This week we're pleased to share another guest post by our 2017 Board & Senior Leadership Conference Speaker, Steve Zimmerman. Steve is an author and nationally recognized expert in nonprofit financial sustainability. Republished with permission
Questions to ask before beginning a strategy process
After a long week, a Friday evening at our favorite restaurant where we know the service, menu and what to expect is a common comfort many of us long for. Unfortunately for many, when it comes to board service, the strategic plan is their common comfort.
I understand. A detailed strategic plan that highlights the tasks that need to be done, who is responsible for them and when they’ll be done by is very appealing. The board can be engaged in “strategic discussions.” They may even have a retreat and bond over their mutual passion for the organization’s mission.
One problem, they seldom work.
What happens when a funder calls and has a new project they want you to undertake and they want to fund it? No organization truly tells them, “Sorry, it isn’t in our strategic plan.” Rather, they find away regardless of the plan. Agility and ability to respond are essential in today’s environment to meet the challenges and opportunities that exist in our community and deliver exceptional impact in a financially viable manner. However, these attributes are seldom found in detailed multi-year task oriented strategic plans. Part of what perpetuates these plans is how people approach them. We commonly see three reasons for planning:
- Our last plan ran out;
- We need a plan for our funders or accreditation; or
- Something isn’t working quite like it used to.
The first two reasons are really not reasons to engage in planning. Many organizations thrive even without a board adopted and approved strategic plan in part to effective leadership, a stable environment and a shared understanding of the organization’s mission and services. Approaching planning from these perspectives is an exercise in compliance, not strategy. Save your resources and put them toward your program services instead.
The last reason, however, is the beginning of a conversation. What exactly isn’t working? What do you believe is the biggest strategic issue for your organization? Have your funding streams significantly changed over the last several years? Do your programs seem stale or are your constituents’ needs changing? Are there new organizations in your community offering similar services?
You may not know the exact question you need to ask, but approaching strategy with an end in mind or a feeling of what isn’t working will allow an exploration to unfold which can surface symptoms and possible solutions.
To help identify strategic issues, we begin by asking a series of questions in four areas: constituent needs, funding trends, other external factors and internal factors:
Understanding the needs of our constituents and whether our current program offerings meet them is essential for impact. While for some organizations this can be a challenge, engaging your constituents in the process and having a thorough understanding is essential. Some questions to ask include:
- What are top three needs our constituents have today?
- Do immediate and long-term needs differ?
- Have these needs evolved over the last five years?
- How well do our programs directly address these needs?
- Have we seen a change in demand for specific programs?
Answering these questions begin to focus whether your programs are truly creating impact, or if a program re-design may be necessary.
Like a canary in the coal mine, funding trends can often be the symptom that something else is wrong, but they’re important to explore in their own right. Some questions to ask include:
- What is the percentage of earned revenue versus philanthropic support our organization receives and how has this changed over the last three years?
- What are the main revenue streams for the organization, what percentage of revenue are they for the organization and how have those changed in the last three years?
- What is the organization’s operating reserves and how have they changed over the last three years?
- Do we know the surplus generated or subsidy required for each business line and have these changed significantly over the past three years?
- How has the funding environment changed over the last three years? Do we see this continuing?
As nonprofit business models shift, these questions have become increasingly more important and harder to answer in terms of finding the root cause, but knowing the starting point is helpful before entering a strategy process.
Other external factors
The competitive landscape in which our organizations operate is complex and dynamic with changes in the public sector partners, new entrants from the for-profit sector and both competitors and potential collaborators among nonprofits. Questions to explore our market landscape include:
- Who else in the community is offering similar services to ours and do we have a competitive or collaborative relationship with them?
- Are for-profit companies entering our service space?
- Are community leaders, elected and other, supportive of our organization’s mission or is there a divide in support?
- Have we received negative press in the past two years?
