Business Planning for Nonprofit Organizations: What It Is and Why It Matters

Winter Issue of Bridgespan’s “Strategies for Social Impact” Features Article, Related Case Studies to Help Nonprofits Better Understand the Business Planning Process and its Value

[ClickPress, Tue Apr 11 2006] Mention business planning and people often think about written plans—the tangible products. However, this leap can short-circuit the process of developing the plan, which is where many nonprofits find the greater value.

In a new article published by The Bridgespan Group, authors Kelly Campbell and Betsy Haley explain why and how this is so. The article describes the fundamentals of business planning:

o Strategic clarity: Developing a description of the impact for which the organization will hold itself accountable and the cause-and-effect logic explaining how its work will lead to that impact;
o Strategic priorities: Determining what specific actions and activities must take place to achieve the intended impact;
o Resource implications: Understanding the resources—financial, human, and organizational—needed to pursue these priorities and mapping out a plan to secure them;
o Performance measures: Establishing the quantitative and qualitative milestones that make it possible to measure progress toward the intended impact.

“Business Planning for Nonprofit Organizations” also includes questions to ask at each point in the process, multiple examples from Bridgespan’s nonprofit consulting experience, and a description of the elements of a typical written plan. However, the article emphasizes that the process of developing the plan—not just the “final” plan itself—is one of the most important sources of value for organizations.

According to the authors, “A nonprofit organization’s mission statement is its heart and soul, defining its reason for being and inspiring staff, volunteers, funders, and participants to believe that positive change is possible. But the breadth and ambition that can make mission statements so compelling are the very reasons that they are seldom good guides for allocating resources.” They suggest that understanding the current state of affairs—what exists, what is working well, and what is not—is key to thinking critically about how to achieve the organization’s intended impact, and the investments and tradeoffs likely to be required.

The article, which is available on line at http://www.bridgespan.org/kno_articles_bpfornonprofits.html, is featured in the Winter 2006 issue of “Strategies for Social Impact,” the Bridgespan Group’s quarterly knowledge letter, along with case studies from Aspire Public Schools and Nurse-Family Partnership. The Winter 2006 and prior issues of “Strategies for Social Impact” can be viewed at http://bridgespan.org/kno_newsletters.html; for a free subscription please email subscribe@bridgespan.org.

“Business planning is at the core of much of Bridgespan’s work with nonprofit organizations,” said Jeff Bradach, Co-founder and Managing Partner, the Bridgespan Group. “When a nonprofit achieves strategic clarity and a deep understanding of the organization and its economics, its leaders came make better decisions and assess tradeoffs more clearly. And, in sharing what we learn and observe from our consulting engagements with the broader sector, we hope to help larger numbers of nonprofits chart paths to greater impact. Organizations willing to take a clear-eyed view of what they are doing, why they’re doing it, and what results they wish to achieve in the future can benefit greatly from the process suggested by the article, and from the examples which our clients so generously allow us to share.”

About The Bridgespan Group
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. Bridgespan activities include strategy consulting for nonprofit organizations, knowledge sharing, and Bridgestar, a nonprofit initiative which provides talent-matching services, content, and tools designed to help organizations build strong leadership teams and individuals pursue career paths as nonprofit leaders. For more information visit Bridgespan on the web at www.bridgespan.org.