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 granthelp@ida.net, or on my Cloudlancer Writing Services Facebook page.  

© 2012 Rebecca Lee Baisch   All rights reserved.

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 granthelp@ida.net.

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 away...email us at granthelp@ida.net.

SWOT’ing Your Nonprofit

Why would you want to SWOT your nonprofit? Because it will help you understand your place in the nonprofit world.

Cloudlancer Writing Services offers writing services to for-profit as well as nonprofit businesses. For-profits absolutely understand the concept of SWOT, since they generally have to submit business plans to lenders. Nonprofits on the other hand, tend to view themselves as somehow above the normal tools used to evaluate a business. I firmly and emphatically disagree with that viewpoint.   

SWOT, or SLOT, used in the context of business planning, is defined as a Strength, Weakness (or alternatively, Liabilities), Opportunity and Threat analysis. Many nonprofits do not include one in their initial strategic plan, but every single nonprofit (and for-profit as well) should produce one on a yearly basis. You may not ever have to submit one to a funder, but at a minimum,  a properly constructed SWOT will keep your organization moving forward and prepared to succeed.

Many businesses, both for-profit and nonprofit, at least give a nod to the Strength and Opportunity components. The Weakness and Threat areas are often minimized or totally ignored in the company planning.

An honest assessment of your organization’s business health and mission success using a SWOT analysis can help you understand why you are not moving forward as quickly as you want to, why your funding requests are ALWAYS turned down, or even what to do to manage explosive growth. 

For example, perhaps your mission statement and mission execution don’t match, confusing funders trying to understand how their funds will be used.  Perhaps there are far too many nonprofits in your area addressing the same mission. Perhaps they are more established, better organized and have greater name recognition. There is only so much money available from funders, and if you don’t stand out, you may not get any of that funding.

Perhaps your nonprofit has always been the only one addressing a specific mission. Success breeds imitators. Are there suddenly several organizations all competing for the same dollars? Annual SWOT reviews should reveal that as a Threat. Did you recently lose a key employee in the fundraising department? Evaluate the impact to your organization by revising your SWOT report. Has your mission evolved out of its original focus area? It’s time to re-assess your presentation to prospective funders by revising your SWOT to deal with current reality.

Your organization may subliminally recognize that something has changed. Putting it down on paper forces you to recognize and deal with problems before they become crises, and allows you to be proactive, instead of reactive to changing circumstances.

If you have questions on preparing your SWOT analysis, give us a shout, and we’ll be happy to help.

Do You Need a Website?

Cloudlancer Writing Services usually sends a prospective client a questionnaire to assess organizational readiness to apply for grants. One of the questions asks whether they have a website, and for some reason, in the last two or three months, many organizations have answered “no” to that question, or indicated they have a simple page with their name and donation contact information only.

I absolutely recommend that your NPO have a well-designed and informative website. There are so many hosting services out there that have DIY templates, there is simply no reason not to have one. On the other hand, a really bad website is undoubtedly worse than no website.

The website should provide information as well as ask for donations. Many grantors will ask for your URL, and they may expect to be able to visit the website and receive information that may not be on your grant application. For that reason alone, you should have a website with the information they may be seeking.

The latest surveys of foundation-based grant funders indicate that approximately 20% have gone to a web-based application format.  That is an increase of 5% in two years. That is both a blessing and a curse. Aside from the Common Grant Application format, there is no standardization of these online application processes. Many of them are severely limited in space to provide your grant narrative, and they often do not have space to list your other funders. Others ask for your top five funders, sometimes with amounts, sometimes without amounts. Most of them do not allow you to send other data, such as expanded program descriptions, or documentation regarding funding. They may not ask for your board of director’s information.

A well-designed nonprofit website will answer many of the questions they may have. Smaller nonprofits with low budgets for web development should still strive to answer at least the five “W” questions; Who, What, When, Where and Why.  The website should provide donor recognition (your new donor may well expect some sort of recognition on your website) opportunities, news of events past and future, and some mention of your most outstanding accomplishments in the past year.

