vision. For example, if an agency envisioned a community where 80% of children are reading at grade level in 5^th grade and the current statistic was that only 66% of students met that benchmark a pathway approach would anchor 66% of kids at one end and 80% of kids at the other end.  The facilitator would then lead the group through an open-ended conversation to describe what happens between those anchor points as the pathway steps that would close the gap.  If facilitated well, creating such a pathway would reveal if there is capacity in the agency to create the desired social impact. The weakness of a generic pathway model is that it is open-ended and prone to subjectivity because it does not lock groups into thinking in a structured cause-to-effect process.

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Logic Model: While somewhat academic, developing a logic model is an excellent way to visualize social impact. One of the reasons a logic model works well is that it offers a framework for working sequentially from resources to impact.  Here is a link to an excellent guide on creating logic models developed by the WK Kellogg Foundation. Developing a logic model starts with creating the linear categories of: Input, Activities, Outputs, Outcomes, and Impact.  The facilitation process can start with either end of the continuum and moving either forward or backwards.  So if your Impact vision is that 80% of 5^th grade children reading at grade level, then the first backward question is “What Outcomes do you need to see as milestones towards that Impact?” Outcomes that support the impact might include improved test scores, policies changed, number of school institutionalizing programs.  Moving one more step back to Outputs, the group would then describe the service delivery indicators that could cause the Impact. Output indicators might be such things as the number of children participating in programs, number of parents being engaged in the process, etc.  Further back, Activities describe what the organization does to cause the Outputs and, further back still, the Resources describe the assets that the agency has to dedicate to the task.  Conversely drawing a logic model can start with Resources and move forward to Impact.  Logic models work as a visual orientation because it forces a team or an agency to consider the relationship between resources and impact.  Are the resources adequate to produce the activities, outputs and outcomes that create the desired impact?  If not then the choices are to either scale back the impact or increase the resources dedicated to the change effort.

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Outcome Mapping:  Another model for visualizing social impact is an outcome map. Similar to a logic model an outcome map sequentially considers the organizational process from strategies to impact.  A useful guide on creating an Outcome map comes out of Organizational Research Services’ experiences evaluating an Annie E. Casey Foundation projects. One difference between using outcome mapping and a logic model is that outcome mapping has been used extensively to describe social impact in the context of community driven processes. Outcome mapping is better tailored to encourage full participation of stakeholders and the community.  An excellent in-depth exploration of a community and participatory approach to outcome mapping can be found at the International Development Research Centre.

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Social Impact Model™ A fourth visual representation of Social Impact can be found in the trademarked model of describing social impact that was developed by Root Cause.  The Root Cause model, bridges the gap between problem and solution through the clear representation of the Strategies and underlying Operational Model iteratively informed by clear Social and Economic Indicators and Organizational and Performance Indicators.  A full description of the Social Impact Model is found at the Root Cause website.

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The point of outlining four models for describing social impact is not to suggest one approach over another or to prescribe how visualizing social impact “must” be done.  The purpose is to introduce several models that can frame the concept of making explicit the connection between the mission, vision, and program structure of an organization and the Social Impact of the organization.  In an age of accountability and the focus on outcomes and change, organizations need to be able to clearly articulate what social impact they influence or cause.  Finally, while describing social impact may appear to be a “nonprofit” concern, the increasing focus of private sector companies on a “double” or “triple” bottom line suggests that describing social impact is a model for any social enterprise.

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It is my belief that the effective organizations of the future are those who are clear about their purpose and their social impact and can draw the picture to illustrate the connection.  As a result, facilitators need to be skilled in the process and visualization required to help organizations create a social impact model.

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As always, your feedback is welcome.

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In one of the early posts to this blog I offered a taxonomy to help nonprofits think about organizational capacity, resource development planning and fundraising.  In that post I described capacity development as the practice of developing and maintaining staff skills, organizational systems and intellectual and physical resources required to meet your organizational mission. In short, I suggested that capacity building is thinking about what it takes to maintain and build your organization.  I have been working with several organizations on thinking about organizational capacity and thought I would revisit the concept of capacity in a little more detail.

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If you do a Google Search on the term organizational capacity you will see that there is not shortage of resources to help organizations think about capacity building (I reference a couple of the most practical resources below). Unfortunately such a search will reveal a couple of things.  First it will show that successful companies invest in infrastructure and capacity as a normal part of doing business.  Second it will show that in the nonprofit world, agencies strive to under-invest in capacity as a way to demonstrate “effectiveness.”  The idea is, “our overhead is low so we must be good.” This disconnect between the “for profit” and nonprofit agency thinking about infrastructure has been described by at least one set of authors as a starvation cycle. In the long-run, it is argued, under-investing in agency capacity is detrimental to any organization, The purpose of this post is not to overview all of the elements of capacity or even discuss how to build capacity but offers a facilitation approach to a strategic conversation about capacity building. What kind of conversation will result in an agency specific plan to develop capacity? While this post is geared towards nonprofits such strategic conversations might have place in commercial ventures as well.

