Strategic Planning

3.5 mins

Summary

Planning for the next 3-5 years; also known as business planning.

Strategic planning (also referred to as business planning) is a process nonprofits use to make critical trade-offs to best achieve their goals. While these processes have varying degrees of formality and take different forms, they are clearly distinct from routine management activities and are intended to guide and inform key decisions toward specific organizational aims throughout the year.

How it's used

Organizations use strategic planning to provide a structured process to define success for an organization, determine the operational and programmatic steps to get there, and align resources and staff to achieve the goal within a given time frame. Strategic planning typically involves examining an organization's intended impact and theory of change, and rigorous analysis of the organization's internal capabilities, full program costs, external environment, and donor and beneficiary trends to identify opportunities with the greatest potential for impact.

Strategic planning processes often result in a written document that can be used as an internal reference and a road map for accountability and decision making, a resource for new staff, and a tool for measuring success. Written strategic plans can also be used for external purposes, such as attracting funders and partners, and communicating about the organization to beneficiaries and other constituents.

Methodology

Strategic planning requires organizations to get clear on their mission and goals, current operations, and pathway to success. There are four critical steps, although the process is often iterative:

  1. Achieve strategic clarity: First, clarify the organization's goals. Develop a concrete statement of the impact the nonprofit will hold itself accountable for, in what time frame, and for whom [Intended Impact], and how the nonprofit's work will lead to that impact [Theory of Change].
  2. Set strategic priorities: Next, determine the specific actions and activities that must take place to set the theory of change in motion. Evaluate current programming and identify opportunities to modify, expand or eliminate certain programs. To do so, conduct internal analyses such as Program Evaluation, Program/Mission Alignment, and Full Cost Analysis to determine how well current programs are fulfilling intended impact and mission. Also conduct external analyses, such as Benchmarking or Landscape Analysis, to answer key questions about the nonprofit's strengths and weaknesses relative to others' in the field, and how it fits into a broader ecosystem.
  3. Determine resource implications: Next, nonprofits must consider the resources—financial, human, and organizational—that will be needed to achieve their strategic priorities, and develop a plan to secure them. Identifying a clear funding model can help nonprofits estimate how much money they can raise in the future. Often, after projecting future costs and revenues, nonprofits realize they need to adjust their strategic priorities and scale back their programmatic ambitions so that future budgets will balance. A good strategic plan should be ambitious yet realistically achievable, not foolishly optimistic.
  4. Develop an implementation plan and establish performance measurement: To effectively implement a strategic plan, organizations should clearly lay out the steps needed for each of their strategic priorities, who will be responsible for each step, and what quantitative and qualitative milestones should be tracked. These milestones help the organization to stay on track over time and measure its progress toward achieving its intended impact.

Related topics

Additional resources

Strategic and Business Planning for Nonprofits
This wide-ranging list of resources for strategic and business planning is curated by the National Council of Nonprofits.

Business Planning for Nonprofits: What It Is and Why It Matters
This comprehensive article outlines critical steps in the strategic planning process, illuminating processes with examples.

Business Planning for Nonprofits: The Organizational and Leadership Benefits
This article demonstrates three potential benefits of business planning—aligning staff and board members around a strategy, developing a leadership team's capacity for strategic thinking, and identifying the capabilities and positions needed to advance the organization—as demonstrated by the experience of MY TURN, Inc.

Examples and case studies

YES Prep: Preparing Low-Income Students for High School, College, and Beyond
Incorporating video, text and sample documents, this case study explores the nuts-and-bolts details of how YES Prep Public Schools, a charter organization based in Houston, Texas, succeeds in preparing low-income students not only to graduate from high school, but also to enter college ready to meet the challenges of a post-secondary education.

The Steppingstone Foundation: Managing Growth This magazine article examines how a Boston educational-services nonprofit used strategic planning to create a path for growth.

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