If fundraising is the biggest challenge of the nonprofit sector, then strategic planning is only second to it. But the crazy thing is, if you connect the two (strategic planning and raising money) you not only will be more financially sustainable, but you will also achieve more social change. Money and strategy should never be separated. So that means nonprofits can no longer operate with a strategic plan that ignores money. Instead, nonprofits must create a strategic plan with a fully integrated financing plan, which is the topic of today’s installment of my regular Financing Not Fundraising blog series.
If you’re new to this series, the Financing Not Fundraising series recognizes that fundraising in the nonprofit sector is broken. Nonprofits have to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities and instead work to create a broader approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.
To connect strategy and money, you have to start from, or work toward, a place where three key things are fully integrated and working together in your nonprofit:
1. Your mission
2. Your core competencies and
3. Your money
That means that how you bring money in the door works with, not against, how you achieve your mission.
So what does it look like when you have connected money to your strategic plan? Your strategic plan:
Articulates a Value Proposition. The goals, both programmatic and financial, of your strategic plan will not come to fruition if they are not created with an understanding of how your nonprofit fits into the external community marketplace. Before you create the goals of your strategic plan, you must do your research to understand the external environment of client needs, competitors/collaborators, funding sources, and other inputs that go into your work. This means that in order for your strategic plan to be realistic, and fundable, it must define a place in the external environment where your organization can add value.
Includes A Money Goal. It seems so obvious, but so few nonprofits include a money goal in their strategic plan. At least one of the broad goals of your strategic plan has to be about money. I have seen a countless number of nonprofit strategic plans that tout lofty program goals but spend no time on how much those goals will cost and where that money will come from. Your strategic plan will remain only a paper plan until you include a goal about how you will bring enough money in the door to fund the plan.
Projects Future Money. And just like your overall strategic plan, the money side of that plan must take a long-term view. You want to project future revenue and expenses for the entire life of your strategic plan. So if you are creating a 3-year strategic plan, you need to project the revenue and expenses required for the entire organization over those three years. And that revenue and expense must be based on what you say you will do in the three years of your strategic plan.
Creates a Financial Model That Makes Sense. It makes me crazy when I see a nonprofit copying another nonprofit’s money raising ideas, like when a local nonprofit holds an event that appears to be very successful, so three other nonprofits try to mimic it. Or a new nonprofit launches a direct mail appeal because they think that’s what nonprofits do to raise money. The right way for your nonprofit to bring money in the door depends on your organization’s mission and core competencies. Create a smart financial model that adds to, not detracts from, your mission and that builds on the specific strengths of your staff, board and operations.
Nonprofits simply can no longer create a strategic plan that ignores money. To chart a compelling, realistic strategic direction for your organization you must learn how to connect money to your strategy. If you want to learn how to create the financial part of your strategic plan, sign up for our Creating a Financing Plan webinar.
By Nell Edgington, socialvelocity.net