Sunday, March 20, 2016

Business Strategy for Non-profits: Difficulties and Opportunities

Too often non-profits embark upon the strategic planning process without appropriate consideration paid to costs and benefits of the programmatic actions taken by the organization. “Acting like a business” is a scary phrase for many non-profits with social-good missions, and too few executive directors understand the importance of a business-first approach in strategic planning, rather than focusing solely on meeting a broadly defined mission statement. By incorporating many of the strategies identified in the “Real Value in Strategic Planning” article, non-profits can become more efficient and stable organizations by impacting their core mission in a more strategic way.
There are many reasons why it is difficult for non-profits (especially smaller non-profits) to conduct their strategic planning process in the same way as would be recommended for a business. Consider the amount of time that an organizational leader should commit to thinking strategically over the course of a year. Thirty days for a non-profit leader is invaluable time. Though worthwhile and helpful in the long term, finding and accounting for this time can be difficult for an executive director because of how organizational funding is structured. Restricted programmatic funds mandate staff time to be spent in very particular ways, making it difficult to find time and cash for strategic planning.
Additionally, non-profits often do not take appropriate time to consider their place in the situational environment. Are their programs overlapping with other organizations? Is their mission statement in the same “demand” as when the organization was created? Not often enough are non-profit mission statements and goals updated to reflect changing needs and the work accomplished to date in a certain focus. This also affects both short and long term strategies. Non-profits generally have 3-5 year strategic plans, which can be useful tools in the short term to guide day-to-day and programmatic activities. However, non-profits should think in the 10-20-30 year timespan to better understand the market implications of the environment around them, and how their programs and mission in the long term could be affected.
Because of funding, time and organizational restrictions, it can be difficult for non-profits to embody business-like approaches to strategy development and implementation. However, if more non-profits took the time to develop short and long-term strategy actions steps that are more business focused, these organizations could potentially offer a better return on investment to foundational funders.

Sources:
1. The Real Value of Strategic Planning (Kaplan and Beinhocker, MIT Sloan Management Review, Winter 2003)
2. Personal experience as a board member of an environmental non-profit and development consultant for non-profits in strategic planning


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