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Organizational capacity has the domains of: a) governance, leadership and strategy, b) organizational systems and infrastructure, c) reliable and autonomous funding, d) strategic partnerships, e) evidence based programming, and f) evaluation and outcome systems.  On one level, capacity can be measured using rubrics and other metrics to identify gaps between where an organization is now and where it needs to be.  Philanthropic foundations that fund capacity building efforts often take this quantitative approach.  However, capacity building can rarely be reduced to a “present or absent” checklist. Rather, capacity is better reflected as a strategic conversation that involves, story, aspiration and strategic intention. I would suggest that there are four questions inform a strategic conversation:

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Where are the Critical Weaknesses?  While I just suggested that an objective assessment of the capacity portrays an incomplete picture of agency capacity, such an assessment does need to be the starting point of a capacity exploration.  While assessment of an established nonprofit agency might involve a more substantive assessment than is required in assessing a smaller agency, an objective review of capacity domains serves as the baseline understanding that frames the conversation.  In this assessment, agency staff, board and possibly other stakeholders need to engage in frank discussion about critical weaknesses requiring immediate attention.  One can think of any number of critical weaknesses such as a lack of adequate fiscal controls or a lack of HR policies and procedures that could trigger immediate action.

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What are the Leverage Points?  A second question reflects on agency capacity and explores what is the leverage effect of focusing capacity building on one single element.  Is there one part of capacity building that can be leveraged to advance the agency’s larger goals?  For example, one agency that I worked with was planning to launch a fundraising campaign targeting small donors.  Prior to implementing the campaign the agency invested in capacity by redesigning its website to make online donations easier.  When the small donations campaign was launched, online donations represented the primary donation method and the revenues exceeded the investment in the website redesign by a large percent.

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Where are the Opportunities?   Another component of the critical conversation is to discuss the opportunities that present themselves.  In this challenging economic environment, a discussion of capacity might be a good time to explore concepts of reducing overhead to increase capacity.  Discussions of co-housing agencies or even the big “M word” (merger) might be fair game in the discussion of opportunity. In this case, sharing overhead might actually free up resources to invest in other facets of capacity. For some agencies strategic conversations about capacity resulted from opportunities presented by prospective Federal stimulus dollars.

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Where is the Energy and Passion?  A final question that can inform capacity discussions is one that is best answered when the process is opened to the broader community of volunteers and other stakeholders.  By opening the scope of perspectives, the conversation can increase vision, energy and passion.  For example, younger volunteers might use their instinctive technology skills and take the lead on developing a new social media outreach campaign for the agency.  In another example, an executive director told me the story of hosting a capacity building conversation including the agencies that funded them.  The conversation surfaced the fact that one of the funding agencies was going through a department-wide upgrade of computers and because of the conversation the agency decided to donate their older machines to the nonprofit. For a couple hundred dollars to install, configure and network the computers the executive director said it resulted in a significant technology upgrade and standardization of computers for his agency.

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With these four framing questions the next step to consider how you structure a strategic conversation about agency capacity.  Hosting a strategic conversation about capacity could neatly fit into a board/staff retreat or a similar block of at least 2-4 hours.  As suggested earlier, while not an end to itself, a capacity needs assessment should be conducted prior to the strategic conversation.  With a block of time dedicated to the task and assessment data complied, a strategic conversation might include the following format.

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1. Presentation of the Assessment Data:  Whether you use traditional presentation slides, story telling or other visual representation, it is important that everyone in the team is oriented to where the agency stands now.  The second part of the assessment presentation is to frame the vision of where the agency could or should be.  By presenting where you “are” and “where you want to be” you identify the gap that needs to be filled.

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2. Reflection and Movement Building:  The second step of the strategic conversation is to create the opportunity for the group to reflect and engage.  While movement building is perhaps an ambitious word to describe this stage, the idea is to not just talk but to create energy and excitement around the potential. This stage might be achieved by a modified scenario planning exercise, appreciative inquiry process, or by using more traditional prioritization exercises.

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3. Create Strategic Intentions: The third step is to create strategic intentions around capacity. Strategic intentions in this instance ate narrow and focused around the capacity needs and, while in sync with the agency strategic plan, are more likened to key implementation objectives.  The task for this phase of the conversation is to break capacity building into components that can be managed as a whole.  For example, moving from annual fiscal reviews to a formal audit might be one intention and a separate intention might be the development of a donor relationship database. Both together, however, are about improving fiscal management.

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4. Develop an Implementation Plan: The final stage of the conversation is to develop broad implementation strategies. In this stage, there should be a range of creative strategies developed to achieve the strategic intents.  In some ways the strategies might look more like a brainstorm list than a step-by-step workplan. By having broader implementation plans allows for adaptive management of an array of opportunities.

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5. Document the Agreements and Plans: As in all group process there needs to be some documentation of the strategic intents and implementation plan. Communication and feedback loops also need to be built into ensure accountability to the plan.

