Differentiating between "Big Dreams" and "Strategic Plans": The Art of Philanthropic Due Diligence (Part 2)

I have had no time in the last 6 weeks to pause and post insights from my daily philanthropic due diligence work. The high number of evaluation, research, and advisory projects on my "to do" list has kept my nose to the grindstone. However, in the course of completing these projects I am employing every element I know from the art of philanthropic due diligence. So let me say a few words about nonprofit "Strategic Plans."

As part of our Levels 2-5 Due Diligence reports, we collect and analyze 1-3 year "Strategic Plans." It is my job to tell whether I am looking at a nonprofit's "Big Dreams" or realistic "Strategic Plans." There are a few giveaways that make the call an easy one. When the first line reads "Reach every child, everywhere," I'm staring at "Big Dreams." When a 2-year old organization serving 2,000 people sets a target for 220 million people in 10 years, again I am seeing "Big Dreams." The problem is not the audacity of the goals. The problem is the lack of feasible plans to achieve the goals in a specific time frame.

I recently evaluated a young educational organization that set the same budget and enrollment goals 3 years in a row. Each year they budgeted $950,000 and sought to enroll a critical mass of students that would let them break even. Each year they fell far short of their goals. In fact, they were raising less and less money each year. To make up for the financial shortfalls the organization set a new fundraising goal to establish an endowment. Not surprisingly no additional monies were raised. A person who does the same thing year after year and expects different results has had a break with reality. Setting goals based on the benefits of achieving them rather than their feasibility is life in a dream world.

You can put this scenario into the age-old analogy of drawing a line from point A to point B. Time and again nonprofit leaders envision point B. I come in and see point A. And no one can find the line between the two. In a recent conversation with a financial advisor, I was asked what has surprised me the most in my due diligence work. I did not have to think long about the answer. As I evaluate organizations each month I constantly find good intentions and big dreams. I rarely observe well-executed plans.

The next time you read or hear about an organization's plans and goals, look for the step-by-step instructions about how they will get from here to there. If you can't find a sensible price tag tied to a timeline of action items, you have entered a dream world. A "Strategic Plan" is not a set of goals that would be strategic were they to be reached.

If you want my advice, I'd say the reason that so many nonprofits produce "Big Dreams" instead of "Strategic Plans" is the absence of an experienced COO. The CEO/President/Founder who dreams up new goals each year needs a COO to chasten those dreams. The COO should refine them through a planning process. No doubt that type of relationship between a dreamer and the planner would produce friction. But that friction has the potential to produce realistic "Strategic Plans."