The philanthropic and nonprofit sector’s success is defined by social impact—the improvement that a group of people or society can expect to see as a result of an investment in a program, initiative, or organization. Strategy is the pathway to the desired change, a framework that articulates intended outcomes, sets priorities, and guides decision-making.
Strategy matters because it rationalizes the allocation of resources in a systematic way—all in service of solving problems that the private sector cannot or will not address. If implemented well, it can have a positive ripple effect. The smallest successful program strategy can be replicated broadly and ultimately result in better policies and systems. An individual nonprofit can magnify its impact by banding together in a coalition with a shared and synchronized strategy. And a set of grantmakers might increase their efficacy by aligning plans for a common series of objectives in a particular community or field.
Yet foundation and nonprofit leaders still struggle with creating and achieving effective strategies. Why do so many go amiss? Because they…
1. Devise the strategy in a vacuum.
Most social sector organizations do not adequately consider the larger context in which their strategies will be carried out. Strategy occurs at several levels – programmatic, organizational, community-wide, sectoral, and systemic—that are at once distinct and interrelated. Grantmakers and nonprofits alike must take the bigger picture into account. This should include opportunities to coordinate their goals and plans with others.
2. Stick to the usual suspects.
The best strategies usually result from a participatory process that incorporates the perspective of multiple stakeholders—including those who can challenge assumptions, stretch conventional thinking, and advocate for new approaches that might be more beneficial. Too often, foundations and nonprofit groups involve those who are responsible for implementation at the expense of external stakeholders, especially those who stand to benefit from it.
3. Overlook research about what has worked elsewhere.
Why is it that we seldom leverage research that can help us better understand why certain social and environmental problems exist and what others have done to address them? Building on the lessons of others enables leaders to efficiently learn about current trends in their field of interest, gaps, the latest thinking related to effective practice, and program quality and outcomes. There is a clear field-building benefit as well: if more nonprofit leaders and funders referred to the literature in the development of their strategies, we might begin to see better alignment of goals and investments.
4. Avoid making tough decisions, particularly about what to stop doing and where to stop spending money.
Many dodge making difficult resource allocation decisions out of fear that some staff, trustees, collaborators, or constituents will be disappointed. However, the best strategy choices are often disruptive and could involve phasing out programs or eliminating staff. An effective strat¬egy clearly informs internal and external stake¬holders where an initiative or organization is headed, what the priorities are, and how time and money will—and will not—be distributed. An organization or program must be candid about challenges and limitations and clear about who determines the goals, resources, and plans. While a participatory process is important, everyone’s vote is not equal. The process needs to be guided by a designated set of decision-makers that has sufficient knowledge and authority to make key determinations, particularly those that maybe controversial.
5. Pay excessive attention to the creation and unveiling of the strategy and not enough to its execution and refinement.
Too often, leaders celebrate adoption of a new strategy or plan without sufficiently realizing that the hard work is really just starting. In other words, they put too much effort into "ready, set,” and not enough for "go." Implementation requires accountability, perseverance, and adjustment. Unforeseen events and mistakes will inevitably occur. As the pace of change has accelerated, the lifecycle of a strategy has become shorter. The most successful ones are dynamic and flexible, providing leaders with a framework for making decisions, solving problems, and responding to opportunities as they arise in “real time.” Performance and outcomes measures must be included and tracked to facilitate ongoing learning and improvement. A funder or nonprofit can no longer assume that a strategy is successful because it was carried out—it needs to understand how and why the investments made a difference. This, in turn, allows for integration and enhancement of strategies within and across organizations.
That’s our short list of strategy “don’ts.” We hope that it will encourage philanthropic and nonprofit leaders to develop better strategies by employing some practices that we believe are well worth the extra effort, and are explained in more detail in our recent paper on this topic. To meet the increasingly complex challenges society faces, we cannot afford to have our strategies be second-rate.
What other factors do you think prevent a foundation or nonprofit strategy from thriving? And how can sector leaders devise better strategies?