Lead with Strategy; Budget for Goals TONY BOOR

MARTY MARTIN

TOM PATE

If a tree fell in the forest…did it

have a strategy?

What drives your organization?

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Something to think about….

Context…little group voting!

• Does your budget = your strategy?

• How many of you have a strategic plan…of some kind?

• If you don’t have one, why?

• Didn’t have time…busy getting the mission done!

• or

• Got it drafted…couldn’t get it approved!

• If you have a strategic plan…

1. Does it cross the entire organization?

2. Does it have a strategic intent AND a financial intent?

Topics

• Budget vs Strategy

• The Strategy Driven Budget

• The Role of the Board

• Off the Rails…What Happens in the real world

• A Nonprofit Case Study

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Strategy…

• 3-5 year view of the organization

• Asks “what/why” or “if” questions

• Where are we?

• Where do we need to go?

• What will it take to get there?

• What stands in the way?

• What resources do we need?

• If we needed to place a bet, where

would we place it?

• Board & Staff - Collaborative

• Considers the financial view, but

is flexible

Budget…

• Defines the 4-6 quarter view

• Driven from the strategy

• Staff Driven, Board Approved

• Asks “how much”…a LOT

Strategy vs. Budget

The CFO View: Strategy vs. Budget

• Budgets are the last phase of a longer strategic journey

• Budgets provide the annual framework to measure financial success

and directional movement

• Best Practices –

Build “Top Down” and “Bottoms Up”

Use as an opportunity drive return on investment – don’t spread like

peanut butter!

Utilize Strategic Plan, Annual Operating Plan as well as key metrics,

benchmarks, ratios and drivers to help develop expectations

Strive for continued efficiency, quality and productivity gains – expect

5+% improvement each year

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Fitting Strategy & Budget Together

Mission/Objectives

Environment

Strategy Formulation

Implementation Plan

Evaluation

Annual Operating Plan

Operating Plan By Group

• Quarterly

• Fundraising, Mission, Operations

Why this works…

• Creates broad alignment

• Establishes priorities and key objectives

• Clearly focuses the individual departments of an

organization

• Ensures that new ideas or initiatives are aligned to the

overall strategy

• Establishes a near-term and long-term roadmap to

measure success; Routinely assess progress and

adjust direction

The Role of the Active Board

• Culture

• Compliance

• Control

Quick Case Study

Fiscal Year Revenue Wishes

FY10 $11.2M 802

FY11 $10.8M 863

FY12 $11.3M 865

Half Full….

• Largest Chapter

• Financially Solid

• Engaged Board, Strong Staff

Half Empty….

• Large Geographic Area

• Fragmented Staff

• Granting <50% of Eligible Wishes

• High Financial Treadmill

Ohio/Kentucky/Indiana

Annual

Budget

Staff

Driven

3 Yr

Strategy

Board

Driven

L-YR + 10%

Spread Equally List of Action

Areas

Detailed Annual Budget

3 Yr

Strategy

3-5 Strategic “Planks”

Individual Giving

Hospital Relationships

3 Yr Financial Plan

Required Investments

Board & Sr Staff Driven

Annual

Plan

Annual Goals, Budget

YrX Investments

Staff Driven, Board Confirmed

Detailed Dept. Budgets

Staff Driven

Ex:

Dept

Budget

The Strategic Planning Shift

Results

• Shared Board & Staff Buy-in – Its “our” plan

• Long Term Mindset

• Clear Goals, Milestones

• Shift in where we invested

• First Investment: Hospital Relationship FTEs

• Second Investment: 2 New Individual Giving Directors

• Third Investment: Central “Donor Mining” Support Team

• Cut lower performing (but long valued) activities/roles to fund new

investments

Perils and Pitfalls…Your Turn!

What works well for you?

What would you avoid?

When Off the Rails Might Be RIGHT?

Know

Competent & Comfortable

Must learn

Translate to new context Opportunity?

Don’t Know

Kn

ow

D

on

’t K

no

w

Copyright. All Rights Reserved. Marty

Martin. 2014

What do you need to know..

Ask our Panel…and your Peers!

Opportunity to Win for sharing your story!

“However beautiful the

strategy, you should

occasionally look at the

results.” (Winston Churchill)

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Monitoring Results

“School Solutions”:

• Annual Summary

• Quarterly Report Card

• High/Medium/Low Progress

What have you seen work?

Opportunity to Win for sharing your story!

Questions

Take Action Now

• Rally your team! Strategic planning and budgeting should be an

organization wide exercise

• Detail your revenue/contributions and expenses: understand the

drivers and trends

• Develop KPIs: Cut through the noise, find a handful of key

indicators for the operational and financial health

• A simple strategy is better than no strategy – and tie to your KPIs!

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Don’t forget to complete

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Did this session give you the jolt you needed?