Is your strategic plan strategic?

A strategic plan is the guiding document for an organization, describing the approaches and actions the organization will take over a certain time period to achieve a set of agreed-upon goals and objectives. It provides a framework for staff to focus their annual and shorter-term work, and for the Board and leadership to measure the organization’s progress and success.

Every organization has a strategic plan, but is that plan actually strategic?

Being strategic means acting with a specific end in mind. It means take steps towards a clear destination. It means being intentional, so that every action serves a purpose.

Many of the strategic plans I’ve seen are a laundry list of activities to be done. Activities that are all thoughtful, all important or valuable, and all mission-aligned. But it isn’t clear how those activities were selected, or how they will collectively move the organization towards a specific outcome. There doesn’t seem to be any intent behind the actions, as if someone thought of things to do without thinking of why to do them.

Good strategic plans are grounded in strategy – thoughtful approaches to achieving a desired aim. What this means in practice is first deciding what you need to do in the time frame of the strategic plan to achieve your mission, before deciding on goals, objectives, and tactics. That way, every action you take is clear, focused, and purposeful.

When I work with clients on strategic planning, I usually pose the following questions:

  • What audiences do you need to reach first?
  • What geographies are your top priority? Why?
  • What is the best approach to growing or expanding your work to reach more people?
  • What barriers do you need to overcome in order to succeed?
  • What can you reasonably achieve in the next five years (or timeframe of the plan)?

There are many possible ways to approach the work, but an organization must decide what path it wants to walk. This is why strategic planning usually begins with a SWOT analysis – to first consider the organization’s competencies and the opportunities and challenges it will face.

When investing in a strategic planning process, make sure that your plan is actually strategic. It will help your organization to act with a clear understanding of the intent and thus bring greater focus to your staff and Board.



Keeping your Board in its place

I’m currently working with an organization that is at a point in its growth where it needs stronger leadership and more clearly defined governance structures. In working with the executives around this matter, I recently participated in a client’s Board meeting to advise the members on their roles and responsibilities.

After explaining the typical duties of Board members, I thought it important to also talk about what Board members should not do, and one of the things I mentioned was not micromanaging the organization.

In my experience, too many Boards get too much in the weeds with the organization they lead. When they do, they can make life difficult for the employees: they may take away authority from management, put unnecessary pressure on staff, and remove autonomy and self-determination. As if nonprofit staff don’t have enough stress – too much work, not enough resources to get it done, and not enough pay to make non-work life enjoyable. Now we’re going to add the pressure of pleasing Board members to our plates? Yeesh.

The Board should stay at the strategic level: it should set the overall course for the organization and then make sure it stays headed in the right direction. The Board should trust the people hired to work in the organization to handle the daily execution and implementation of that strategy. These people were hired for their skills and expertise, and they know the work more intimately from spending lots of time doing it.

That’s not to say Board members can’t get involved in the work. Board members can be great resources that staff can and should turn to for assistance. I’ve seen staff reach out to certain members for help with problems, and I’ve seen individual Board members offer their wisdom, advice, or support for particular projects or programs of interest. It’s great for the staff, who could use a helping hand, and great for the Board member, who gets a better understanding of the work while becoming more personally invested in it.

How can I say that the Board should stay at the strategic level but can also get involved in the work? Where is the line?

The difference is “the Board” vs. “individual Board members.” The Board as a governing body should stay at the strategic level. Yes, the Board should be informed of details relevant to their decision-making, particularly around financials, but otherwise they don’t need to know about the day-to-day occurrences of the organization. Individual Board members can get involved with the organization as is needed or appropriate, but when the group gathers as a whole, it should focus its decision-making on a higher level.

The Board is the ultimate governing body of an organization, but in order to maximize its effectiveness, it must know its place. Executive leadership should help guide the Board to harness the collective wisdom, experience, and enthusiasm of its members, but protect the staff from any unnecessary pressures or burdens that will reduce their performance. If all goes well, staff are enabled and empowered to be more productive and more successful.


Want big money? Inspire confidence

Over the holidays, I got around to reading Vu Le’s blog entitled “Hey, you want nonprofits to act more like businesses? Then treat us like businesses” in which he points out that while funders demand nonprofits act more like for-profit businesses, they don’t invest in them like they do for-profits.

While I wholeheartedly and passionately agree with Vu’s requests from funders – more money, more overhead, faster decision-making, more risk-taking, less micro-managing – I think he fails to fully consider the funders’ criticism.

His blog begins with the inciting incident – funders once again asking nonprofits to behave like for-profit businesses. Vu’s title states his viewpoint – if you want nonprofits to behave like businesses then you have to treat us that way – but I think that’s confusing the chicken with the egg.

Yes, to a large extent, nonprofits are backed into a very tight corner because of the way funders invest in them. And yes, I personally believe that if change is going to happen on this front, that funders will be the ones to truly make it happen.

However, you don’t treat a child like an adult just because the child says that’s the only way he’ll grow up and act like one.

