December 8, 2011

Align Finances to Support Implementation

In addition to staff time, implementing your strategy likely will require shifting finances or acquiring new resources to support strategic goals. Step 4: Align Finances to Support Implementation will help you allocate resources against your nonprofit's agreed upon goals.

In addition to staff time, implementing your strategy likely will require shifting finances or acquiring new resources to support strategic goals. For organizations with small amounts of unrestricted financial support, aligning resources to the strategy may require fundraising aggressively to support your strategic priorities and initiatives so that funding restrictions don’t slow down your progress.

You may find, as the Cristo Rey Network did, that your new strategic focus will position you to raise funds more successfully. The Cristo Rey Network is a network of 24 high schools created to provide a top-quality, college-preparatory education to economically disadvantaged students. In 2008, Bridgespan worked with Cristo Rey to develop a strategic plan that shifted the organization’s focus from growth to improving quality, so that all of their students graduate from the network’s high schools ready to succeed in college. According to Robert Birdsell, president and CEO, "For the first six months of implementation, we had to shift funds within our organization to support the strategy; but since then it has been fully funded. Having a very clear strategy and focus gave us a project to sell to funders."

For all organizations, living into a strategy requires taking a hard look at how to allocate resources and the changes needed given agreed goals. The approach that Children and Families Commission of Orange County (CFCOC) used provides some helpful guidance on how to align resources to new priorities. CFCOC is a grantmaking organization that utilizes revenues from a sales tax on tobacco products to support education, health, and child development programs for young children. Its leaders developed a new strategy guided by four principles: 1) prioritize resources for the children most in need; 2) direct more resources to children’s early learning needs; 3) evaluate children's outcomes versus program outputs; and 4) invest a greater percentage of funds in catalytic versus sustaining activities.

Guided by these principles, CFCOC’s leaders determined they needed to make significant changes to what the organization funded. CFCOC used a simple rubric to assess its current programs and grants against its new strategy, considering each on a few dimensions, such as: Is the program targeted to those in most need? Is the program critical to ensure strong outcomes? And, is the program critical to maintain community and/or political support? Based on this assessment, CFCOC’s leaders determined whether the organization should keep, modify, or discontinue each program. CFCOC then mapped out how it would make the change over a two-year period so that, by the end of that period, the majority of its funds supported projects directly aligned with the adjusted strategy.

Questions to Consider: Aligning Financial Resources

  • Given your strategic goals, what programs should be continued, modified, or discontinued?
  • Are key initiatives getting the resources they need to succeed?
  • Does your overall budget reflect your strategic priorities in terms of spend across initiatives and across the organization as a whole?
  • If you are anticipating a tighter budget year ahead than when the plan was crafted, what principles will your management team use to make the tough calls?

During implementation, CFCOC has continued to use these principles to guide decision-making on whether they should keep, modify, or discontinue each program or grant, but the organization also has had to weigh a number of other factors. The declining funding environment in which it has been operating has made these decisions more complex. Given that CFCOC achieves its impact by funding others, a key practical consideration for CFCOC has been its grantees’ level of readiness to shift their focus or maintain critical services despite less support. As described by Mike Ruane, executive director of CFCOC, “Implementation is always some variation of the absolute recommendation… It requires adjustment because of gaps in readiness and conditions that change… It should not be an all or nothing game of ‘should we follow the strategic plan or not;’ Every step you make is progress.”

You probably will need to make a number of important decisions regarding resource allocation during implementation, some of which you couldn’t anticipate fully as you set your strategy. One approach CFCOC used to ensure that these decisions are consistent with its longer-term strategy was to bring these issues to its governing board on a quarterly basis. Doing so has helped the organization balance its big-picture goals with its day-to-day work.

A Template to Guide Step 4: Aligning Finances to Support Implementation

Each initiative you undertake has to be adequately resourced over time. That’s why it is so critical to develop a resource plan for your initiatives. This Initiative Resource Planning Template can help your staff think constructively about the costs associated with implementing a strategy. Since many initiatives require different parts of the organization to work together, they may not be owned by one single department or have a natural champion during the budgeting process when tough decisions and trade-offs get made. However, if you dive into detailed departmental budgeting without considering the resource requirements of your initiatives, you risk underfunding them. One way organizations guard against this challenge is by beginning their annual budgeting process with a focus on the strategy, building in enough time to adjust across several versions and scenarios. There is no magic to this step; strategically-focused budgeting requires a series of tough conversations about what you can and must do to achieve your most important goals, with a commitment to follow through with the necessary resources.

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The Bridgespan Group would like to thank the JPB Foundation for its generous and ongoing support of our knowledge creation and sharing work.