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Agency capacity is intimately tied to the long-term growth and success of any venture.  Unfortunately, in the nonprofit world, many organizations have been acculturated to under-invest in capacity.  This cycle needs to be broken.  Capacity building needs to be acknowledged as a core responsibility of nonprofit agency management and all strategy must include the development of strong systems and infrastructure that support the missions of the organization.  Hosting a strategic conversation that results in concrete yet flexible action plan is a major first step to raising awareness of capacity needs.  Such awareness has never been more needed than in these challenging social and economic times. An agency willing to have a strategic conversation about capacity will find that such an investment results in the rewards of a clearer focus and greater infrastucture to carry out one’s organizational mission.

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As always your feedback is welcome.

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In Depth Capacity Assessment tool:  Venture Philanthropy Partners Capacity Assessment Grid
Great qualitative tool for smaller agencies: Tool for Assessing Startup Organizations

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I once was talking with an executive director of a nonprofit agency that hosted an annual board retreat. She sounded exasperated as she described the situation this way, “Every fall the board has the same discussion, asking –so what do we do at our board retreat this year?” As we spoke I asked her what an ideal staff retreat would look like from her perspective. “Well,” she said, “we ultimately do make pretty good use of our time but it never seems intentional. More than anything else I wish the board was intentional about the annual retreat. I mean, after all, aren’t board retreats supposed to be big and strategic?” I proceeded to share with this director that retreats should be functional, intentional and big in relationship to the value of the desired outcome. In short, I suggested, there are likely four main frameworks for board retreats.
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Continuing Education: Throughout the year, boards often get bogged down with the multiple roles of governance and agency support. Board retreats can be great opportunities for continuing education. Education may relate specifically to board-related duties and may be driven by pressing or current needs, such as risk management, fiscal accountability or training related to the agency’s mission and goals. Short of a pressing educational need for the board, a continuing education retreat might be developed around expanding the general capacity of the board. Continuing education that focuses on marketing, communication, or conflict resolution could help expand the knowledge of members both in their board roles and in their broader professional roles.
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Connection and Community: A second framework for a board retreat is to use the time to focus on connection and community. With a connection and community focus, this type of retreat may be a joint event involving both board and agency staff. I have seen such retreats effectively used when an agency has navigated a major transition such as rapid growth or a significant crisis. Alternatively, a connection and community retreat may also be useful when a significant number of new board members are assimilating to the organization. Goals for such retreats may center on cultivating mutual understanding of agency’s programs, or to cultivate a shared passion for the mission, or can focus on creating connections between people. The process for such retreats may use team-building exercises, listening circles, story-telling or other interpersonal group processes to structure the time accordingly. Increasing community and connectivity can strengthen relationships for the year ahead.
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Celebration and Reflection: The third framework for a retreat is to celebrate and reflect. Different that a volunteer recognition party or a social gathering, retreats that focus on celebration and recognition are designed as catalyst events rather than motivational events. Retreats of this nature may be associated with a milestone like a 20th anniversary, the completion of a capital campaign, the successful merger of two agencies, or may precede a milestone event. This type of retreat differs from a motivational recognition program in the retreat serves as a catalyst for the planning and implementation of the next chapter. For example the frame of a recognition event is, “we have paid off our building thank you everyone for your dedication and hard work,” but the message for a celebration and reflection retreat would be, “we have paid off our building now it is time to develop a satellite office across town to expand out services.”
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Strategic Planning: A fourth framework is the traditional strategic planning retreat. The challenge of a strategic planning retreat is that it can’t be designed as an event but must be designed as one stage in the sequence of a strategic planning process. Single event-based strategic planning may produce a document but because the event has a beginning and an end, the plan often lacks the energy and movement of a staged strategic planning process. Strategic planning is not an annual event but is an ongoing iterative process. Having said this, however, making strategic planning a focus of a retreat can be a powerful focusing stage in a strategic planning if it is part of a larger momentum building process.
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The important consideration in designing an effective board retreat is to build the agenda around a single framework as the focus of the group’s activity. This is not to say that a retreat won’t have activities drawn from more than one framework (i.e., a strategic retreat with a team building exercise) but the key is to purposefully design the agenda to achieve a single goal. It is simply not realistic to spend five or six hours together and educate and celebrate and connect and develop a strategic plan. Effective retreats focus on one theme with the purpose of using the theme to move the organization forward over the next year. Common to all of these frameworks is movement. Capacity building is about moving your board forward. Connection and community establishes working relationships. Celebration and connection lay the foundation for new achievements. Strategic planning is about working towards the future.
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As is common to many of the posts on this blog is my foundational belief that an agency that breaks out of the routine and rethinks fundamental group processes will prosper and grow. Investing in strategic process design and strategic facilitation across all business practices will yield significant dividends and that includes investing the annual board retreat process. Focus and movement are for times when there is more at stake than running a good meeting.
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