Strategic Planning for Nonprofits

by Gregory S. Dowell

Nonprofits are not immune to the need to plan strategically.  Arguably, with more constrained budgets and a dependence on volunteers than businesses in the for-profit sector, strategic planning is even more important for nonprofits than for most other entities.

There is a real cost to strategic planning – in terms of volunteer time, management time, and resources.  Even if the planning is done on the cheap, there is some kind of cost to be absorbed.  Face it – nonprofits are fighting over what seems to be an ever-shrinking pie of available resources.  When those critical resources are received, whether those resources are financial or human, the visceral reaction is to allocate everything to the organization’s mission.  Living day to day without any real plan is always the default option, but that leaves the organization in peril and exposed to the next financial downturn.

So why is strategic planning necessary?  Simply put, it is important to help the organization stay focused on its mission today, and it forces the nonprofit to look into the future – giving it a better chance of surviving. A strategic plan will typically look out 5 years or so – looking much beyond 5 years in most cases is too speculative, as there are just too many variables to consider.  As one strategic plan winds down, it is important to re-boot the process and develop another plan.

There are a number of approaches, but the basics of strategic planning involve the following:

1. Announce that the nonprofit values the strategic planning process and will embark on its own plan.
2. Pick a leadership team that is representative of the nonprofit.
3. Have the leadership team recommend a set of strategic objectives.
4. Present these objectives to the larger body.  Look to gain support for the objectives and be willing to modify as necessary.
5. Develop a business plan to attain these strategic objectives.
6. Assign responsibilities for each of the objectives to teams; each team to be headed by a leader.
7. Determine how success will be measured and how often it will be measured, and by whom.
8. Commit the necessary resources to achieve the plan.
9. Communicate with everyone in the organization to gain buy-in and to explain how the organization will benefit from the plan.
10. Report on the process to the entire organization on a regular basis.

Strategic planning needs to be led by someone or, preferably, by an internal team that is represented by the various sectors of the nonprofit – if the organization does not have that kind of talent, an outside consultant can be hired.  If a team is developed, someone must lead the team.  Importantly, all levels of the nonprofit must be involved in the process, including finance, volunteers, management, staff, donors, and benefactors (and maybe community representatives as well).

A recent article, “Tips for a Successful Not-for-profit Strategic Plan” (by Ken Tysiac) appeared in the Journal of Accounting, highlighted the need for adopting the strategic planning process.  To quote from this article:

“. . . without a well-constructed strategic plan, resources can be wasted, and the organization may never develop the focus and mechanisms needed to accomplish its goals. Worse, an organization without a strategic plan might never even figure out exactly what its goals are.”

This article calls for developing three objectives in the strategic planning – more than that will run the risk of spreading resources too thinly.  These objectives should be simple and clearly stated.  Furthermore, it is very important to come to consensus on these objectives – which is where the leadership becomes critical.

Developing a business plan to achieve the objectives is next.  The plan should be as specific as possible, and each part of the plan should lend itself to measurement; we often refer to these measurement tools as “metrics”.  A number of sayings abound, but I like thinking that we have a better chance of achieving what we commit to measuring.  The article in the Journal of Accounting mentions the SMART method for developing measurement criteria, which stands for Specific, Measurable, Attainable, Results-oriented, and Time-bounded.

An example of a nonprofit setting a measurable goal is given in the article:

“Ducks Unlimited set its metrics at protecting or restoring at least 480,000 acres of wetlands over five years, reaching 700,000 members, and achieving a $2 million annual operational surplus.”

A critical piece of the planning process is the buy-in aspect.  The plan will fall on its face if it does not become part of the day-to-day fabric of the organization.  It will be a challenge but, if a plan involves the entire organization throughout the planning process, and if the nonprofit makes the process of its operations, it will reach that critical stage of becoming institutionalized.  Planning is hard, but implementing the plan will be harder still.  Many find it far easier to do business as it has always been done, which is the death knell for change.  Leadership must do its job, not just with planning, but with gaining and maintaining consensus along the way, especially as the plan is implemented, in order maximize the chances of achieving the objectives.

This process is not for the faint of heart – it represents a huge commitment.  The stakes for nonprofit organizations are high, though, and the risk of failure due to a lack of strategic planning is all too real.