20.05.04© organization futures llc 20041 strategic thinking about local sources ken phillips,...

20.05.04 © Organization Futures LLC 2004 1

Strategic Thinking About Local Sources

Ken Phillips, Organization Futures CFP Workshop in Kiev May 2004

Management

Finance

Fundraising Program

Governance

Trends for Organizations1. Geopolitical focus moves south and east.2. Reductions in foreign and government funding3. Increased role and importance of the civil society /

organization sector4. Increased competition for funds5. Rising expectations about results6. Donors and participants press closer to NGOs7. Growing competence in strategic planning, capacity

building, fundraising, public relations, branding, community involvement, and board development

Organization Development Stage 1

Good program following donor initiatives 1. The donor determines the mission, sets the budget, and issues an

RFP2. Your organization writes good proposals in response to the

donor’s plan and RFPs3. The donor does the strategic thinking and set the goals for you4. You carry out the donor’s intentions if you get the grant or contract5. Your board is a program oversight board with a financial

assurance role6. Your executive director is a program director for the donor7. You respond to what the donor asks you to do8. You are a contractor for that donor

Organization Development Stage 2

Taking control of your destiny by initiative1. You determine your mission, plan the budget, and seek donations

for the mission2. Your organization finds and develops new markets of donors3. You do the strategic thinking and set the goals for yourself4. You carry out your organization’s mission5. Your board is a strategic board with a fundraising role6. Your executive director is the organization leader and fundraiser7. You play a strong leadership role and get others to follow you8. You are more independent with a diversified base of many

different donors

Strategic Thinking Invents New Categories –

Not Rearranges Old Ones

Formal planning processes—preserve & depend upon ‘old’ established categoriesExtrapolating from the past or copying from others says ‘you are a good student’—not a good leader!Planning—involves a calculating style of management—not a committing styleReal ‘strategists’—get their hands dirty digging for ideasStrategy making is a process that is interwoven with all that it takes to manage an organization.

Strategic Management

Vision

Mission

DONORS Credibility Goals Objectives Activities Indicators RESULTS

S W O T

Positioning

Strategies

CultureResults for Society Participants Donors

Strategic Thinking Strategic

Planning Strategic Implementation Strategic

Evaluation

Peter Drucker

1. What is your business?

2. Who is your customer?

3. What does your customer consider value?

4. Non-customers are as important as customers.

5. The customer never buys what the supplier sells.

6. Management that does not innovate will not last.

Nonprofits Add ValueCompetition produces better results Innovation, harder work, lower costs, better services

Organizations add more revenues50% government, 25% fees, 25% donations, 25% volunteers =

125%They have expertiseMission driven, highly motivated, , professional, specialised,

independent boards for controlThey provide important extrasPublic education, citizen involvement, advocacy, volunteers

Michael Porter on Strategy

Competitive strategy is about being different.It means deliberately choosing a different set of activities to deliver a unique mix of value.A focussed competitor targets the special needs of a subset of customers and designs its activities accordingly.

Build Strategic and Competitive Advantage

Flows from identifying key resources & competencesIdentifies obstacles & options to overcomeIdentifies and exploits rivals’ weaknessesLeads to a unique ‘value added’Develops key resources & competencesInitiates changes in your sector to your advantageCaptures scarce resources (ideas, people…)Anticipates and responds to changes Asks: Why is our performance going as it is? Where will it lead if it continues?

How can we design a new strategy? London Business School

Competition

Nonprofits like businesses are in competition for funds.The basic successful service strategies are to compete by providingbetter quality lower costa unique and innovative approach.

Donors – and clients - will need to see a ‘value added’ from the nonprofit’s use of their funds.Competition for dominating and ameliorating an issue

What are the obstacles?

Identify four obstacles for BRCS

Write each one on a card

Collect ideas in groups

What’s going right?

Identify four things going well

Write each one on a card

Collect ideas in groups

Why Are Organizations Not Raising More Money?

1. Unproven Results to Participants

2. Questions of Trust and Reliability

3. Weak Value to Donors

4. Lack of Total Organizational Fundraising

Lessons about Fundraising

1. Giving is based on trust, confidence and respect.

2. Fundraisers represent the totality of the nonprofit.

3. Giving occurs because of the value the donor receives and her total experience.

4. Donors want to know the difference that their individual gifts actually make.

5. Donors, as well as participants, want to be involved in planning and evaluation.

Lessons about Evaluation

1. Results that matter are Measured, long-term, sustained impacts.

2. Core management functions are Assess stakeholder needs in planning Design programs with progress indicators Monitor during implementation Assess your own organization Review ethics and standards Learn, document, share and use lessons

Essentials for Organizations

1. Mission Value • How important is it society?

2. Effectiveness Quality• How big a result is there?

3. Efficiency Price • What is the cost for results?

4. Trustworthiness Ethics • How well does it behave?

5. Transparency Accountability • How involved are constituents?

Extend Your Appeal To New Donors

Know the donors

Base appeal onValueResultsCostInvolvementTrustworthiness

Current

Donors.

