Heart and Hammer: Heralding the Purpose of Nonprofit Organizations

Heart and Hammer: Heralding the Purpose of Nonprofit Organizations

January 8, 2016

The following is an adapted excerpt from Gavin’s pamphlet “Heart & Hammer,” in which she presents a sweeping vision for the leadership of nonprofit organizations.

Over my 40 years working in the private sector, the nonprofit sector and government, I have seen the impact and power of nonprofits when they are mission-driven, results-oriented and people-focused - on purpose.

The heart of a nonprofit’s purpose is to serve the public good and to help people build their self-confidence and self-determination to achieve their fullest potential and quality of life. Nonprofits that link and partner with the private sector, government, other nonprofits and the community at large best fulfill this purpose by maximizing benefits for the people they serve. Such maximizing can only occur when an organization’s mission, vision and strategic plan work in concert to provide a meaningful and financially sound framework.

The Joy of a Strategic Plan

A strategic plan defines an organization’s mission (what I call “today's purpose”), as well as its vision for change (“tomorrow's promise”). Its goals, strategies and measures of success drive an organization’s implementation plan. And, of course, there is no strategic plan without skill and the will for implementation.  

I find that a successful strategic plan is conceived with both the “heart” and “hammer” at the forefront of thought. With the “heart” representing here the organization’s mission and vision, the scope of services  delivered and the impact of that service. The “hammer,” which is just as essential, speaks here to an equal dedication to the capacity building required to deliver those services. My hope is for organizations to see strategic planning as an opportunity to marry those two concepts, both in terms of communications and funding.

Communicating the Strategic Plan

A strategic plan is really the story of a nonprofit. Necessarily, it should reflect the organization’s history, legacy and future.

In order to communicate that plan, organizations must start with a clear definition of how its mission can improve the lives of individuals, as well as a strong concept of how it will be accountable to the community. These elements are simply integral to an organization’s brand.  

As communicating and marketing are essential goals for every nonprofit, they should be prominent in any strategic plan. I urge organizations to begin this part of their strategy by zeroing in on their target audience, both in terms of non-paying customers (clients served), as well as funders (government, private donors, members/fee-paying participants), partners and collaborators.

Keep in mind that each subset of your target audience chooses to work with a nonprofit based on its quality, impact, efficiency, results and the spirit of their staff and volunteers. And never forget that your products - services provided, programs offered and public policy advocacy - are central to engaging with each subset.

A strategic communications plan defines the organization’s target audiences explicitly - as well as the objectives for each audience. The plan should lay out action steps for each potential messaging avenue  such as  the organization’s website, social media, print publications and television.

Once an organization has clearly pinpointed its audience and strategies for reaching it, it must be proactive about cultivating a visible presence in the community. While this traditionally happens through a combination of annual reports, newsletters, social media and local newspapers, I think that building authentic and effective relationships with community leaders (including elected officials, other nonprofits, community boards, police and fire departments, and local schools and hospitals) holds the to key to cementing an organization’s role.

Indeed, collaborations are key to communicating your strategic plan. They amplify the voice of your mission and vision. They can build trust, expand and deepen your impact and raise your political effectiveness. While there is a natural tension between independence and collaboration with partners, the power that can come with effective stakeholder management is worth the effort it takes to build relationships in your community.

Financing the Strategic Plan

Of course, none of the above can happen without proper financing. Necessarily, strategic plans should be carefully reflected in an organization’s financial plan, with clear statements of program revenues and expenses, infrastructure requirements and investment plans.

A diversified and solid financial structure including assets, reserves, working capital and investments is a platform for success. It’s also important to have a diversified revenue mix, a plan for revenue growth and expense management, as well as efficient fiscal controls and program margins.

While nonprofits inherently do not stress profit margins, please never forget: Nonprofits can make a margin on programs and programs can cross subsidize. And the overall organization can and should produce a margin to contribute to reserves.

Once an organization’s strategic plan and financial plan are aligned, the institution’s board of directors must be equally committed. Without their oversight and development of private friendraising and fundraising sources, it becomes increasingly difficult to deliver any strategic plan.  

Let me break down the formula further. As I am fond of saying: "No money, no margin, no mission.” Understanding the current funding mix and financial performance of programs while strategically analyzing opportunities for revenue diversification and margin is a very critical strategic planning outcome. Each revenue element should be analyzed for potential, risk and restrictions.

A note on fundraising: while private fundraising may only be 15 to 25 percent of total revenue, it should be treated as an incredibly important revenue source. Indeed, fundraising signifies the ability of a nonprofit to present its cause, case, constituency and communications in a powerful way. Fundraising represents the marketability  of the nonprofit; a fundraising ask is our version of sales, making it a strong indicator of the strength of an organization’s products and messaging.

However, it is also important to keep in mind that restricted private fundraising for programs or capital require strong accountability systems which can be costly and cumbersome for an organization to maintain. Therefore, unrestricted private funds present the greatest opportunity and greatest need for a nonprofit.

A few data points to keep in mind: Private contributions have consistently been 2 to 3 percent of GNP. Some 80 percent of givers are individuals, 10 percent are corporations and 10 percent are foundations; 75 percent of adults donate, on average, 2.5 percent of their income.

The key message here is the importance of individuals, which organizations can so easily forget about under the pressure of chasing other funding sources. Given the unique power of individual donors, an organization’s strategic plan should break down its strategies for outreach to individuals, through face to face interactions, programming, direct mailings, web based giving, special events, and endowment campaigns.

Mission-Driven, Results-Oriented and People-Focused Nonprofits

Leadership and management of nonprofits is both an art and a science. While I find it useful to stress the “heart” (the organization’s mission) and the “hammer” (its mission impact and results), we can never forget that it is the people - staff, volunteers, the board, participants, partners and community - who create the spirit of both accountability and responsibility that are necessary to achieve every organization’s purpose to serve the public good.

Paula Gavin