Social sector organizations face intense capacity constraints. It’s a perennial challenge just to keep overhead expenses in line while struggling toward sustainability. Yet now non-profits are asked to do more: help more people with less money and tackle the underlying social ills that create need. Whether they’re seeking better efficiency or greater scale, these institutions need the capacity that comes from a strong core of leadership, strategy, operations, external engagement, and funding if they are to achieve success.
These core capabilities are closely linked and attempts to improve just one factor in isolation tend to disappoint. Hiring a development director rarely pays off when an institution doesn’t have a clear strategy, for instance. At the same time, writing a snazzy strategic plan without attending to the organizational changes necessary to implement it is a recipe for a document destined to become a bookend on the institution’s shelf rather than a roadmap to success.
Organizations – like all complex systems – tend not to stasis but to change. They’re either getting better or they’re getting worse. To build capacity and ensure an organization is on an upward trajectory, it’s necessary to take coordinated steps that address its interrelated components. Our work over the last several years suggests strategic planning can, when done right, provide impetus and coordination for exactly such a series of interventions.
Earlier this year, we asked clients at several leading social sector organizations to reflect on how their capabilities have improved following our engagements. Our work with these organizations ranged in scope and length, but typically began with improving strategy and adaptability. We did not intend the interviews to be a scientific sample or a rigorous evaluation: we simply wanted a quick reaction on how we could improve.
As we discovered, the benefits of our best projects didn’t stop at strategy. We asked our clients to assess their organizations on five capabilities:
- Strategy and adaptability: How well-defined is the organization’s goal and plan to achieve it? (This is where we expected our clients to report the greatest – and perhaps only – improvement.)
- Leadership: How effective are the senior leadership and board of directors? How well do they make and then execute decisions?
- Financial health: How financially sustainable is the organization?
- Internal operations: How effective and efficient are the organization’s internal processes and systems?
- External engagement: How effectively is the organization using external engagement to advance its mission?
The self-reported scores for five of our clients are summarized in Figure 1.
As the results show, strategy was never the only area to improve. The process of developing a strategy and the work to execute it delivered other tangible benefits. Our clients reported stronger fundraising, clearer internal processes, more coordinated leadership, and richer partnerships.
So what’s required for projects that begin with strategic planning to also improve capacity?
- Planning should address organizational capacity head-on. A strategic plan has to deliver practical, actionable recommendations to be most useful. That means it can’t take an abstract tack by identifying capacity gaps and discussing how to address them in the long-term without offering guidelines for the day-to-day work of the organization in the meantime. In our work, that’s meant leaving behind not only written recommendations but also practical tools to help assess efficiency and identify possible operational improvements, which lead to stronger internal operations.
- A strategy should be fundable. Just as a strategy has to be executable, it also has to attract or generate revenue. Funders won’t invest in a visionary strategy that doesn’t match their goals and they find a strategy that can attract co-funding especially attractive. A fundable strategy keeps possible funders in mind, sets specific and ambitious goals to motivate them, and is responsive to how key funders make decisions.
- Planning should provide practice in good decision-making. The strategic planning process involves tough decisions, and so offers organizations a chance to perfect their decision-making processes. By engaging the senior leadership team, the board, and senior staff, the planning process is a chance to bring the organization together around goals while refining the way decisions are made. Where leadership structures are more complex, as in the case of coalitions, planning can be an especially valuable means to increase leadership cohesion and effectiveness. Realizing these benefits not only requires stable leadership, but also close collaboration between planning consultants and staff, and frequent refinement of the plan.
- Planning should involve key stakeholders, not just funders. Strategy should integrate feedback from outside the organization. For example, we have found that sometimes policy-makers, who consume the research and policy papers produced by advocates, hold a very different view about how the advocates can be most effective. Similarly, the voice of beneficiaries can influence strategy for service delivery organizations.
Strategic planning that avoids difficult questions of fundraising, operations, leadership, and external engagement is easier. It’s also mostly useless.
Instead, the goal is not a pretty plan. It’s a stronger organization that can raise resources and deploy them to achieve its mission. As we have found in our work, beginning with that kind of strategic planning requires not only fancy formatting or pretty charts, but also a willingness to engage in the nitty-gritty of an institution’s work and deliver practical insights.