“Is there any way we can push this expense off a little longer?”
Every nonprofit Executive Director we’ve worked with has had to make tough budget decisions at some point. It’s part of the job, after all.
Whether it’s reconsidering vital new hires or delaying a strategic planning process—pushing an expense into the future is a tempting budget fix. You save money now, without giving up on the idea that you’ll make those important long-term investments later.
We’re seeing this among organizations and individuals across the board right now:
- Major corporations are making headlines for layoffs and cost cutting.
- Among small business owners, new data reported by Fast Company reveals 85% of small businesses are preparing for hiring freezes and 87% are reassessing spending on “hard costs.”
- On the personal level, financial survey data shows that 76% of people are making changes to their personal spending and 34% are delaying major purchases.
For nonprofits, one of the first cuts leaders often reach for is delaying strategic planning. But here at Funding for Good, we’ve seen time and again how this choice can hurt organizations in the long run.
Three Opportunity Costs of Delaying Strategic Planning
1) Making the wrong spending choices
A strategic plan is a roadmap to guide your decision-making. This roadmap reveals your destination (mission, vision, and goals), how you’re going to get there (the strategies and activities you’ll use, as well as the investments you’ll make), and how you’ll know once you’ve arrived (the metrics you need to evaluate success). Every organization is different, which means there’s no one-size-fits-all GPS for a successful nonprofit. Without your organization’s personalized roadmap, you could end driving in circles, taking wrong turn after wrong turn. Which gets expensive quickly. Even in periods of greater economic uncertainty, your organization still has to spend money. The key is spending it smartly.
2) Limiting your ability to report impact and assess effectiveness
A strategic plan outlines your objectives and how you’ll evaluate success–giving you key tools to understand which programs are succeeding, which are not, and how and when to adapt. Yes, you likely already have plenty of metrics created for donor reports. But a strategic plan enables you to put program metrics and outcomes in context of your organization’s overall impact goals. In tough financial times, knowing which programs are succeeding and contributing to achieving your mission is critical to guide spending decisions. Plus, being able to report clear and compelling impact to your donors will strengthen your fundraising—which is more crucial than ever in difficult economic times.
3) Wasting resources on projects that results in mission creep
One thing many nonprofit leaders struggle with is mission creep, also called mission drift. This is when your organization ends up with programming that doesn’t actually advance the organization’s mission—and in some cases even deters and distracts from your core mission.
For example, imagine your student-focused civics education program is approached by a board member who wants to start a civics education book award housed at your organization. They’ll give you seed funding to cover the award’s first-year costs. You don’t want to disappoint your board member and this would be their most substantial gift to date. So you accept. But you soon realize creating this new program from scratch is far more costly than expected. Your development team is wasting months trying to raise matching gifts while your program team is scrambling to balance the new project with their core responsibilities.
While this is an obvious example with a clear decision-point (accepting this gift or not), mission creep also happens in much more subtle ways. Having a strategic plan in hand enables you to easily assess whether a new project, strategy, or tactic will help—or hinder—your organization in achieving its overall vision and mission. Programs that aren’t ultimately mission-aligned can end up being costly detours.
The Benefits of NOT Delaying Strategic Planning
Here at Funding for Good, we’ve seen firsthand how smart and efficient strategic planning helps organizations reach their goals faster. And, despite what you may have heard (or experienced), strategic planning doesn’t have to be a long and difficult process for your organization.
So when you’re heading into budget season, consider how strategic planning can help you make the best financial decisions, in good times and bad.