New Donors

Donors

Know and Meet the Expectations of Donors

Get to know donors better

All staff fundraise and meet donors

Top executives and board members fundraise

Assure fundraising attractiveness of programs

Use the donor’s language

Excellent and timely reporting

Responsive donor service by all

Donor’s Needs

Objectives

Strategies

Expectations

Emotions

Biases

Know and Meet the Expectations of Donors

Get to know donors better

All staff fundraise and meet donors

Top executives and board members fundraise

Assure fundraising attractiveness of programs

Use the donor’s language

Excellent and timely reporting

Responsive donor service by all

Give Value to Donors1) Acknowledge their financial and emotional support

2) Ask them what they value in their relationship

3) Involve them (really, virtually, media, other ways)

4) Give them influence within the organization

5) Use individualized marketing to respond to them

6) Provide customized programs to meet their needs

Why Have Standards?

Shared values and common direction

Public responsibility

Donor trust

Prevention

Improvement

Defense Everything needs to be verified!

Crisis of Confidence for Nonprofits

Program Impact on Participants Fundraising Impact on Donors Ethics Trustworthiness Commitment Fundraising Effort

Key Elements of Public Accountability

1. Transparency and accountability to donors and others2. Truthful fundraising appeals 3. Use of funds according to donor expectations4. Sound financial management and accurate reports5. Measured program effectiveness 6. Informed & independent Board, no conflict of interest7. Adherence to best practices in all aspects of work8. Complete, accurate and timely reports

Iron Rules of Fundraising (1-5)

1. Fundraising is not about money

2. There are only internal barriers to fundraising

3. Determine and promote your uniqueness

4. Compete through innovation, price and quality

5. Assure basic systems are in place

Iron Rules of Fundraising (5-10)

6. Donors give because of value they receive

7. Meet the needs and expectations of donors

8. Develop relationships with donors

9. Solve their problems, not yours

10. Learn to love the word “No”

Fundraising Rules at Latvian Children’s Fund

Work hard for fundraising

Maintain good contacts with donors

Have concrete projects

Produce good results

Maintain low costs

Account carefully for funds

Send good reports to the donors

Total Organizational Fundraising©

Six step approach to the core capabilities of an organization for effective fundraising

1. Fundamental Principles of Fundraising

2. Internal Culture of Fundraising

3. Strategic Planning, Positioning and Fundraising

4. Organizational Ethics and Standards

5. Strategic Evaluation for Learning

6. Involvement and Accountability for Donors

Capacity Building

It encompasses organisational capabilities to:

Assure a well-run and respected institution

Plan and improve programs

Recruit, manage and reward people

Raise financial/volunteer/material resources

Understand, reach and motivate others

Be a well-run and respected institution

Mission

Strategic positioning

Branding

Values and culture

Governance

Management

Planning

Plan, implement and improve programs

Design

Indicators

Involve

Implement

Monitor

Evaluate

Long term impact

Consequences

Replicability

Sustainability

Science

Recruit, manage and reward people

Leading

Managing

Culture

Strengthening

Changing

Learning

Management

Volunteers

Participants

Lessons

Raise financial, volunteer and material resources

Culture

Strategic Planning

Training

Implementation

Managing

Material

Endorsement

Understand, reach and motivate the others

Collect data constantly to give insight

Get outside yourself to see your organisation

Identify new partners and groups to involve

Develop strategies for mutual involvement

Change to know and meet their needs

Consider non-donors as donors

How to Take Control of the Environment

Get out of your self and your own limitationsPut yourself in other people’s position

Keep your eyes open to observeSee the body language

Listen to learnHear what is not being said

Develop your antennaUnderstand the intangibles

New NGO StructureResource Participants / Stakeholders

Funding, involvement, decision making, evaluating, control

Board of DirectorsFiduciary/legal, Policymaking, Select staff directorFundraising

Chief Executive OfficerPlanning and Management – Participatory MannerInfluence and Implement board decisions – ResultsFinal decision maker – Hard Choices

StaffProgram, fundraising, finance, etcInfluence and Implement executive director decisions

Program ParticipantsProgram, involvement, decision making, evaluating, control

West Broadway Neighborhood Association

Year 1992 1993

Culture negative positive

Planning ad hoc 3 year strategic plan

Participation limited open / extensive

Activities complaining many / results focus

Influence little significant

Members 25 200

Revenues $3,000 $200,000

Life Cycle of an Organization

Why Is Evaluation a Problem?

