We work with a number of private Community Action Agencies. Funded by federal Community Services Block Grants, other federal and state funds, and private donations, CAAs work to eradicate poverty in local communities. They have been around for 50 years, and many of them are quite successful at stabilizing families and helping them break generational poverty.

Like many nonprofit leaders, CAA executive directors know what they are doing. Many have been working in this specialized field of nonprofits for decades. They know the ropes, they know the grants, they know the clientele. They know it all so well that many of them could do their jobs blindfolded. Each year, they develop and submit annual work plans to their state office that administers CSBG funds. And each year, they implement their work plans.

But ask the executive director—or board leadership—of a Community Action Agency where they want to be in five years, and many of them will not know how to respond. Most will say that they will continue to do what they have been doing for many years, with the possible exception of serving more clients or delivering more of the same services.

And Community Action Agencies are not alone. The leaders of many nonprofit organizations will respond the same way.

The Problem with Strategic Plans and Nonprofits

When confronted with the notion of developing a strategic plan, many nonprofit leaders have reservations.

• We don’t know what our funding will be over the next several years.
• We have restricted funds that can be used only for certain purposes, so developing a plan is a waste of time.
• We already know what we will be doing. Why develop a strategic plan?
• Our plan is to work ourselves out of business (e.g., there won’t be anymore homeless people, anymore hunger, etc.).

We won’t debate the validity of these and other concerns here. Suffice it to say that nonprofit leaders often have significant reservations to developing a strategic plan. They may see it as a waste of time. They may see the end product as something that will not be used. Or they may simply not know what a strategic plan is or how to go about developing one.

The Value of the Balanced Scorecard Approach

For those who are familiar with the Balanced Scorecard, you’ll find all sorts of reasons that nonprofits—and Community Action Agencies—should utilize this approach. For those who are not familiar with it, here’s a brief overview.

The Balanced Scorecard model was developed in the 1990s to help for-profit leaders overcome the tendency to focus only on the bottom line.  In the early 2000s, public sector organizations starting using this model as well. As Paul R. Niven points out in his exceptional 2008 book, (Balanced Scorecard Step-by-Step for Government and Nonprofit Agencies; John Wiley & Sons), This model is a

• Communication tool
• Measurement system
• Strategic management system

Balanced Scorecards utilize a strategy map, which is a one-page document that clearly and concisely explains the organization’s future. The strategies are divided into categories called perspectives, and all lead to the ultimate goal or outcome of the organization. Typically, these perspectives include financial, human capital, and internal processes. Other perspectives could include donors, clients, volunteers, or other broad categories, depending on the organization.

Strategic goals, objectives, or outcomes are identified for each perspective. Strategies and tactics can then be developed for these outcomes. And monitoring, tracking, or reporting systems can be put in place to assure performance and accountability.

We’ve developed a modified Balanced Scorecard model that includes annual work plans, strategic goals and objectives, logic models, and milestones—all necessary in the Community Action world, let alone the worlds of other nonprofit organizations. Our model aggregates all of these components into a single, easy-to-understand document. We then add five-year summary calendars and annual detailed calendars, and voila! The strategic plan is not only written, but it is a guiding document used by team leaders, program managers, and staff weekly to guide their ongoing work. At last, nonprofit leaders have a document—and, more importantly, a management solution—that integrates day-to-day operations with long-term strategy.

Community Action Agencies are encouraged by leaders in their national partnership, as well as their federal funders, to consider adopting the Balanced Scorecard methodology into their strategic planning. At first, some CAA leaders were hesitant. But the ones we’ve worked with have not only accepted this model, but now embrace it. They sometimes wonder how they got along without it.

Leaders of other nonprofit organizations can learn from the Community Action Agency counterparts. Looking at their work from a strategic perspective, developing long-term objectives and outcomes, and adopting the Balanced Scorecard methodology are invaluable undertakings.

If you’d like to read more about one Community Action Ageny’s experience with the Balanced Scorecard method, download our free white paper: Where Will Your CAA be in 5 Years?