Nonprofit Leadership: Maximizing Impact April 27, 2009 UPEACE 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

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

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.

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

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)

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)

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.

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

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

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

Connects the mission and the programs

Establishing performance measures that are understandable to all

Encourages strategic thinking – the best allocation of scarce resources

Four main components of strategic planning Strategic clarity Mission statement Intended Impact Theory of Change Strategic priorities: What specific actions and activities must take place to achieve the intended impact Resource implications: To pursue the priorities, and the plan to secure them Performance measures: Establishing the quantitative and qualitative milestones to measure progress Source: The Bridgespan Group

Strategic clarity

Mission statement

Intended Impact

Theory of Change

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

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

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

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?

“ 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".

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 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

It serves a boundary function

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

Should help in the process of evaluation

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.

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: What are the most important elements of our programs? What assumptions led us to choose these particular program element? Are there other ways to achieve the desired outcomes? Why are we not taking that approach?

What are the most important elements of our programs?

What assumptions led us to choose these particular program element?

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 .

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: Who are the beneficiaries? What benefits do our programs create? What won’t we do?

Who are the beneficiaries?

What benefits do our programs create?

What won’t we do?

2. Determining strategic priorities is the next step Looking 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

Looking 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

What will it cost to implement?

What’s the gap?

Financial projections for new strategy

Scenario planning

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

Need to collect data – INDICATORS

Program milestones

Quantity

Quality

Operational milestones

Human resources

Infrastructure

Financial milestones

budget

Measuring success in nonprofit organization What makes measuring success particularly difficult in the nonprofit environment? What was the problem with the ‘bucks and acres’ measurement system of the TNC? What approach did the American Cancer Society (ACS) adopt given its challenge? Any questions/points you want to discuss on the reading?

What makes measuring success particularly difficult in the nonprofit environment?

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

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

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

Small group exercise on developing strategic clarity Select one member in your group to share his/her organization’s mission and main programs Work together and draft the organization’s ‘Theory of Change’ on your ‘flip chart’ Clarify the organization’s ‘Intended Impact’ Discuss what indicators are currently being tracked. What should be added?

Select one member in your group to share his/her organization’s mission and main programs

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

Clarify the organization’s ‘Intended Impact’

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

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

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

Managing in Tough Times Act quickly, but not reflexively, and plan contingencies. Protect the core Identify the people who matter most and keep the group strong Stay very close to your key funders Shape up your organization Involve your board Communicate openly and often How is your organization reacting the ‘financial crisis’?

Act quickly, but not reflexively, and plan contingencies.

Protect the core

Identify the people who matter most and keep the group strong

Stay very close to your key funders

Shape up your organization

Involve your board

Communicate openly and often