Navigating through the sea of books on nonprofit strategic planning, one thing becomes clear—they all seem to echo similar strategies: first, secure buy-in from the board; then, conduct a thorough stakeholder assessment and environmental analysis; finally, gather for a series of meetings to chart out the roadmap for the next 3-5 years.
While I respect the expertise of many seasoned practitioners in this field, I’ve always found this cookie-cutter approach somewhat lacking in, well, actual strategy. It’s entirely possible to breeze through each step without ever grappling with the tough questions or making any substantive decisions. What often results is either a glorified to-do list full of tactical tweaks, or a lofty document so detached from reality that it’s practically floating in the clouds. Statements like “Become a leader in early childhood education” or “Deliver exceptional statewide programming” sound impressive, sure, but how do you measure such vague aspirations? Who defines what it means to be a “leader,” and what exactly qualifies as “exceptional” programming in the future compared to what you’re doing now?
While I could dive deep into the shortcomings of traditional nonprofit strategic planning (and trust me, I do that elsewhere), this article is all about celebrating the remarkable work of others. Sure, a lot of processes might feel like they’re cut from the same cookie-cutter mold, but let me tell you about some real game-changers. These are the tools, frameworks, and methodologies that have sparked breakthroughs in my own work, and I wholeheartedly recommend them to anyone embarking on this endeavor.
#1 The Vital Importance of Diagnosis
Instead of jumping straight to solutions like ramping up marketing efforts or launching new programs, it’s crucial to ask why demand is low in the first place. Is it marketing? Are competitors swooping in? Or perhaps your offerings just aren’t hitting the mark with your community anymore.
In Richard Rumelt’s book, “Good Strategy/Bad Strategy,” i he argues that “the kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action.”
I see this in fundraising all the time. I once heard from an organization that said “We failed to meet our goal of growing revenue by $1million this past year, so next year we are making up for it by setting a grow to grow revenue by $2million.” Huh? Setting higher goals when you’re already falling short is a recipe for disaster. Before charting a new course, it’s essential to assess why you missed the mark. Did you bank on the wrong tactics? Perhaps your team is spread too thin, or maybe your underlying assumptions need a reality check. Taking stock of these factors is crucial before forging ahead.
“Leaders may create bad strategy by mistakenly treating strategy work as an exercise in goal setting rather than problem solving,” Renault says. Renault’s approach really hits home for me. His focus on figuring out why you haven’t reached your goals before jumping into setting new ones is incredibly valuable. It’s like getting to the root of a problem before trying to solve it—addressing the cause is essential for making meaningful progress. If there is no diagnosis of the underlying issue, Renault says, “there can be no focus of resources and actions on a cure.”
#2 The Nonprofit Lifecyles Framework
One incredibly valuable framework for understanding nonprofit organizational strategy is the Nonprofit Lifecycles Framework developed by Susan Kenny Stevens. According to this framework, organizations typically progress through stages, starting from the Idea or Startup phase, moving into Growth and Maturity, and possibly experiencing a decline before reaching either a Terminal stage or undergoing a turnaround. While organizations may grow at different speeds and spend varying amounts of time in each stage, the core idea is that they all follow this general cycle.
Building upon Stevens’ framework, Michael Stone, PhD, emphasizes the importance of asking different questions at each stage of the cycle. In the Idea or Startup phase, organizations are still assessing demand and whether they’re the right fit to meet those needs. During Growth and Maturity, they’re learning from past experiences—both successes and failures—to refine their mission and offerings. And when facing Decline, organizations must confront whether to gracefully Terminate or undergo a Turnaround by reevaluating their mission or methods of delivery.
#3 Prototyping and Testing Ideas with Minimal Risk
Prototyping, a cornerstone concept in design, involves creating a scaled-down, cost-effective version of an idea to test its feasibility and refine it before full-scale implementation. Think of it as building a doll-house version of a skyscraper to ensure everything fits before breaking ground, or fashion designers crafting samples to perfect style and fit before mass production. However, in the nonprofit sector, prototyping is often overlooked. One major hurdle is the lack of funding for prototypes. Many foundations prefer to support proven programs and are hesitant to fund risky ventures that might fail. This leaves nonprofits to rely on general operating funds for prototyping, which can be challenging as these funds are typically allocated for staffing, administration, and fundraising. Despite these obstacles, prototyping is crucial for effective strategy development.
I’m frequently asked by earnest board members, “Can you prove this will work?” The truth is, it’s impossible to prove something will work until you’ve given it a shot. That is the heart of the scientific method: form a hypothesis, test it, and then confirm or refute it. Therefore, we must test our hypotheses before committing to long-term strategies.
#4 The Matrix Map: Assessing Impact and Profitability
One of the most revolutionary tools in nonprofit strategy is the Matrix Map, pioneered by Jeanne Bell, Jan Masaoka, and Steve Zimmerman. This tool prompts organizations to assess their programs and fundraising efforts based on two key factors: impact and profitability. While they offer guidelines for defining impact, organizations can also tailor these criteria to align with their mission.
For organizations reliant on grants, it’s common to find most programs clustered in the top left quadrant—the Heart—signifying high impact but low profitability (since users don’t pay for the services). Conversely, fundraising activities often end up in the bottom right quadrant—the Money Tree—where they’re profitable but lack significant mission impact. It’s clear that this setup is unsustainable.
The ultimate aim is to boost the profitability of programs and enhance the impact of fundraising activities. This might involve diversifying revenue streams, such as through earned income initiatives. Many successful large organizations achieve growth by tapping into government contracts or establishing revenue-generating streams like ticket or product sales.
#5 Asking: “What would have to be true for this to work?”
Roger Martin‘s insight on strategic planning poses a powerful question: “What would have to be true for this to work?” This question cuts to the core of our ideas by uncovering the assumptions that underpin them.
Crucially, this question isn’t about what is currently true. Especially for untested ideas, we lack concrete knowledge of what will happen. Conducting exhaustive market studies isn’t feasible for most organizations, so instead, we operate on assumptions about what we believe to be true.
For instance, let’s consider the idea of hosting an evening workshop for foster parents on a specific topic. Asking, “What would have to be true for this idea to work?” prompts us to examine our assumptions:
- It would have to be true that foster parents have the time and resources to attend an evening workshop without their children.
- It would have to be true that foster parents are interested enough in the topic to rearrange their schedules and attend.
- It would have to be true that the workshop’s location is convenient for them to access.
By dissecting our assumptions in this manner, we gain clarity on what we know, what we don’t know, and what we need to test further. This approach helps us refine our strategies and make more informed decisions.
Strategic planning in the nonprofit sector is not a one-size-fits-all endeavor but rather a dynamic process that demands thoughtful inquiry and adaptation. By embracing tools like the Nonprofit Lifecycles Framework, The Matrix Map, and incorporating insightful questions from thought leaders like Roger Martin and Richard Rumelt, organizations can navigate uncertainties with clarity and purpose. It’s imperative to challenge assumptions, diagnose underlying issues, and prototype ideas to ensure sustainable growth and impactful outcomes.
