Nonprofit Leadership: Maximizing Impact

April 27, 2009UPEACE Centre for Executive Education, Costa Rica

“Empowering leaders to transform challenges into opportunities”

Agenda for the morning Introductions

Overview of nonprofit organizations

Strategic Planning– Mission Statements – Theory of Change– Intended Impact

Activity on gaining strategic clarity

The Learning Pyramid

Lecture

Reading

Audiovisual

Demonstration

Discussion group

Practice by doing

Teach others / immediate use

Av. retention rate after 24 hrs.

5%

10%

20%

30%

50%

75%

90%

D. Sousa, (2001). How the Brain Learns

Some key themes in this course

These are times of tremendous change and therefore tremendous opportunity

The traditional boundaries between the for-profits and nonproftis are changing

Given the complexities of nonprofit leadership, strategic discipline is essential

Overview of Nonprofit Organizations

Nonprofit Organizations

Organizations which enjoy tax exempt status as a result of being organized to serve a broad public interest.

Nonprofits and profits Nonprofit organizations are permitted to generate

a profit

However, nonprofits may not distribute their profits to their staff or directors – nondistribution constraint

Surplus must be used to further the mission of the organization

Why do we have nonprofits? (in pairs)

The nonprofit world has been experiencing significant changes

Increasing privatization of government services (education, health care, social services, the arts)

Increasing financial pressure on nonprofits

Increasing concerns about the efficacy of nonprofits

Increasing corporate social responsibility initiatives and funds

Other trends?

Source: Social Enterprise: Private Initiatives for the Common Good (Harvard Business School)

Some of the management challenges of the nonprofit enterprise

Defining and measuring success (economic stability and growth is a subsidiary goal).

Raising funds – cannot sell the company ‘shares’

Attracting and motivating people given the often limited resources and the nondistribution constraint (no profit-based incentives)

Strategic Planning in Nonprofits

What is strategy?

Getting critical resource decisions right – allocating time, talent, and money to the activities that have the greatest impact – is what “strategy” is about.

Source: The Bridgespan Group is a nonprofit,501(c)(3) organization applying leading-edge management strategies, tools and talent to help other nonprofits and foundations achieve greater social impact.

Strategic Planning

The process of developing a comprehensive document that sets forth what and organization is working to accomplish and how it intends to succeed

Source: The Bridgespan Group

The Strategic Plan

Connects the mission and the programs

Establishing performance measures that are understandable to all

Encourages strategic thinking – the best allocation of scarce resources

The strategic planning process is as valuable as the end result

Four main components of strategic planning

1. Strategic clarity – Mission statement– Intended Impact– Theory of Change

2. Strategic priorities: What specific actions and activities must take place to achieve the intended impact

3. Resource implications: To pursue the priorities, and the plan to secure them

4. Performance measures: Establishing the quantitative and qualitative milestones to measure progress

Source: The Bridgespan Group

The University for Peace’s Mission Statement:“To provide humanity with an international institution

of higher education for peace and with the aim of promoting among all human beings the spirit of understanding, tolerance and peaceful coexistence, to stimulate cooperation among peoples and to help lessen obstacles and threats to world peace and progress, in keeping with the noble aspirations proclaimed in the Charter of the United Nations".

Which functions does this mission statement fulfill?

The Earth Charter Initiative

The mission of the Earth Charter Initiative is, "To establish a sound ethical foundation for the emerging global society and to help build a sustainable world based on respect for nature, universal human rights, economic justice and a culture of peace."

The mission is the centerpiece of the nonprofit organization It serves a boundary function

Serves to attract and motivate stakeholders (donors, staff, and clients)

Should help in the process of evaluation

The challenge could be see to create a mission statement that is specific enough to inspire, but sufficiently broad to allow strategic redirection

A nonprofit’s theory of change:

Theory of Change: Explains how the organization’s intended impact will actually happen.

In other words, why will the organization’s approach bring about the desired change.

To clarify a nonprofit’s theory of change, ask:

1. What are the most important elements of our programs?

2. What assumptions led us to choose these particular program element?

3. Are there other ways to achieve the desired outcomes? Why are we not taking that approach?

A nonprofit’s Intended Impact provides a bridge between mission and programs

Intended Impact: Is a statement about what the organization is trying to achieve and will hold itself accountable for within a period of time. It identifies both the benefits the organization seeks and the beneficiaries.

To clarify an organization’s intended impact, ask:

1. Who are the beneficiaries?

2. What benefits do our programs create?

3. What won’t we do?

2. Determining strategic priorities is the next stepLooking at current programs

– How do they align with mission, intended impact and theory of change?

– How much do they cost? (per outcome?)

– Do they play into the organization’s strengths?

– How do they compare with peers?

– Changes that should be made?

• Modify

• Add new ones

• Discontinue

3. Resource Implications – human and infrastructure

What will it cost to implement? What’s the gap? Financial projections for new strategy

– Scenario planning

UPEACE Strategic Planning…star, constellation, galaxy

4. Performance measures Need to collect data – INDICATORS

Program milestones– Quantity– Quality

Operational milestones– Human resources– Infrastructure

Financial milestones– budget

In establishing performance measures, it is important to be clear about the timing and ownership

Measuring success in nonprofit organization

1. What makes measuring success particularly difficult in the nonprofit environment?

2. What was the problem with the ‘bucks and acres’ measurement system of the TNC?

3. What approach did the American Cancer Society (ACS) adopt given its challenge?

4. Any questions/points you want to discuss on the reading?

Small group exercise on developing strategic clarity1. Select one member in your group to share his/her

organization’s mission and main programs

2. Work together and draft the organization’s ‘Theory of Change’ on your ‘flip chart’

3. Clarify the organization’s ‘Intended Impact’

4. Discuss what indicators are currently being tracked. What should be added?

Lessons learned from ‘Measuring what matters in Nonprofits’

Measuring mission depends on measurable goals

Keep measures simple and easy to communicate

Measures are marketable

Measures are only as good as the use to which organizations put them

Returning to the milestones over time is a sign that your organization is continuing to think strategically

Managing in Tough Times

1. Act quickly, but not reflexively, and plan contingencies.

2. Protect the core3. Identify the people who matter most and

keep the group strong4. Stay very close to your key funders5. Shape up your organization6. Involve your board7. Communicate openly and often

How is your organization reacting the ‘financial crisis’?