1. Everyone is afraid of evaluation. 2. Evaluation costs money.3. Evaluation is often very difficult. 4. There are new and confusing disciplines. 5. People confuse different approaches in evaluation. 6. The approach to evaluation is not well planned. 7. The results of evaluation are not well used. 8. Nonprofits lack a culture of learning. 9. You can lose your job from a bad evaluation.

Significance of Strategic Evaluation

Significance of Evaluation for Capacity Building

mission programs strategic evaluation learning capacity building

better achieved mission better fundraising

Significance of Evaluation for Grants

grant design indicators implementation

M & E evaluation donor satisfaction

Management Role in Strategic Evaluation

1. Create a culture of openness and learning2. Open diverse feedback channels3. Assure clarity of purpose of all evaluations4. Require lessons learned summary in all reports5. Review a consolidation of lessons learned6. Incorporate lessons learned in all new planning7. Create internal and external learning groups8. Conduct program audits like financial audits9. Promote contributors to and users of lessons

Board Role inStrategic Evaluation

1. Set evaluation and learning as a board priority

2. Clarify a policy for evaluation and learning

3. Require evaluation measurements in all plans

4. Provide adequate annual funding for evaluation

5. Include evaluation in the executive director’s review

6. Walk around on your own and talk to beneficiaries

7. Take time to reflect at a Lessons Applied Retreat

Fundraiser Role in Strategic Evaluation

1. Bring donors’ perspectives to all discussions2. Press for accountability and transparency3. Develop a code of ethics for your organization4. Research what donors like and don’t like5. Plan strategically with stakeholder analysis6. Determine value added and strategic positioning7. Help shape organizational purpose and program8. Demand evaluations with lessons learned9. Advocate organizational fundraising culture

ResultsDonors Organization BeneficiariesMoney Value added Life Changes Activities Inputs Processes Outputs Outcomes Results indicators

Source: USAID

The Actors

Program Results

Finance / Administration

Fundraising

Staff Board

Managers $

Learning to Change Depends on Evaluation

Information Understanding Motivation Plans Commitments Actions Changes Follow up

ICrisesPressing problemsDeadline driven projectsMeetings, preparations

IIPreparationPreventionValues clarificationPlanning Relationship building

IIIInterruptions, some phone calls, mail, reports, meetingsMany proximate pressing mattersMany popular activities

IVTriviaBusy workPhone callsTime wastersEscape activities

Importantand Not Urgent

Urgentand Important

Not UrgentNot important

Not Important But Urgent

Five Steps to Getting Unstuck

1. Break out of inertia – do something today.2. Bring in a third-party “enforcer” – a friend or

executive coach – to keep you moving.3. Don’t worry about rejection; just realize you’ll get

plenty of it.4. Seek criticism from people with no stake in your job.5. Try “storylining” or similar exercise to uncover the

activities and surroundings that motivate you.Adapted from Fortune, August 19 1998

Evaluate Your WeekWhich goals did I achieve?

What empowered me to accomplish these goals?What challenges did I encounter?How did I overcome them?Was achieving these goals the best use of my time?Did my focus on these goals blind me to others?

Which goals did I not achieve?What kept me from accomplishing these goals?What unmet goals should be carried forward?How much of my time was spent in Quadrants II & I?What can I learn from the week as a whole

Peter Senge: Learning is a journey.

1. Personal Mastery – Seeing reality as it really is2. Shared Vision – Aiming high, compelling dream,

energetic harmony, exhilarating motivation3. Mental Models – Removing internal restrictions4. Team Learning – Synergy from the group, dialogue not

discussion, accessing each other, using a facilitator, innovative approaches

5. Systems Thinking – The whole pictureThe Fifth Discipline: The Art and Practice of The Learning Organization (1994)

Learning Systems Individual LearningPersonal motivation and performancePersonal assessment and change

Knowledge ManagementNew knowledge, tools, strategies and policiesMechanisms to capture, share and use knowledge

Learning OrganizationFocus on Individual and team thinking processesMoving from data to knowledge to wisdomTransformation from new knowledge

Pick the BIG issuesWork on them RIGHT

Issue Small BIGApproach

Wrong no gain disaster

RIGHT little gain YES!

Interviews as Assessment

Interviews withStaff involvedBoard members Interested outsiders

Ask the same 10 basic questions (image, effectiveness, barriers, opportunities, etc.)

Confidential basis

Report as basis of plans and recommendations

Benchmarking

Track how your top 3-5 competitors workProgram activities and resultsOverhead costsFundraising growthFundraising methods

Get data from their public reportsBecome a donor to see how they treat youTrack them regularlyIdentify what they do well and how they do itUse the information to set your own improvements

Leadership

Showing vision

Getting commitment

Delegating

Communicating

Fostering change

Supporting others

Leadership Potential

Key among leadership capacities are the ability toDevelop self-awarenessIncrease self-confidenceTake a broad, systemic viewThink creativelyLearn from experience

Center for Creative Leadership

What Do Leaders Really Do?

