Monday, October 22, 2012

Strategic Planning - Positioning Your Nonprofit for Growth

Ah, the much-maligned and often discarded strategic plan. Why would I write about that, you ask?
Probably no other topic gets more groans and eye rolling when I propose it to my clients. I get comments like “Total waste of time and money”  “Ineffective gobbledygook” and “too confining”, along with a few less printable comments.  
I get it, I really do. When I was an employee of a nonprofit, the board once decided we would have a retreat and come up with a “plan”. The retreat was held at a board member's mountain cabin, set in a lovely forest area. There were a few glitches.
First, I had to drive 92 miles through an Idaho snowstorm on poorly maintained secondary roads to get there. Not too bad, if you were used to it, and had a four-wheel drive, but I wouldn’t say I arrived in a relaxed and upbeat frame of mind. Second, the format was to have everyone write down their wish list for the agency, and put them in a hat. The moderator (a board member) would pull them out, read them and ask for a show of hands as to whether it should be included in the plan (for real…I couldn’t make this up). The suggestions dealing with budgets and controls didn’t get many votes. The result was that there was a lot of emphasis on the “warm fuzzies”, marketing, getting grants, and events. The results were expanded and put into a nice little report cover containing about three pages, and that was the strategic plan. I don’t think anyone ever looked at it again, and a couple of years later, it was thrown away.
Then there was the client who wanted to hire me to write “a two page executive summary for our strategic plan”. Great, glad to help. When I asked for the plan so I could summarize it, he responded, “Oh we don’t have a plan, we just need to have a summary for a grant”. I pointed out that I couldn’t summarize something that didn’t exist, whereupon he told me “never mind, we can throw something together.” Yikes!
Neither of these scenarios have anything at all in common with an effective strategic plan. First, these should span a minimum of five years, and should be forward-looking, with a specific goal. It should contain financial projections and the SWOT analysis I mentioned in the last post. The plan is constructed to develop methods and measurements to evaluate progress in achieving that goal. Second, there has to be a review of the plan annually. What were the first year goals? Were they accomplished, and if not what is being done to get back on track? Does this review necessitate modifying the five-year plan? If at any point, the plan goal has gone completely off track, should the original the plan be rewritten with more a realistic goal?  Ideally, the plan evolves as each year is completed, and a new five-year plan emerges for the next five-year period almost automatically.
Strategic plans, by their very nature, should not be static. Look at the name. Strategic means have a strategy (goal, plan and method) to get somewhere or accomplish something specific. Imagine what would have happened in WWII at the Normandy landing, if Eisenhower had just had all the generals throw their battle plans in a hat and took the ones with the most votes to implement. I imagine the native tongue of the United States would now be German.
Strategic plans have to begin with the desired end result or goal for that time period, and then develop methods to achieve that goal, include recognition of, and contingency planning for, the inevitable obstacles, and they must be dynamic. They are the road map for your agency. That means that your destination must be defined, and while you may have to take a detour, you still know what your arrival point is going to be, and you still follow the basic direction for getting there. The road is not a concrete channel, and a detour is not a reason to abandon the journey. If you are a group applying for 501(c)(3) status, the strategic plan will make the application much, much easier to complete, and if done well, will probably prevent the dreaded “need more information” letter from the IRS.
Don’t ignore or dismiss the value of the strategic plan. When properly constructed and monitored, it does have value, and may ultimately save you far more time and money than it cost to develop. If you need help feel free to contact me at, or on my Cloudlancer Writing Services Facebook page.  
© 2012 Rebecca Lee Baisch   All rights reserved.

