Nonprofit strategic planning

Nonprofits Need to Invest in Strategic Planning

This article is the final one in a series describing the investments that nonprofits need to make (full series here). I conclude this series underscoring the importance of strategy. In fact, as I read the 2016 Northwest Nonprofit Capacity Report (a convenience survey implemented by five state nonprofit associations). I am struck by the lack of attention given to strategy in this report. Bluntly, too many nonprofit organizations do not have a focus on strategy and that, I believe, is to their detriment.

The table presented below, adapted from the full capacity report of the survey, represents the percent of nonprofit survey respondents, by budget size, that have a written plan(s) across a range of management domains and who also rate the written plan(s) as being effective.

Even a cursory look at the numbers in this table should be a cause for alarm. In the best case scenario, roughly a three-quarters of nonprofits with budgets of over a half-million dollars, have a written annual budget and also report that the written plan is effective. Unfortunately, even in this best case scenario, the data suggests that more than one in five large-budget nonprofits don’t have an effective annual budget. At the other end of the scale, significantly less than half of the smaller nonprofits have written and effective budgets. Drop one line down on the table, and you see that barely half of the largest nonprofits have a planning-tablewritten and effective strategic plan. The vast majority of small and mid-sized nonprofits lack effective plans. In areas such as Board improvement, executive transition, and emergency succession, virtually all leaders are absent in developing written and effective strategies. As to clearly articulating their reason for existence, fewer than one in ten nonprofits have a written and effective theory of change (see my last article).

So we ask, is it any wonder why it is difficult for nonprofits to make the investments in their R&D, workforce, board, collaboration, public policy, and evaluation? Without investing in strategy, a nonprofit may survive and even grow large, but that is the exception and not the rule. Further, if nonprofit leaders and their board of directors fail to embrace their role in thinking and acting strategically, their organizations will more likely be fixated on managing rather than solving community needs.

The greatest challenge is that many nonprofits have limited resources (time, money, staffing, expertise) to be intentional about their strategy. However, without taking the time to put your strategy in writing and actively using that plan for management and governance, then organizational success (or failure) becomes more opportunistic, less focused, and a bit more tenuous. There have been more than one five-plus million-dollar year organizations that have failed because of a lack of strategy.

Intentional. Written. Effective. Strategy matters. In some ways, rather than closing this article series with a discussion of strategy, it perhaps should have come first. Without an investment in strategy it none of the other investments will be effectively implemented. So creating a strategy is the first investment, what does investing look like? Here are a few ideas.

Commit your organization to strategic thinking. Strategy starts at the top with the board and your executive leadership team. Pop quiz. How much of your board meeting time is spent in reviewing the minutia of program operations? For too many agencies the bulk of board meetings are spent reviewing minutes, listening to committee reports, discussing budget-to-actual line item variance, dealing with minor personnel matters… “wait, times up, let’s table our board strategy discussion until next meeting.”  If this is your nonprofit, it is time to turn the agenda upside-down and lead with strategy. If you are not spending a third to a half of your board meetings thinking about and acting on your organizational strategy, then it is time to let go of controlling operations and embrace strategic thinking.

Consider partnering with impartial experts. It is unfortunate that, in many cases, nonprofit organizations have been burned by consultants, trainers, and facilitators. As a consultant, I have seen the work of mediocre consultants who have over-promised and under-delivered. I have seen the remnants of an annual work plan that was sold as a strategic plan. I won’t take this further but simply say that it does not need to be that way. There are many consultants who, similar to me, have spent decades managing in the nonprofit and social sector before consulting, who are committed to leading in the field, and who earn and preserve their reputation client-by-client. At the risk of sounding like a sales pitch, partnering with someone from the outside that brings content expertise, impartiality, systems-thinking, and community networks can effectively support the work of your organization and serve as a navigator and facilitator to strengthen your focus and ask the hard questions.

Dedicate time and resources to plan. While the table above represents written plans in ten distinct rows, a solid strategic planning process can encompass a number of the mentioned planning areas in a single document. For example, strategic plans that I have written often encompass a systems assessment, define a theory of change, develop strategic priorities, evaluation, and a revenue model with targets. Some have included board development planning as an appendix or core priority area. An effective strategic plan must be customized and tailored to the developmental stage of your nonprofit and be owned by the leadership. And a strategic plan must be a priority.

Develop a management model for your strategy. As is illustrated in the nonprofit survey referenced earlier, there is a gap between “no plan and a written plan” as well as a gap between “a written plan and an effective written plan.” The relevancy of a strategic plan is directly proportional to the effective use of the plan. A management model for your strategy includes dedicated time on every board agenda and in leadership team meeting agendas. To be effective there needs to be discussion progress, a formal performance monitoring system (like a “dashboard”) and progress notes.

Remember that the best plans are adaptable. The most vibrant strategic plans adapt to the contours of a changing context. For example, I am familiar with a nonprofit that was too conservative in their growth assumptions for the organization and had new board members who are questioning the focus of the agency mission. So this nonprofit is welcoming change and is planning to review and likely revise their ambitions for the next three years despite only being halfway through their current strategic plan. The point of strategic planning is not to etch your strategies in stone but to set a concrete direction and move confidently towards it. Along the way, take advantage of opportunities and continue to design your way around the changing landscape. Writing an effective strategy is as much an action and mindset as it is a document.

As with the rest of the investments suggested in this series of articles, investing in strategic planning is not triggered by an organization’s size or budget but is triggered by the vision of the leadership. For nonprofits, I am convinced that the difference between mediocrity and greatness is attributed to intentional strategy and investing in those strategies. Again, it is my belief that engaging in a formal nonprofit strategic planning process is the most critical investment that nonprofit organizations need to make today.

Your thoughts are welcome.


photo credit Startup Stock Photos

Mark Fulop
Mark founded Facilitation & Process in 2009 to help organizations and communities bridge the gap between where they are today and where they want to be tomorrow. He’s led dozens of Portland nonprofits, government agencies and philanthropic organizations through complex change initiatives including strategic planning, revenue planning, board development, collaboration, and facilitation.