Questions to Ask in Developing a Strategic Plan and Budget
When you are developing your budget and reviewing the multi-year financial plan which is tied to that budget, you should actively review your mission, priorities, and management and financial capacities. If you are considering an expansion in program, facilities, or staff, begin by asking yourselves these questions:

• How would we change our operations to handle this expansion? Who on our staff would be affected and what is their view?
• How would we fund this added expense? If we plan to acquire additional governmental support, have we approached government officials and have they assured us of additional annual support for the foreseeable future?
• If we hope to receive additional foundation or United Way support, have we discussed our expansion with them and have they assured us of additional annual support for the foreseeable future?

Click here for a full menu of questions you can use to make sure you are heading in a direction that is mission-relevant and sustainable. Email us with your ideas for other questions that can contribute to a more effective strategy and a more mission-relevant budget!

Need more?  Read how we can work with you or present a workshop to hone these ideas.

Unfamiliar terms?  See our glossary.

Excerpts from Linking Mission to Money
This link from Chapter Sixteen Profit-Making by Nonprofits explains that nonprofits differ from for-profit companies by how they spend their profits, not by whether they earn profits. Click here for excerpts from Linking Mission to Money

The board has year-round duties in advising, approving, and monitoring a budget. This link from Chapter Five Reviewing Priorities  provides a suggested annual checklist and schedule for your board's duties.

A strategically-focused budget has budget initiatives that are targeted to specific institutional goals and priorities set by the board for the year. Click here for a form the staff can use for the initiatives they propose for the upcoming budget.

Articles of Interest
Best leaders risk failure to effect great change  asks are we -- as patrons, donors, board members and opinion leaders -- by our actions supporting or penalizing meaningful risk-taking and true leadership?

What's next for nonprofits, so be nimble  discusses three challenges that will confront nonprofits in the coming years. 

Fundraising planning should focus on solving nonprofit's problems   discusses how endowments and planned giving fit into a board's difuciary duty to sustain mission.  Assuring sustainability over the next year takes priority over sustainability over the next five years, which must be assured before tackling sustainability over the next 50 years.

Paradox of nonprofit investment pits mission against rates of return   discusses why we need a new approach to measuring the value of nonprofit investments.  We need to solve the paradox that conventional financial measures sterr outside capital away from high mission investments.

Simplicity is best strategic plan to keep nonprofits on proper path   provides useful guidance if your organization is undertaking some strategic planning.  It encourages you to keep the strategy simple to ensure you do end up with a strategy rather than an elaborate action plan that takes you to an unknown destination.

Lobbying is permitted - and worthwhile - if nonprofits follow rules  explains that IRS regulations expect nonprofits to be engaged in lobbying, and many nonprofits needlessly limit their participation in public debate over critical legislation. 

Multiyear planning can help keep a nonprofit close to its community  discusses the role of multiyear planning in helping a nonprofit to maintain a tight link between its mission and the shifting needs of the community.

Nonprofits face danger in blurring line between donors, its managers  discusses how the well-intentioned movement of philanthropy toward seed grants, matching or challenge grants, and performance measurement requirements can lead to unintended adverse consequences for nonprofits.

Nonprofits that are businesslike with passion take road to success   discusses seven key attributes of effectively-managed nonprofits.

5 lessons finance officers want to teach execs, board  reminds CEOs and boards of some budget lessons that are repeatedly forgotten, often with unfortunate results.

What a nonprofit's board should do with a budget  discusses the benefits of the strategic perspective that boards can bring to the budget.

Nonprofit's spending plan should start with test of community needs  explains why, as part of budget preparation, you should reassess the links between your current services, mission, and the community needs they are intended to address. 

What a community needs most from its nonprofits  discusses the dilemma of sustainability versus growth which pervades the nonprofit world. A nonprofit organization has to decide early on how to deal with its ambition to grow and its obligation toward sustainability.

Nonprofits wouldn't be around without profits  explains that what separates tax-exempt organizations from taxable organizations is not whether they earn profits, but how they spend their profits. If a nonprofit always loses money, it will fail, no differently than any company will fail.

Other Resources
Low-profit, limited liability corporations (L3C) is a new for-profit corporate form enacted by the Vermont Legislature in May 2008.  This new form holds promise as a way to permit donor-advised funds and foundations to take equity stakes in socially-oriented for-profit companies through IRS-allowed Program Related Investments (PRI). This avoids the" either non-profit or else for-profit" dichotomy that forced a grant/donation versus loan/equity approach to funding socially beneficial activities.  Its greatest potential is to increase the number of ways in which socially-focused organizations can attract funding.  See our L3C resource page.

The American Association of State Colleges and Universities (AASCU) published its top ten issues likely to impact public higher education in the 50 states in 2009.  With diminishing revenue streams in the face of traditional enrollment increases in recessions, this may be a watershed year for public higher education strategy. 

One of the key strategic challenges of colleges and universities is how to encourage students to stay in school.  One resource to inform strategies is the National Survey on Student Engagement (NSSE), which surveys college students to learn more about their daily experience in college.  The 2008 survey affirms earlier findings that copying what another college does may not produce better results:  student experiences vary more within a school than across schools.

Developing any strategic plan requires an evaluation of your environment.  Trend analysis is a simple yet effective wayfor any organization to form a view of how its environment is changing.  An excellent use of this technique is presented in detail by Henrico County, Virginia.

All nonprofits should think ahead about how they can maintain services to their constituents for the next five years, whether they can do it alone, or whether they can do it better by collaborating or merging with another nonprofit.  A useful survey of the experiences of 192 nonprofits is this study by Kohn, LaPiana, and Gowdy, Strategic Restructuring: Findings from a Study of Integrations and Alliances Among Nonprofit Social Service and Cultural Organizations in the United States.

Bridgespan Group also studied nonprofit merger and acquisition activity over the past 11 years.  They concluded, " relatively few nonprofits are using M&A strategically, as a way to strengthen organizations' effectiveness, spread best practices, expand reach, and to do all of this more cost-effectively. Yet the potential for M&A to create real value in the nonprofit sector exists, particularly if more philanthropists take on the mantle of matchmaker and help nonprofits explore and evaluate M&A opportunities."  See their study here.

The permissibility of lobbying by nonprofits is widely misunderstood and many nonprofits needlessly limit their participation in public debates of critical legislation.  IRS regulations permit, and in some ways expect, nonprofits to be engaged in legislative activities as long as the activity falls within specific guidelines.  Click here for more information and resources on nonprofit lobbying.

Kennedy School Lecturer Marshall Ganz’s online curriculum module on Organizing is now available to the public.  This web module contains learning materials that touch upon questions such as “What is organizing? How do people organize? What skills are required of organizers? How can these skills be shared with others?”  This module is designed as a library of readings, video lecture clips and web link resources on organizing for organizers, students, and trainers of organizers alike.  In addition, trainers will find pedagogy on organizing developed by Professor Ganz and his colleagues.

The stresses on the state and local sector over the past twenty years have led to excellent work on financial management. The work of the National Advisory Council on State and Local Budgeting remains among the best resources currently available to guide any nonprofit looking to manage better. See especially the Framework for Improving Budgeting .

The concept of sustainability has its roots in the governmental sector's concept of structural balance. This 1994 article, Budgeting for Structural Balance, is a good summary of a concept that is now taken for granted by the best state and local governments.