Wednesday, October 17, 2012

Structuring Overhead As An Allowable Program Expense

Many foundation grant applications state or imply that the grantor will not support administrative costs for the organization. That is why they ask for both an organizational and program budget. If your organizational budget and financial statements show a overhead expense allocation that is 50% of your operating budget it can reflect poorly on your grant request. I often receive program budgets from clients that totally (and unintentionally) understate the actual cost of the program.
Far too many nonprofits lump everything that isn’t a clear direct program cost under organizational overhead, also known as administrative or indirect costs.  For instance, an animal rescue might cite food costs, veterinary care and adoption event costs as the total cost of the program. 
In reality, there are other costs that can be legitimately tied to the program.  For instance, let’s look at heating costs. Let’s say that your animal rescue focuses on dogs. You have a building that is 2000 square feet. One-half of that building is dedicated to kennels, food storage, and bathing facilities for the dogs. Your annual heating cost for the entire building is $2800. One-half of that figure is legitimately a program expense, and should be assigned to the program when applying for a grant. If you didn’t have the space and it wasn’t being directly used by the dogs, your heating costs would be lower.
Salary expenses can be similarly expensed. If you have one paid employee, and that person spends six hours a day typing, filing and answering the phone, and two hours a day cleaning cages and feeding and bathing dogs, the two hours is directly attributable to the program. If you are not using time reporting for the employee, have them fill out a timecard that specifically details the time they spend directly working hands-on with the dogs.
Take a couple of hours and review your budget and financial statements. Identify which expense items might be improperly classified as indirect costs. Take the list to your accountant/tax professional, and determine the best way to allocate these costs to the program.  Remember, accurate recordkeeping is vital to this process. You must be able to document the division of costs for the IRS, as well as for grantors.  You may have to restructure your chart of accounts, or your accountant may be able to do a monthly closing journal entry adjustment to place the costs in the proper area if your records are complete and accurately portray the allocations.
In the beginning, this may all seem rather tedious, but having your costs properly entered will pay off in the form of better grant results, as well as in better financial control of your nonprofit. If you need help with any of the concepts above, please contact me at

Tuesday, October 9, 2012

Your Role in the Grant Process

We’ve all heard the phrases, “it takes money to make money”, or “pay to play”.  The nonprofit equivalent of that is that you have to be involved personally, and as an organization, in the process of fundraising. 
Your board needs to be committed to the concept of fundraising. Your ED or CEO must take the lead in promoting good donor relationships, whether directly, by hiring a donor relations manager or by assembling a top fundraising team. These should be “givens”.
Most of all, your organization has to be actively engaged in producing the program outline and financing requirements to approach funding organizations and keep accurate records not just of the funds received, but of your use of those funds.
Large nonprofits generally have a department that does nothing but formulate budgets for programs, tracks the grant for correct utilization of funds and does the final reporting.
Smaller NPOs often find this part of the process just plain boring. Cash and time-strapped nonprofits often hire grant writers and just tell them “Find us the money”. It isn’t that simple.
99.99% of all foundations will require a formal annual report, audited organization financials for the most recently completed year, current 990's, a detailed program budget, a program outline that defines the population demographics or target recipient for the funds, and a detailed final report that specifies exactly how the funds were used within that program. Failure to deliver any of these will doom proposals to failure, and failure to satisfy the final report or diversion of any of the funds for uses beyond those allowed in the grant can result in a request for repayment of the funds.  If you are applying for general operating support or a capital campaign, they may also require a strategic (business) plan and detailed budgets.  Cloudlancer provides assistance in constructing these “must-haves” to fully 50% of our clients.
Don’t be the client who says, “Jeez, I’m not applying to a bank for a loan…why do I need all this stuff?” Think about it - you’re asking someone you may not even know to GIVE you money. Why would you think that they wouldn’t want assurance that your organization will use it wisely? Participate in the process by having all the necessary facts on hand, up-to-date, and in a usable format.
For example, if you run a dog rescue, be prepared to verify your costs and results in detail. Examples of information would be: how many dogs have you rescued, how many have been placed, what were your costs per placement, how many dogs are typically unplaced each month and why, and what are your occupancy, feed and veterinary costs?
Your participation in the grant process is a cost-effective use of your organization's time. If you need more information, Cloudlancer Writing Services is just a click us at