Your website should look and feel professional. What is acceptable on social media pages is often not acceptable in the business world. If you must take a really informal tone, provide a link to your Facebook or other social media page. Typos, poor grammar, slang, and Twitter-style writing does not belong on your website.  I actually looked at a website recently whose landing page started out with “Hey there dude, whazzup?” Somehow, I don’t think the review board of the Carnegie Foundation will be impressed. If you don’t feel that you can present just the right impression, we can help you to achieve that balance between professional and empathetic.

Your website is your organization’s online persona. It’s the first impression many people will have of your organization. Make it a good one.

ASPCA Emergency Funding for Hay Purchases

A grant for nonprofits specializing in equine rescues has just opened at ASPCA.  The website states that they will fund from $5,000 to $10,000 for emergency hay/feed relief, with preference given to organizations in drought-stricken areas.  They may also consider applications for rescues affected by Hurricane Isaac. See the full informaton at:

http://www.aspcapro.org/aspca-equine-fund-hay-bale-out.php

If you need assistance, please don't hesitate to contact Cloudlancer Writing Services at www.cloudlancerwriting.com

How do nonprofit funders assess your financial health?

Here at Cloudlancer Writing, I often counsel nonprofits on positioning themselves for maximum competitiveness when applying for grant funds. Mission is important, the ability to show results is important, program development and documentation is important, but financial accountability and sound management of funds is equally, if not more, important. When you move out into the larger philanthropic world, it increases the need to be as professional as possible. These people do not know you, and they have to have a way to assess your organization. The best prose in the world is not enough to put your organization at the top of the pile when applications are reviewed by national, regional or government agencies.  Your local philanthropist may be able to come to your office and chat with you, but larger organizations typically do not visit every nonprofit that they fund.

Many nonprofits have specific financial methodology for deciding which nonprofits should receive funding.  One example of such a tool can be found at:

 http://nonprofitfinancefund.org/files/images/initiatives/financial-scan-sample-report.pdf. 

This report format, which was developed with considerable collaboration with a major financial institution, is the epitome of the formula-based evaluation and uses the data obtained from your 990. It reads and functions like a loan evaluation form. Other foundations have their own, perhaps less rigid formulas that they have developed over years of experience with the nonprofit sector. The common denominator is that all of them seek to discover whether your nonprofit can survive and accomplish its mission.

As I have often stated, in many ways the criteria by which grant funding is awarded is no different from that used by a bank or loan company to loan funds. The only difference is that your nonprofit doesn’t repay the funds in cash. Rather, the use of the grant funds is justified from the grantor’s standpoint if it is used effectively to advance whatever cause or mission they are supporting. Since these particular dollars will never be repaid, the criteria for disbursing them can be, and often is, even more stringent than a loan application.

No funding agency, whether philanthropic or not, wants to see the dollars they provide squandered. Your nonprofit track record of getting maximum good out of the dollars you have been given is the charitable equivalent of a 900-point credit rating. No matter how great the need, no matter how committed your organization is to its mission, if you can’t prove good stewardship, your application is likely to be rejected.

I do not necessarily subscribe to the idea that all nonprofits must “solve” a problem to be considered for funding. Sometimes, the best that can be achieved is mitigation of the issue at hand. If your nonprofit supports victims of domestic violence for instance, your single organization can’t eliminate all the root causes. Poverty, substance abuse, illiteracy and a myriad of other factors enter into the equation. What funders DO want to see is that you are having a measurable and sustainable impact. Perhaps it’s a program to retrain the people to obtain a better income. Perhaps it’s substance abuse counseling. Perhaps it’s simply a way to be removed from the violent situation. If you can show that the dollars you were granted are providing solid, measurable results, and that you can support your daily operating expenses, that is usually enough to meet the grantors expectations.

To provide that proof, and keep track of your results year-over-year, you will need sound financial reporting, a program that provides for a clear description of the problem you are addressing, and clear result-based reporting. That is what funders are attempting to measure, using not just glowing accolades, but financial evidence that you have a defined mission, that you spend money wisely to gain maximum impact on the problem, and that you have a clear path to sustaining the program even without their specific funding. When applying for funding, don’t start out with a built-in roadblock. No matter how small your nonprofit is, good financial recordkeeping will help to position you for success.