Strategic Planning and Evaluation: Tools for Realizing Results
To enable significant impact, organizations should ask three key questions and decide if formal planning and evaluation are the right approaches to finding the answers.
Nonprofit organizations are a stunningly diverse bunch, with assets ranging from hundreds of dollars to billions, service areas as varied as neighborhoods and the entire planet, and missions that encompass the full scope of human imagination and experience. But for all their differences, they are united in their desire to accomplish real results and in their need for funding—often from philanthropic individuals and institutions—to succeed in that ambition.
In a world where problems will always exceed the resources available to address them, philanthropy has a special responsibility to allocate its resources as effectively as possible to achieve significant social impact. With so many options and so much at stake, funding decisions will inevitably generate spirited debate, as is apparent in the simmering controversy over the significant increase in recent years of foundation support for formal processes such as strategic planning and evaluation. In particular, critics have made two major arguments against that funding choice: 1) that these processes simply cost too much, absorbing resources that would be better allocated to nonprofit programs that actually generate social impact, and 2) that many, if not most, of these efforts rely too heavily on simplistic goals and metrics that do not capture the true complexity and character of the intended social benefits.
Acknowledging that I am a planner by profession and that I previously headed up an Obama Administration program dedicated in large part to expanding the use of formal evaluations, I want to make three points.
First, despite their seemingly esoteric nature, strategic planning and evaluation are simply tools for optimizing performance. Used properly, they establish clarity around critical, basic questions that every nonprofit or foundation seeking impact should be highly motivated to confront:
- What social impact are we trying to achieve?
- What activities should we pursue to achieve our intended impact?
- How will we know if we’re succeeding?
I would argue that any nonprofit or foundation that can’t provide well-reasoned answers to these questions—however they determine those answers—has very dim prospects for accomplishing anything of real value to society, unless by chance.
Second, formal strategic planning and evaluation are not necessarily for everybody. Although all nonprofits and philanthropies should have solid answers to the questions above, there is no compelling reason for why they all should rely on systematic planning and evaluation processes to arrive at the answers. Those processes can be costly, though they’re not inherently so. Both encompass a wide range of approaches, from informal and intuitive assessments performed by internal staff to formal, rigorous analyses led by outside consultants. Whatever their degree of formality, their objective is the same: to enable nonprofits and philanthropies to develop increased confidence that their efforts are making a difference in the world.
So given their extraordinary diversity, when does it make most sense for nonprofits and foundations to undertake more formal, analytically rigorous, and, yes, costly strategic planning and evaluation processes? While there are many reasons for why impact-seeking organizations might desire greater confidence around resource-allocation decisions, the most compelling is simply scale. Put simply, the more money a nonprofit aspires to raise or a foundation contemplates providing for a particular program or intervention, the higher the opportunity cost—to the organizations involved and society overall—of being wrong about what approaches actually drive results. Plus, as scale grows, the real cost of systematic planning and evaluation, at least on a per-beneficiary basis, may become quite low.
The scale factor is particularly compelling, I believe, when the decision-maker is not actually the donor. It’s one thing for individuals to dedicate their own hard-earned money to support a given charitable pursuit. It’s another thing altogether when the people making funding decisions are using other people’s money. That, of course, is the case at many large private foundations (and all government agencies, for that matter). In such situations, fiduciaries and other stakeholders (and taxpayers) have a right to demand a high level of confidence that the organization’s decision-makers are deploying money wisely and to good effect.
Ultimately, nonprofits and foundations must decide based on their own circumstances what degree of formality their evaluation requires—or whether they value these processes at all. Following the logic laid out above, for example, where organizations are focused on pursuing more subtle or multifaceted changes in small-scale settings like neighborhoods and using the money of the people actively engaged in driving that change, the case for formal, rigorous strategic planning and evaluation simply doesn’t seem compelling.
Third, effective strategic planning and evaluation processes should yield robust, quantitative goals and metrics. Because the core purpose of these processes is to enable organizations to take productive actions, the goals and metrics that frame those actions must capture their most important elements and make it possible to monitor and measure them. And by definition, the metrics should be clear, precise, and quantitative whenever possible. That’s not always an easy task, but there can be no doubt that ambiguity is an enemy of focus, accountability, and learning.
Fortunately, a wide array of the most common social programs and interventions that philanthropies support at significant scale—job training, education, health services, home visitation, and teen pregnancy prevention, to name a few—are relatively straightforward and can be accurately assessed using discrete, quantifiable goals and metrics. Even where they are not—as might be the case with more complex or conceptual outcomes such as individual well-being, civic engagement, or social justice—skilled planners and evaluators can and must directly confront this complexity, possibly disaggregating concepts into elements that they can specify, track and measure in ways that still enable successful action while also respecting the organization’s true intent.
All that said, it’s inevitable that some strategic planning and evaluation processes will yield goals and metrics that may seem superficial or non-productive, and those interested in improving social sector effectiveness need to call them out and improve them. But organizations can’t abandon altogether the search for reliable metrics simply because the challenge of getting it right is arduous.
Still, the question remains: Are foundations and nonprofits overinvesting in strategic planning and evaluation? It’s possible that the pendulum has swung too far in some circumstances. But if so, this would still be a welcome change from prior decades when information about philanthropic aims and outcomes was scarce and rigorous strategic planning and evaluation hard to come by. Indeed, it’s sobering to contemplate how much money the social sector has wasted over the years because foundations or nonprofits unknowingly funded ineffective programs and interventions. When all is said and done, it is that specter that should inspire us to help our very diverse community of nonprofits and philanthropies find their best paths forward.