An important study called The Nonprofit Sector Leadership Report was recently released by The Concord Leadership Group LLC. To me the scariest finding from the study is that 49% of nonprofits lack a strategic plan. As someone who does strategic planning with nonprofits as a career, even I was surprised by this number.
This study is worth the attention of nonprofit leaders and board members because its’ findings stress that basic leadership practices are not being followed in many of our nation’s nonprofits. The full study can be found here, and it’s well worth a read. In this post I wanted to highlight some key findings and recommendations from the study (for those who don’t have time to read 32 pages!). The risks associated with not having a strategic plan are many, and a study like this provides a wake up call for our nonprofit sector and its’ leaders, both paid staffers and volunteer board members.
If you are wondering who responded to this survey, here’s a quick summary: “The Concord Leadership Group LLC collaborated with nonprofit industry leaders on a study to take a snapshot of the state of leadership across the nonprofit sector. The study sought to measure how nonprofits were embracing core leadership concepts and practices. And how they were being perceived at various leadership levels in the organization. From mid-November 2015 to early January 2016, the survey was distributed to nonprofit leaders, staff members, board members, and volunteers in emails, on nonprofit industry blogs, and across social media platforms. One thousand six people took the survey. The majority of the survey sample came from North America . . . The majority of survey respondents (71%) have worked in the nonprofit sector for seven or more years. One-third were CEOs or executive directors; one-third were middle managers; and the rest were a mix of board members, senior leaders, staff members, and volunteers.”
4 KEY FINDINGS OF THE NONPROFIT SECTOR LEADERSHIP REPORT
1. A LACK OF BASIC ORGANIZATIONAL LEADERSHIP SYSTEMS: “Twenty-nine percent (29%) of nonprofits reported not having a strategic plan, with an additional 4% not knowing if one existed or not. But 19% of those saying they did have a plan said the plan is not written down. Combining them with those saying no strategic plan exists, the study suggests that 49% of nonprofits are operating without any knowledge of or access to a strategic plan. Strategic plans are significant because nonprofits with a written strategic plan were:
- More likely to collaborate with other nonprofits (83% vs. 76%);
- More likely to have boards open to taking calculated risks (65% vs. 51%);
- More likely to have their CEOs undergo an annual performance review (36% vs. 21%);
- More likely to have a formal process for measuring leadership effectiveness across the organization (75% vs. 50%).”
2. A LACK OF COMPELLING VISION: “One in four nonprofits say they don’t have a vision compelling enough to unify the board, staff, and donors and facilitate decision-making. And despite pressures from government regulators and the media, 27% of nonprofits report budgeting less than $1,000 a year to marketing or community relations.”
3. INSUFFICIENT SUCCESSION PLANNING: “Seventy-seven percent (77%) of nonprofits reported not having a leadership transition plan or a leadership-training program. Sixty-five percent (65%) are not intentionally using multi-generational teams to ensure leadership continuity on their staff or on their boards.”
4. A LACK OF PERFORMANCE EVALUATION: “Ninety-five percent (95%) of survey respondents were confident in their personal leadership abilities, and 91% were confident in their ability to help the nonprofit accomplish its goals. But 61% of CEOs do not get annual performance reviews from their board. And 42% of nonprofits do not have any formal mechanisms in place to measure performance.”
All 4 of these items are startling because they are basic needs to operate any organization effectively. The data shows that these are not isolated organizations who are struggling with the basics, but sector-wide trends.
So what can be done about these findings? The answers as recommended by this study are described below.
TOP RECOMMENDATIONS OF THE NONPROFIT SECTOR LEADERSHIP REPORT
1. WRITE DOWN THE PLAN: “Since almost half of nonprofits do not having a plan in writing, the first and top recommendation is write down the plan. Having a strategic plan written down impacts each of the other areas of nonprofit leadership, including more effectively sharing the story.”
2. HARDWIRE THE PLAN: “Writing down the plan is a starting point — not an end. Strong leaders ensure the strategic plan is being implemented. As renowned consultant and author Peter Drucker said, ‘What gets measured gets managed.’ So a key to implementing the plan involves using it as a management tool for every staff member.”
3. CREATE CASCADING GOALS: “An even more powerful way of hardwiring a strategic plan is to create cascading goals. With ‘cascading goals,’ the goals flow from the board to the CEO directly out of the strategic plan. Then, instead of seeing the board’s objectives as her personal goals, the CEO sees them as the organization’s goals. So she shares the goals with her staff, asking them how their areas fit in with those goals. No longer caught between conflicting agendas, the entire organization is united around its strategic vision.”
4. FOSTER A LEADERSHIP CULTURE: “More than one in three nonprofits reported a ‘high’ turnover of staff and difficulty attracting new talent. Yet 77% reported not having a leadership program in place. One tool to help retain wanted talent is intentionally creating multi-generational teams — something 65% of nonprofits are not yet doing.”
5. FORMALIZE A LEADERSHIP-TRAINING PROGRAM: “As your organization experiments with multi-generational teams, you’ll start developing a pool of potential leaders. Formalizing a leadership-development program is an effective way to keep grooming these leaders. . . The important thing is to set aside regular time for training — whether the trainers are from within the staff or outside speakers. And set aside time for your staff to share what parts of the training they are able to use in their day-to-day work.”
6. PLAN FOR SUCCESSION: “Each day 10,000 Baby Boomers are reaching retirement age. In the study, 41% of those identifying as ‘CEO/Executive Director’ were Baby Boomers. Thirteen percent (13%) of all CEOs were retirement age or older. . . Creating a succession plan can lead to important conversations about retirement plans and what the organization needs to put in place now to competitively recruit a successor.”
7. LEARN STORYTELLING: “Communicating a compelling vision, being an ambassador for the organization, and inspiring action are all traits of strong leaders. But 62% of those in the survey reported not knowing how to create a compelling vision. . . Learning storytelling strategies helps leaders effectively share their vision both within the nonprofit and to the wider community. Fortunately, the benefits can be seen fairly quickly. For example, even though only making incremental changes to their storytelling, attendees of the annual Nonprofit Storytelling Conference are reporting 200% and 300% growth in their fundraising revenue and donor retention — two of the key areas leaders in this study report struggling with.”
ONE FINAL RECOMMENDATION — DON’T LEAD ALONE
“By its very nature, leadership is lonely. Most first-time board chairs and CEOs are caught off guard by how isolated their position makes them. So the final step we’d recommend is: Don’t lead alone. Leading is hard work. . . .Being a strong leader doesn’t mean you have to settle for isolation. Many professional associations have specific opportunities for CEOs and executive directors. Even informal groups of fellow CEOs in the community or region can be helpful. Executive coaching is another way to not be isolated in leading. CEOs say that being coached helps them grow in confidence by giving them the informed sounding board they need to talk through situations and create strategies. More importantly, staff in organizations with CEOs getting executive coaching share how much calmer, more confident, and more effective their leader is. In fact, studies show the ROI on executive coaching is more than 300%.”
Is your organization in the 49% or 51% group?
What this study says to me is that running a nonprofit is really hard work. Being a nonprofit Executive Director is one of the toughest jobs out there. Executive Directors and board members may know what they should be doing to set their organization up for long-term success in theory, but they may be fighting constant fires. Getting a strategic plan on paper will help shift an organization from being reactive to being more proactive. The necessary tools may sound simple, but for a variety of reasons, these tools are not always accessible to nonprofits.
That’s why I’ve designed my 6 step Nonprofit Strategy Tango just for nonprofits ready to take on strategic planning. Will your organization be in the 49% without a written strategic plan or will you join the 51% who do have a strategic plan? I’d be happy to help you make that leap.