Seven Strategic Choices for Non-Profit Organizations

What does a strategic plan for a non-profit organization look like? Along with a mission statement and long-term goals, it includes several strategic directions. These choices guide the organization’s activities toward success over the next three to five years.

Alongside day-to-day duties to oversee budgets, manage risk, ensure legal compliance, determine policies, support an executive director, and report at annual meetings, boards are responsible for keeping the big picture in mind. The big picture consists of those strategic directions - the significant areas that the board decides to pursue. Each area will generate actionable projects to be completed by the board, the executive director, the staff, or volunteers. And at each board meeting, directors should provide an update on how the organization is meeting the outcomes defined in each direction.

My experience working with non-profit boards of directors over the years has shown these strategic directions have common themes. There are seven distinct areas:

• Finances
• Governance
• People
• Outreach
• Programs
• Promotion
• Place

1)? Finances

Financial considerations often top the list of strategic priorities for non-profit organizations. This is because when funds arrive through grants, government subsidies, donations, or membership fees, they immediately get allocated to programs. Every dollar that comes in gets spent. As a result, non-profit organizations operate on a thin edge of financial sustainability. If an unexpected spending hiccup increases expenses, the organization can quickly fall into a deficit.

Meanwhile, there is always more to be done, more clients to serve, and more programs to add, resulting in more costs. So, the board’s finance director is always attuned to the need to raise more money or stop the bleeding when occasional short-term deficits occur. When those deficits continue for multiple years, there is an even greater need to mind the finances.

Bear in mind that regular financial oversight by the board is not strictly a strategic imperative — it’s part of the job. The financial status is reviewed and updated at every board meeting, and then it’s up to the executive director to manage day-to-day spending.

Financial management becomes strategic when significant funding changes are needed. This could include increasing fundraising, finding stable sources of revenue, cutting major expenses, adding dues, or providing services that generate fees.

Capital expenditures are also strategic. When the organization expands to a new location, buys a major piece of equipment, or embarks on a significant renovation, its spending goes beyond day-to-day repairs. These are strategic investments.

?2)? Programs

Programs are the services provided to clients or the community. They fulfill the organization’s mission and can include skills training, immigration services, cultural performances, recreation coordination, environmental advocacy, meal support, and much more.

A new strategic thrust might identify additional areas to pursue. For example, beyond adding additional class times for an after-school program, it could expand to new geographic areas or target groups. Or, in another example, programs could be broadened from offering housing assistance to providing job training for new immigrants. The strategic plan will clearly identify what avenues to pursue.

The corollary is that the strategic plan gives directors permission to turn down opportunities that are not in keeping with desired goals — they are off-strategy. The plan informs the board, “We don’t do that.”

Understanding programs from a strategic perspective also means evaluating them. Are they meeting the community’s needs? Are they being delivered effectively? For example, a local sports organization serves disadvantaged youth by running after-school programs. The program’s cost is $400,000 per year, and it serves 80 participants, equaling $5,000 per participant. Could the money be spent more effectively?

?3)? Governance

Improving governance becomes strategic when the board faces fundamental challenges. Turnover is high, recruiting is difficult, legal issues arise, major losses are ongoing, or non-board members express dissatisfaction. Symptoms include messy annual meetings, mass resignations, petitions by members, and antagonism over who gets to vote. Nasty emails fly around, special meetings are arranged, and there are far too many discussions about whether the organization is on track. Sound familiar? It’s time to take care of governance.

The overall thrust for this strategic direction is to achieve best-in-class governance that results in smooth operations. Projects will include changes to recruiting, training for directors, board self-assessments, creation of board member requirements, establishment of conflict-of-interest policies, and agreement to a board calendar. ?

Governance also includes relations with the executive director, overseeing performance management, salary negotiations, board relationships, and succession planning.

?4)? Promotion

Some non-profits operate in niche areas; for instance, amateur actors provide entertainment at seniors’ residences, or ethnic groups advise new immigrants on housing options. Through SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) and other methodologies, the board can identify opportunities to expand the number of people who benefit from the organization.

This is where promotion comes into play: letting the community know about the organization’s work and encouraging more people to get involved. Some boards refer to this as marketing.

Strategic promotion means using limited dollars and resources to most effectively reach the target group. Is advertising better than social media? Is the message clear and consistent with the mission statement? While this is usually the executive director’s job, many boards recognize an urgent and fundamental need to reach their audiences better. This is when promotion becomes a strategic imperative.

As an example of a shift in promotion and marketing, a not-for-profit cinema struggled with attracting patrons until it changed its strategy. It began attracting and rewarding outside partners who brought their own audiences to attend unique programs. Attendance soared as a result.

?5)? Outreach

Non-profit organizations often find growth potential by connecting with the local community and other organizations within it. This is frequently expressed in vague terms, such as “create meaningful community partnerships.” Organizations need to be much more specific. Are they asking local businesses to direct people their way? Can they offer their programs in partnership with other organizations? What is the role of elected politicians in supporting the organization? What similar organizations should send clients their way? Or to whom should they be sending clients?

Outreach also involves nurturing relationships with funders. Boards recognize that simply asking for money is not enough. They need to involve their funders in programs and let them know how their investments are working for the community.

Finally, outreach includes influencing public opinion or educating stakeholders. Environmental organizations aim to change public policies on topics like recycling or reducing carbon emissions while simultaneously educating consumers.

6)? People

For some organizations, volunteers are the lifeblood of programming. They help at events, hand out provisions at food banks, or deliver essential services to clients.

Strategically, this direction is all about determining who will provide essential services. Will it be volunteers? What is the role of staff? Where should contractors be used? For example, when renovations need to be done at a drop-in center, volunteers can paint, clean up, and do minor repairs. When it comes to significant items, contractors may be the better choice.

This strategic direction also includes human resource management in broad terms. The board oversees the work of the executive director and some committees. It can also set policies for human resource issues, including diversity, ethical behavior, compensation, or the use of contractors.

?7)? Place

Many non-profit organizations operate virtually—they don’t need a home. Others have a place where activities occur—a rented space or a building the organization owns. In the latter case, there may be an interest in expanding to other geographic areas, purchasing the building, or major renovations. Fixing a leaking toilet or painting the hallway is not a strategic thrust. Making significant repairs to the roof of a 100-year-old building or building an addition might well be. ?

As an example, two churches consolidated their congregations and ended up with two locations. Should they operate both? Sell one to finance the other? This is a strategic consideration because it will impact how the church presents itself to the community and where services are conducted.?

?A Caution: Be Selective

As you read through these seven strategic directions, you might think that, yes indeed, these all apply to your organization.

But be careful. This is a list of all the themes I have encountered in my work with boards. The thing is, you can’t include them all in one strategic plan. Typically, a strategic plan should focus on just three or four directions. If there are more than three or four, the board needs to re-examine its priorities and make a serious decision on which to pursue. Strategic planning is all about focusing on just a few big ideas at a time. That’s what leads to greater success. ?

Mark Ellwood is an internationally known productivity consultant, trainer, and professional facilitator. ?

Contact him at [email protected] or (416) 762-3453.