Nonprofits of all sizes and sectors are facing an incredibly volatile landscape: public funding disruptions, heightened demands on philanthropy, changing regulations, increasing community demand and the growth of AI. Nonprofit leaders feel more uncertain about their organizations’ finances, staffing and programming than they did just a few years ago. Even worse, the pace of change only makes long-term strategic planning more difficult to execute.
Adaptable nonprofits are bridging those gaps by turning to scenario planning processes as a way to identify the greatest areas of risk and design proactive responses. These tools can fit nearly any organization, slot into a traditional strategic planning process or serve as a standalone exercise to manage change. The results can then serve as a framework for leaders to make significant and challenging decisions faster and with greater confidence.
Keys to a Successful Process
While there are many approaches to scenario planning, here are my three essential keys to success.
1. Use an Established Framework
Many nonprofit leaders lack prior scenario planning experience, but find that having structure makes the process easier and more digestible. One popular four-step approach that is adaptable for many sizes and types of organizations and works across a wide variety of risk areas comes from The Bridgespan Group (and is free to use under a Creative Commons license):
- Identify key drivers at risk. Assess which aspects of the organization are most vulnerable, alongside the likelihood and magnitude of those impacts.
- Develop scenarios anchored on those areas of risk. Map out a clear picture of where the organization stands today, with a realistic most likely outcome and a clear-eyed worst-case scenario.
- Create a portfolio of actions. Determine short-term moves to protect the mission today and larger operational pivots to reimagine the organization for the future.
- Determine key trigger points. Establish clear decision thresholds and metrics that signal exactly when it is time to deploy an action plan.
2. Plan Collaboratively
Just as in traditional strategic planning, inviting diverse participation can bring different perspectives on the opportunities and threats that lie ahead. However, executive leadership, senior staff leaders and some board members tend to be the ideal participants for this exercise.
This specific mix ensures the people involved possess a holistic, strategic view of both internal operations and the external landscape. Board members bring a fiduciary responsibility to the mission. Including the senior staff responsible for carrying out the plans ensures the resulting portfolio of actions are realistic.
3. Dedicate Time
Especially in small organizations, nonprofit leaders face many competing demands for their time and attention. Setting aside a half-day block for senior leaders to work through the steps of a scenario planning process may seem daunting, but it is a critical investment. When a disruption occurs, leaders can suffer from decision fatigue and analysis paralysis. This time investment helps you pre-make key decisions in a time of (relative) calm, allowing you to execute them with speed when it counts.
Putting Plans in Action
The portfolio of actions often generates no-regret ideas you can take pre-emptively to mitigate risk with little downside. These often include auditing recurring expenditures to reduce inefficiencies or expenses, but they can also include proactive steps toward relationship management. Having early, honest conversations with funders about the reality of the operational challenges your organization faces can yield adjusted grant timelines or payment schedules and even lifted grant restrictions. These actions can build an operational cushion regardless of whether the worst-case risks ever occur.
However, these small actions alone cannot solve big problems. Scenario planning, particularly with buy-in from board leaders, creates a springboard for thinking about how an organization may need to evolve in the face of major change. Sharing the results of this exercise in a board meeting or dedicated board retreat or building these exercises into a comprehensive strategic planning process helps board members think proactively about how best to move the mission forward. These can include changing programs, redesigning how you work, exploring partnerships or mergers or even sunsetting with intention and transferring programs and assets to another organization.
The unfortunate reality is that the climate of the nonprofit sector is only likely to get more challenging, as the cascading effects of recent funding cuts and policy changes are felt and continued shifts in geopolitics, economics and technology impact how we work. Now is the time to be thinking proactively about the threats, and opportunities, that lie ahead and ask the practical question: Not “what if?” but “what then – and how?”
The preceding content was provided by a contributor unaffiliated with NonProfit PRO. The views expressed within may not directly reflect the thoughts or opinions of the staff of NonProfit PRO.
