Strategy is Back in Style

After three years of a global pandemic and the whiplash it created for nonprofits, the contours of the landscape are starting to take shape and many nonprofits are creating new strategic plans. But what is strategic planning without strategy? Traditional strategic planning often jumps right into operational planning without first clearly identifying a strategy. We developed Real-Time Strategic Planning or RTSP with the goal of grounding strategic planning in strategy before planning. Our methodology focuses first on organizational identity including an understanding of the business model, competitive advantage, and clear decision-making criteria, before undertaking planning.

Now, more than ever, strategy is critical. Community needs, such as learning loss in primary education, are striking, and economic upheaval and inflation are making our most vulnerable even more so. To be effective, nonprofits must find new ways to adapt to a changed landscape. Organizations are reinventing both themselves and their strategies in the wake of the murder of George Floyd and the racial reckoning it sparked. For example, the Bonfils-Stanton Foundation in Denver, an arts and leadership funder, focused on strategy first in the development of a strategic framework that highlights how equity is now “baked into its DNA.” This strategy has changed everything from its approach to grantmaking and leadership, to investing its corpus, to how it shares office space and leads in its neighborhood and community. These changes were already underway before the more recent “racial reckoning,” but the foundation absolutely felt an even greater imperative to prioritize an authentic commitment to equity in its strategy going forward.

Nonprofits are also using a strategy-first approach to retool their business models. Three Texas organizations, the Texas Campaign, Ntarupt, and Healthy Futures, sought a unified statewide strategy to provide sexual health education to Texas youth. In 2022 they completed a three-way merger to achieve scale and have a greater impact, just as the Supreme Court nullified Roe vs. Wade and made their combined efforts more important than ever.

Other nonprofits are grappling with Covid hangovers and the impact of the loss of one-time funding like PPP (Payment Protection Program) and ERTC (Employee Retention Tax Credit) on their business model. Strategy development should be rooted in a careful understanding of a nonprofit’s prospects for financial sustainability. Planning can address tactics, but organizations need a clear and realistic vision for their financial viability. Arts and cultural organizations are grappling with changes in their audiences and customer bases and finding themselves in competition in new ways with organizations not dependent on subscription, membership, or philanthropic models. Community foundations are being challenged by for-profit models around donor advised funds (DAF’s) such as the Fidelity Charitable Gift Fund and Schwab Charitable. Nonprofits that thrive in the future will likely adopt strategies based on forward-looking business models rather than relying on what worked before 2020.

Strategy-first nonprofits develop strategy before planning, taking a critical look at the ecosystem in which they operate. They are asking themselves hard questions about who they compete against for staff, for funding, for clients, and what they offer that is unique and leverageable for more impact. They are going beyond a simple SWOT analysis to identify their market position and what strengths truly differentiate them. They are going beyond “opportunities” in a traditional SWOT analysis, which also tends to aggravate staff with an endless list of things they will never have the time or resources to do, and instead are developing specific strategies to navigate to where they can have the highest sustained impact.

They are asking difficult questions about their identities and their commitment to equity. They are probing how their strategy at the organizational, programmatic, and operational levels reflect how they want to show up in the world. Our BUILDing for Growth program, working with 62 racial justice grantees of The Ford Foundation, is focused on giving organizations with windfall investments the tools to reshape their approaches to advocacy while building their infrastructure.

The Covid pandemic created winners and losers. Both the nonprofits that benefited (usually financially) and those left behind need strategy now more than ever. Nonprofits cling to the “planning” part of strategic planning when they feel vulnerable to headwinds they can’t control. The chaos of the last three years has subsided, and the sector should be investing in the hard work of strategy development as the basis of a strategic plan. Strategy is about making choices with a keen understanding of your identity and the world in which you operate. Nonprofits that chart clear strategies before undertaking planning will address the headwinds and position themselves to be most effective in the new reality we find ourselves in and whatever new realities still to come.