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| Path: Main Street > Resources/Library > Research Articles > Feature Article |
Business planning for nonprofits
By Peter Wright, president of The Planning Group
September 22, 2008Do nonprofit organizations have the same responsibility to create business plans as their profit-driven counterparts? In a word: yes. In fact, with funding coming from taxpayers and fundraising, not-for-profits have a higher duty of care to create and execute clear, measurable plans.
Nonprofit organizations have a number of unique complexities that make deliberate, action-oriented business planning essential:
A business plan won’t make these complexities go away, but it will help to clarify mandates, priorities, accountabilities, and timelines so nonprofits can focus their efforts on the seriousness and importance of their mission.
- So called “mission-driven” organizations are complex animals. Whether we like to admit it or not, profit is a compelling and focused motive that forces at least some strategic alignment in a profit-driven organization. Gaining business plan alignment across a large not-for-profit organization to a noble but “soft” mission can be elusive.
- Large parts of most nonprofit organizations run on volunteers, and we simply can’t count on volunteers to behave the same way employees do. While it’s true that employees are driven by a complex set of motivators, volunteers are driven by motivation that is multifarious and amazingly subtle. When employees stray too far from our priorities, we fire them. When volunteers stray too far, we change our volunteers’ value proposition.
- Funding can be incredibly unstable. Most established companies have revenue momentum that nonprofits can only dream about.
- By their very nature, nonprofits are torn between equally important, yet highly contradictory priorities. Yes, I know that there are competing priorities in profit-driven enterprises, but nothing compares to the choice between funding research for a cure, and funding care to alleviate the suffering of people today.
- Compared to any large company, not-for-profit organizational structures can be incredibly loose and unwieldy. Whether a federated model, a charter model, or any of the other complex structures under which nonprofits operate, central bodies simply don’t have the same clout as the corporate office of any well-run company.
- With a complex assortment of stakeholders to consider, nonprofits are adverse to risk and change. Given this backdrop, things can move pretty slowly compared to even the largest public companies. I can’t remember the last time I heard anyone in a profit oriented company even use the word “stakeholder.”
Increasingly, big nonprofits are conducting themselves more like businesses. In my experience, this has not yet reached the disciplined planning and execution that is becoming more common in most large companies. The tools and processes required are similar, but nonprofits must take an even more deliberate and measured approach to planning and execution than profit-driven enterprises.
Peter Wright is a career strategist and president of The Planning Group. As a respected executive in the financial services industry and in his current consulting practice, Peter has successfully developed and executed business strategy with notable results. Peter used his planning and training experience to develop The Business Planning Boot Camp series. You can e-mail him at peter.wright@theplanninggroup.ca or call (519) 740-2725.
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