Whether you lead a business or nonprofit organization, it is essential to understand internal and external factors that can impact your sustainability and success. A SWOT analysis is one of the top ways to do this.
In this article, we’re going to cover what a SWOT analysis is, how organizations use it, and how it can strengthen your organization’s sustainability, strategy, and resilience in uncertain times.
We’ll also look at how a SWOT analysis differs from—and complements—other tools like environmental scanning, scenario planning, and strategic planning.
What Is a SWOT Analysis?
A SWOT analysis is a business tool to assess an organization’s internal operating capacity by detailing current Strengths, Weaknesses, Opportunities, and Threats.
A SWOT analysis pushes leaders to take a hard look at the current state of their organization, including what’s working, what isn’t, and what may break sooner rather than later. This sets the groundwork for looking ahead to creating an actionable vision for the future.
A SWOT analysis is often part of the first stage of a larger strategic planning process.
How to Conduct a SWOT Analysis
A SWOT analysis is by far the most recognized approach to conducting an internal assessment of your organization.
The SWOT acronym prompts you to assess your organization’s current internal operating capacity in the following four areas:
- Strengths – In assessing strengths, you’ll want to consider your organization’s internal financial resources, physical resources, human resources, and current operations and processes.
- Weaknesses – In assessing weaknesses, you’ll evaluate the same internal areas as for strengths but instead identify what isn’t working or is under-resourced. For example, nonprofits often delay investing in non-programmatic areas—like operations and cybersecurity—until it becomes critical.
- Opportunities – Whereas strengths and weaknesses focus internally, your analysis of opportunities should also consider outside factors. For example, does a growing community need present an opportunity for expanding your services? Is there another organization in your area interested in a partnership or merger? These all fit under opportunities.
- Threats – Threats can also be internal or external. In recent years, many nonprofits and businesses have dealt with threats like unexpected policy changes, funding cuts, and inflation.
Pro Tips for an Effective SWOT Analysis
Conducting a useful SWOT analysis is more than making lists. The Harvard Business Review advises that instead of using one- or two-word descriptions for each SWOT category, you should: “Explicitly spell out the situation with a detailed phrase or a sentence.”
Here at Funding for Good, we also recommend that organizations use an outside facilitator for SWOT analysis sessions so leaders and other participants can focus on strategy rather than facilitation.
One of the most valuable aspects of a SWOT analysis is prompting leaders to think strategically. The facilitator for your SWOT session will prepare targeted questions with a focus on identifying, understanding, and evaluating your organization’s current state.
Your SWOT analysis can also be coupled with other strategic tools, like an environmental scan.
Using a SWOT Analysis in Your Nonprofit
Conducting a SWOT analysis for a nonprofit follows the same process as a standard SWOT. However, you’ll want to be sure you’re covering things like:
- Mission, vision, and impact
- Community needs
- External funding landscape
- Diversity of the organization’s current funding streams (especially associated risks)
- Policy changes that may affect the organization, program delivery, or the community served
After conducting strategic planning with scores of nonprofits, at Funding for Good we’ve also added a fifth category to our SWOT analysis: Achievements.
Nonprofit work may be meaningful, but it is also uniquely challenging. You’re juggling pressing community needs and navigating an evolving funding and policy landscape—all while still doing the work of running an organization. Often, nonprofits find it easier to identify threats and challenges, rather than seeing opportunities.
Adding time to review Achievements—or doing a SWOT+A—helps nonprofits focus on a positive note and reconnect with the mission. We recommend using questions like:
- What is the change your organization wants to make in the world and what have you accomplished so far?
- What programmatic accomplishments are you most proud of from the past 1-2 years?
- What internal changes have you successfully implemented that have strengthened your organization’s ability to achieve your mission?
By ending on achievements, rather than threats, your nonprofit SWOT analysis can become both a realistic assessment and a moment for appreciating progress.
Using a SWOT Analysis in the Strategic Planning Process
Here at Funding for Good, we consider a SWOT analysis a must-have for an effective strategic planning process.
To ensure your SWOT analysis is well-integrated into your strategic planning process (or other planning activities), we recommend organizations:
- Conduct a SWOT analysis as part of pre-planning work (before holding planning retreats).
- Ensure a thoughtful and representative group of participants in the SWOT session.
- Couple the SWOT analysis with additional stakeholder feedback.
- Explore other planning tools, such as an environmental scan, depending on your organization’s circumstances and needs.
- Hire a facilitator for your SWOT session and strategic planning process.
If you’re interested in conducting a SWOT analysis and creating actionable long-range plans, take a look at our strategic planning services for nonprofits and government organizations.
