Financial Resource Development and Strategic Planning

All nonprofit organizations are concerned with developing their financial resources and raising funds for their ongoing budget, capital projects and endowment funds, among other purposes. It is not unusual for there to be a difference of opinion among the members of the board as to what comes first: Does an organization plan for its future once there is a sense of financial security or does it achieve financial sustainability only after utilizing a strategic planning process?

This question is asked by both chief executive officers and volunteer leaders. Quite frequently, one or more people involved in a nonprofit organization will balk at spending the time, effort and funds on a planning process when they have to stretch to complete the month in the black. Their reasoning is that they cannot afford the time or money to figuring out where the organization “should be” when they are not even sure whether they will continue to exist in a few months.

Having said this, I would maintain that agencies cannot afford to wait until there is a more secure fiscal situation to initiate a process that involves the board, staff, stakeholders and others to determine their financial planning. The main reason for this approach is the fact that nonprofits’ financial sustainability cannot be separated from the agency’s purpose, its services and where it wants to be in the next three to five to seven years. It is not merely a matter of having a “plan” written down and having articulated a particular direction for the organization’s development, but rather it is more related to the impact of the planning process on these key players.

It is true that the board of directors is accountable for the fiscal management of the nonprofit and it cannot afford to ignore the difficulties they face in balancing the budget and knowing where the funds will come from to support next month’s program. At the same time, if the perspective is limited to only what needs to be done to finish the month in the black, then the organization may never achieve that preferred position where the daily overdraft is not worrying everyone. Of course, the staff and the board need to be fiscally responsible, but they also need to maintain both a perspective on the day-to-day while keeping an eye on the not too distant future.

One of the most important contributions a strategic planning process offers the nonprofit organization is its comprehensive approach to dealing with the organization’s present situation and future direction. No one person can sit down, produce a strategic plan and have it unanimously accepted by the board and implemented by the staff. What is really most important is the planning process itself?

A well developed and implemented strategic planning process will involve all of the major players. They will work together to review the organization’s purpose and function, its values and practices, its management structure and its human resources, as well as its approach to responsible fiscal management and financial planning. Part and parcel of this approach is to analyze and develop an approach to financial resource development that will ensure the organization’s sustainability.

When the organization’s key players are involved and committed to this process the efforts to secure additional and solid sources of support will reflect the purposes and goals of the organization. An approach that seeks to solicit those “big donors” who will donate huge amounts of money and rescue the agency from its present financial situation is not only a “dream,” it is also fiscally irresponsible. In today’s environment, an integrated approach that provides the board and the staff with the opportunity to revisit the organization and its standing in the community has the potential to strengthen the organization’s foundation including its ability to develop its financial resources.

The added value of this process is the opportunity to invite and involve people who can provide leadership to the organization. The strength of voluntary organizations is found in the way its committed leadership invests in securing the future of the organization. This is achieved both through their participating in meetings and providing guidance and advice as the agency’s policies are developed, as well as working to secure sources of financial support for the organization’s services and programs.

Even when the miracle does happen and the unexpected large gift appears out of the blue this may only relieve the overbearing financial burden that is felt by the organization for the present time. Essentially, it means that the senior staff and the volunteer leadership will breathe easier for a short period of time; however, it does not alter the agency’s quest for financial sustainability and fiscal security. Building a secure base through an integrated strategic planning process is the way to ensure the agency will not only maintain its present function but will also continue providing the community with needed and valued services.

Stephen G. Donshik, D.S.W., is a lecturer at Hebrew University’s International Nonprofit Management and Leadership Program and has a consulting firm focused on strengthening non-profit organizations and their leadership for tomorrow. Stephen is a regular contributor to eJewish Philanthropy.