Business Planning in Non-profit Organizations

Do non-profit organizations have the same responsibility to create business plans as their profit driven counterparts? In a word: yes. In fact, with funding coming from taxpayers and fundraising, not-for-profits have a higher duty of care to create and execute clear, measurable plans.

Not-for-profit organizatons have a number of unique complexities that make deliberate, action-oriented business planning essential:

• So called "mission driven" organizations are complex animals. Whether we like to admit it or not, profit is a compelling and focused motive that forces at least, some strategic alignment in a profit driven organization. Gaining business plan alignment across a large not-for-profit organization to a noble but "soft" mission can be elusive.
• Large parts of most non-profit organizations run on volunteers, and we simply can't count on volunteers to behave in the same way employees. While it's true that employees are driven by a complex set of motivators, volunteers are driven by motivation that is multifarious and amazingly subtle. When employees stray too far from our priorities, we fire them. When volunteers stray too far, we change our volunteers' value proposition.
• Funding can be incredibly unstable. Most established companies have revenue momentum that non-profits can only dream about.
• By their very nature, non-profits are torn between equally important, yet highly contradictory priorities. Yes, I know that we have competing priorities in our profit driven enterprises, but nothing compares to the choice between funding research for a cure, and funding care to alleviate suffering.
• Compared to any large company, not-for-profit organizational structures can be incredibly loose and unwieldy. Whether a federated model, a charter model, or any of the other complex structures under which non-profits operate, central bodies simply don't have the same clout as the corporate office of any well-run company.
• With a complex assortment of stakeholders to consider, non-profits are adverse to risk and change. Given this backdrop, things can move pretty slowly compared to even the largest public companies. I can't remember the last time I heard anyone in a profit-oriented company even use the word "stakeholder."

A business plan won't make these complexities go away, but it will help to clarify mandates, priorities, accountabilities and timelines so non-profits can focus their efforts on the seriousness and importance of their mission.

Increasingly, big non-profits are conducting themselves more like businesses. In my experience, this has not yet reached the disciplined planning and execution that is becoming more common in most large companies. The tools and processes required are similar, but non-profits must take an even more deliberate and measured approach to planning and execution than profit-driven enterprises.