Last but not least, management guru Jim Collin’s old cliché of “having the right people on the bus” is as important as ever. Without a culture of results organization will not reach their potential. Questions to ask here include:
- Have we had significant turnover in the last two years?
- Do we have the right personnel with the right qualifications and attitude in the right positions?
- Does our organization have a culture of excellence?
- How well does our board understand the organization’s business model and how engaged are they in strategic decisions?
- Does leadership have the accurate and timely information they need to govern and lead the organization?
Some will look at these questions and feel like they are the first step in the planning process. In fact, they are. However, understanding your perceived strategic issue as an internal practice BEFORE you engage a facilitator or enter into a strategy process will enable your staff and board to candidly and boldly address the barriers holding the organization back and position you to seize opportunities on the horizon. It is important to note that often during the discussions that follow, the strategic issues identified at this stage is merely a symptom of a deeper problem. However, having successfully identified, perhaps narrowed and articulated the challenges facing the organization will allow you to collectively explore root causes, identify possible solutions and ultimately make strategic decisions to strengthen your organization.
Strategy is an intensive process. A little prep work upfront will make sure you get the most out of it and that you’re not wasting effort and resources just going through the motions.
Making Strategic Decisions for Financial Viability
November 1st │8:00a-3:30p │Feathersound Country Club, Clearwater
2201 Feather Sound Dr, Clearwater, FL 33762
Presented by JPMorgan Chase & Co.
Understand the relationship between your nonprofit’s revenue & impact.
Discover a tool to inform the strategic decisions
that increase your sustainability.
Spend a day with your board and senior leaders focusing on your nonprofit’s sustainability.
Which programs contribute to your organization’s mission and longevity? Which programs are mission-centric but financially draining? Which areas should you invest in and grow? Are there any that should be trimmed back—or even discontinued?
These are difficult but necessary, strategic discussions for your leadership. And we’re bringing you the one facilitator who can help you have them—nonprofit sustainability expert and author, Steve Zimmerman.
This conference will be most impactful for your organization when the CEO and at least one board member attend together. Your top financial officer is strong choice for your third attendee, so we’re discounting 3-packs of tickets.
A.M. CONFERENCE | 8a-1p
THE SUSTAINABILITY MINDSET: Sustainability expert Steve Zimmerman will lead an interactive, half-day session that will create a collective culture where your board and senior leadership can come together with a shared understanding of the organization’s business model. From that common ground, you can make strategic decisions to deliver exceptional impact in a financially viable manner.
P.M. WORKSHOP | 1:30-3:30p
THE MATRIX MAP PROCESS: Roll up your sleeves during the afternoon workshop and collaborate with your team as Steve coaches you through creating a draft of the tool you can use immediately to engage staff and board in strategic decision making.
HALF-DAY CONFERENCE PRICING
$80 per individual, $220 for a group of 3.
FULL-DAY PRICING (BEST VALUE)
$110 per individual,
$300 for a group of 3.
Attend the Conference & Workshop
and enjoy lunch for a significant savings.
REGISTER TODAY! SEATS ARE LIMITED.
THANK YOU TO OUR PRESENTING SPONSOR
Steven D. Zimmerman, CPA, MBA
Steve is Principal of Spectrum Nonprofit Services, where he provides training and consulting in finance and strategy for community-based organizations, foundations, and government agencies across the country.
He is co-author of The Sustainability Mindset: Using the Matrix Map to Make Strategic Decisions with Jeanne Bell and the best-seller Nonprofit Sustainability: Making Strategic Decisions for Financial Viability with Jeanne Bell and Jan Masaoka.
Prior to starting Spectrum, Steve was a Projects Director with CompassPoint Nonprofit Services, one of the nation’s leading nonprofit consulting, training, and research providers. His extensive nonprofit experience also includes serving as a CFO, Development Director and Associate Director at community-based nonprofits where he performed turnarounds resulting in increased financial sustainability and programmatic reach.