Leaders deal with changePrepare organizations for changeDrive the changeHelp people in the organization cope, struggle

through it, and prepare for the next phase…of change.

The more the change, the more you need strong leadership

Promote planned instability

ChangeChange is taking place whether we like it or not. The only choice we have is to actively shape it or to passively endure it.

If we choose to be passive, the future will punish us.

Alex Krauer, Chairman, Novartis

What Do Managers Really Do?

Mangers deal with getting things doneCope with complexityBring order and consistency to key functionsStrategic planning for growth and qualitySystems to support people & processesProgram development and implementation

Promote planned stability

The How Is DifferentManagement

Planning/budgetingSetting targets/goalsEstablishing detailed stepsAllocating resourcesCreating structuresOrganizing/staffingInformingDelegatingMonitoringControlling

LeadershipSetting a directionCreating future visionDefining strategies to achieve visionAligning people & visionMotivating/inspiringKeeping people moving in the right direction despite obstaclesAppealing to human needs, values, emotions

In Pursuit of Excellence

Bias toward action

Close to the customer

Entrepreneurship

Tolerance of failure

Quick feedback Tom Peters

Basics of Team Work

Communicate

Co-ordinate

Be open and ready to adapt new skills

Strengthen capacities and structures

Effective Communications

Share important information rapidly

Don’t be a bottleneck

Be open and transparent and caring

Give and take feedback constructively

The Importance of Boards

Governance

Accountability

Representation

Programme Effectiveness

Financial Efficiency

Adequate Resources

How to Manage Your Board

1. Educate Your Board about Its Responsibilities

2. Give Your Board Real Work

3. Set Policies and Practices for Board Work

4. Engage Board Members in Fundraising

5. Get the Right People on the Board

6. Change the Board to Achieve the Vision

Role of the Chair

Assures the Board functions well

Chairs Board meetings

Represents the organisation

Focuses the staff director on key priorities

Leads the evaluation of staff director

Strengthens the Board

Role of All Board Members

Participate in Board decisions

Provide expertise as needed

Focus on governance, not management

Support the organisation personally

Participate in work of Board committees

Help raise money or make contacts

Approaches to Board Development

Make it part of the organisation capacity buildingStrengthen staff, Board, program, finance, etc.Code of conduct for Board, staff and volunteers

Define skills and resources needed on the BoardSelf-assessment process and analysisWeekend retreat

Create systems for strengthening the BoardNominations Committee of the BoardLimited terms of office (3 year term, maximum 12 years)

Key Indicators

Executives committed to fundraising

Board committed to fundraising

Organisational fundraising culture

Good systems in place

Programs have impact

Fundraising is managed

Networking is valued

Good Basic Systems in Place

Management level

Board level

Financial level

Reporting

Secretary General Committed to Fundraising

Significant time allocated

to fundraising (50%)

Personal activities

with top donors

Fundraising high on agendas

Assures fundraising

is successful or else…

Board Committed to Fundraising

Contacts and prestige

Budget support

Active fundraising committee

Individual board member

fundraising activity

Fundraising high on agendas

An Organisational Fundraising Culture

Fundraising as a priority

Everyone fundraises

Know and meet the

needs of donors

Fundraising in everyone’s

job description …

and evaluation

GovernanceBusiness, government, international members Responsibilities of board, officers, committeesManagement, programme, fundraisingOngoing strengtheningQualificationsManagement/finance expertsFundraising/marketing expertsProgramme expertsContactsWork

Management

Involving people and sharing information

Changing activities to achieve objectives

Finding ways around barriers

Getting the board to work

Supporting staff

Bias for action

Fundraising

Understanding current and potential sources of funding

Getting everyone else involved

Finding new approaches

Moving quickly

Essential Predictors of RD Success

The Chair of the BoardCompetentCommitted

The Chief ExecutiveCompetentCommitted

The Fundraising DirectorCompetentEnthusiastic

Organization Futures LLC

Consultancy to help organizations assure their futureAnalytic Studies to determine needs and actionConsulting in Strategic PlanningTeam, Management and Board DevelopmentFundraising and Skills Training Workshops

Ken Phillips, Fundraising and Capacity Building Rebecca Stiles Phillips, Management and Leadership Organization Futures LLC 32 Wykeham Road, Washington, CT 06793 USA Tel +1 860 868 9260 Fax +1 860 868 9261 Email NGOFUTURES@aol.com www.OrganizationFutures.com

20.05.04© organization futures llc 20041 strategic thinking about local sources ken phillips,...

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