Let’s first clarify something: Yes, nonprofits are businesses. Like for-profit businesses, they strive to produce enough goods and services to meet demand; they need to advertise and promote their work; they need to raise enough revenues to cover the full cost of doing business; and they need to reinvest in improving the efficiency and effectiveness of their businesses. The differences are that

  1. nonprofits exist for the public good, to better society or the world in some way, and as such
  2. their “customers” (or constituents) usually cannot pay enough to cover the full cost of business, which means nonprofits are dependent on a third-party donor or funder to subsidize their work; and
  3. they do not distribute their profits to their investors (as Vu rightly points out in his blog).

But when people say that nonprofits should behave like for-profit businesses, well, I think they’re right. Some people who say this are misguided and don’t understand how nonprofits operate (the three points above). But what many are talking about is the way nonprofits manage their organization, from leadership and planning to operations and revenue generation. Nonprofits are often started or run by smart, passionate people who identify a societal need and take action, but few of them have any business or management experience. And I’ll be honest: it usually shows.

Take this one client I worked with last year. He fit this description – a university professor with a sharp mind, a keen understanding of his work, a vision of how to solve a problem. But when I asked him what his business is, he responded, “Well, I don’t have a business. I run a nonprofit.” And this kind of thinking is why he had no strategic plan, no fundraising plan… and a fully volunteer-run operation without enough funding to pay for staff or expand his efforts.

Here’s the thing: if you want funders to invest in you like they do for-profit companies, you need to inspire confidence. When you come to a me as a funder with a good idea, I’m interested in hearing more. But when you fail to present a clear, thoughtful plan for executing the plan, financing the work, and producing concrete, measurable results, what makes you think I’m going to just throw a large sum of money at you?

Do you think for-profit businesses just walk up to venture capital firms without a business plan? Without proof of concept? Without projected financials and results? Of course not. Start-ups work hard to put forth a solid, convincing plan based on numbers and hard evidence. (And they are more open and up-front about the risk, which makes it easier for investors to take a risk, because it is known and calculated.)

If you want to be treated like a for-profit company, you need to inspire the same kind of confidence that for-profit businesses do. To do this you should have a handle on basic business principles, including:

  • Planning. Most organizations have a strategic plan, but does that plan provide a convincing picture of how you will create impact? Does it show how you will strengthen and grow your organization to achieve that impact? Does it include concrete measurements and evaluation of progress and success? Do you have a financial plan that illustrates how you will raise enough revenue to cover the full cost of doing business (not just program expenses)? Does it consider what will happen in the event you don’t raise enough funds? Do you have a budget that not only shows how you will allocate your resources but that also reflects your strategic goals? And do you have a thoughtful theory of change (the equivalent of a business plan) that describes the system you work in, what it will realistically take to achieve change, and your organization’s unique role in creating that change?
  • Finance. Do you have a system to properly manage revenues and expenses? Do you conduct thorough financial reporting on a regular basis? Are you allocating your resources to maximize your impact and improve your cost effectiveness? Do you have a diversified revenue portfolio that covers the full cost of doing business? Do your financial reports show that you have learned from the past to improve your financial standing? Are you able to adapt to changing financial circumstances (a big grant you didn’t get, an economic recession, insufficient overhead, etc.)?
  • Management. Does your leadership inspire confidence? Are they organized, thoughtful, compassionate, and focused on the mission? Does your nonprofit have a high turnover rate or high retention rate? Does the organization have a clear and logical structure to achieve its goals? Does the organization have a culture that is positive, cohesive, evidence-driven, and supportive of learning and development? Does the organization have a human resources function, with clear policies and infrastructure to effectively manage staff? Do different people and teams within your organization communicate and collaborate effectively? Has your organization successfully navigated through a period of rapid growth?

There are other aspects of an organization that can inspire confidence – a strong brand, solid partnerships, compelling communications, an honest risk assessment and a realistic risk mitigation plan, a history of success or proof of concept, etc. – but the three listed above are critical aspects of an organization that funders will question when making decisions about whether to fund your work or not.

And sure, you can say, “Well, if funders only invest in our program work, how will we ever have the time and money to invest in all this other stuff?” To which my response is: ask for it. If you can demonstrate a need for these things, and the benefits they’ll bring to your organization, it’s not a hard case to make. Most funders know the importance of supporting the nonprofit enterprise and will at least add some funding to a project grant to help you build out those competencies. Program Officers are real people with real feelings, and they genuinely care about helping your organization succeed (even if their bosses and the decision-makers are more interested in a return on investment). Especially if you have solid relationships with existing funders, ask for what you need.

I am passionate about nonprofits and I admit I am as frustrated as anyone with the way the sector is held back and inhibited by current funding practices. And again, it’s a chicken-and-egg scenario: if we want funding practices to change, we need to inspire more confidence, which might mean asking for funding to do it.

In the end, though, it does no good to play the whiny child, complaining that we won’t grow up until we’re treated like grown ups. Demonstrate that you deserve to be treated like one, and it will be much easier to get the respect and support you deserve.