Integrated Strategic and Financial Planning for

Paige MacLeodPatricia León

Pedro Esquivias

Integrated Strategic and FinancialPlanning for Nongovernmental

Organizations

2 The Nature Conservancy

Resources for Success Series Volume 3

This series replaces Resources for Success. A Manual for Conservation Organizations in Latin America andCaribbean (1993), edited by Paquita Bath.

Copyright © 2001 by The Nature Conservancy, Arlington, Virginia, USA. All rights reserved.

Copyediting: Norma AdamsDesign/Layout: Jonathan Kerr/TNC Production: Publications for Capacity Building, The Nature Conservancy, Worldwide Office, 4245

North Fairfax Drive, Arlington, VA 22203, USA. Fax: 703-841-4880; email: [email protected].

This publication was made possible, in part, through support provided by the Office LAC/RSD/, Bureaufor Latin America and the Caribbean, U.S. Agency for International Development, under terms of GrantNo. LAG-A-00-95-00026-00. The opinions expressed herein are those of the authors and do not neces-sarily reflect the views of the U.S. Agency for International Development. This publication was alsomade possible, in part, thanks to the vision, trust, and support of the David and Lucile PackardFoundation.

The authors wish to recognize the Asia Pacific Conservation Leadership Initiative and Angel Cárdenas(Self-sufficiency and Fund-raising Specialist), who generously contibuted their time and comments tothe development of this manual.

For further information on Integrated Strategic and Financial Planning projects or to provide feedback,please contact:

Angel Cárdenas Self-sufficiency and Fund-raising Specialist The Nature Conservancy Worldwide Office 4245 North Fairfax Drive Arlington, VA 22203 USA Phone: 703-841-4188 Fax: 703-841-4880 Email: [email protected]

3Integrated Strategic and Financial Planning

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

How to Use this Manual . . . . . . . . . . . . . . . . . . . . . . . .7 Practical Applications . . . . . . . . . . . . . . . . . . . . . . . . .8

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Chapter 1:

What Is Integrated Strategic and Financial Planning? . .11

Definitions and Descriptions of Relevant Terms . . . . . . . .11 Evolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Importance of the Plan . . . . . . . . . . . . . . . . . . . . . . . .12 How a Budget Differs . . . . . . . . . . . . . . . . . . . . . . . . .12 Steps in the Process . . . . . . . . . . . . . . . . . . . . . . . . . .13 Expected Results . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Chapter 2:

The Arcoiris Foundation Case Study . . . . . . . . . . . . . .17

History and Early Activities . . . . . . . . . . . . . . . . . . . . .17 Podocarpus National Park . . . . . . . . . . . . . . . . . . . . .18 With Success Came Complications . . . . . . . . . . . . . . . .18

Chapter 3:

Planning To Plan (Step 1) . . . . . . . . . . . . . . . . . . . . . .21

Educating Participants and Decision Makers . . . . . . . . .21 Determining Who Should Facilitate . . . . . . . . . . . . . . .21 Defining the Timetable and Method . . . . . . . . . . . . . . .22 Determining Who Should Participate and Assigning . . . . . .Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Involving Board of Directors . . . . . . . . . . . . . . . . . . . .22 Determining Financial Resource Needs . . . . . . . . . . . . .22

Chapter 4:

Reviewing the Strategic Plan (Step 2) . . . . . . . . . . . . . .25

What Is a Strategic Plan? . . . . . . . . . . . . . . . . . . . . . 25 What Is Strategic Planning? . . . . . . . . . . . . . . . . . . . .26 The Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Review of the Mission . . . . . . . . . . . . . . . . . . . . . . . .27 Review of Internal and External Environments . . . . . . . . . . . .28 Program Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Review of Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

Review of Objectives . . . . . . . . . . . . . . . . . . . . . . . . .31 Review or Development of Activities . . . . . . . . . . . . . . .31 For Further Reading . . . . . . . . . . . . . . . . . . . . . . . . . .32 Arcoiris Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . .33 Revised Arcoiris Strategic Plan . . . . . . . . . . . . . . . . . . .35

Chapter 5:

The Heart of Integrated Strategic and Financial Planning . .37

STEP 3. Establishing the Organization’s Priorities . . . . . .37 STEP 4. Estimating Costs of Implementing Activities . . . . .39 STEP 5. Estimating Administrative Costs . . . . . . . . . . . .41 STEP 6. Projecting Income . . . . . . . . . . . . . . . . . . . . .43 STEP 7. Projecting Income and Expenses . . . . . . . . . . . .45 STEP 8. Developing Scenarios . . . . . . . . . . . . . . . . . . .47

Chapter 6:

Evaluating Feasibility of the Plan (Step 9) . . . . . . . . . . .49

Evaluating Feasibility of Implementing Current Plan . . . . .49 Analyzing Funding Gaps or Surplus Implications . . . . . .49 Analyzing Fund-raising Experience and Expertise . . . . . .50 Evaluating Need to Revisit Plan . . . . . . . . . . . . . . . . . .50 Monitoring, Evaluating, and Adjusting Strategic Plan . . . .51 Conclusion: Arcoiris Case Study . . . . . . . . . . . . . . . . .53 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54 Worksheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

Tables

Table 1. Differences Between a Budget and a Financial Plan 13Table 2. SWOT Analysis Conducted by a ConservationOrganization Located in the Pacific . . . . . . . . . . . . . . . . .30 Table 3. SMART Objectives . . . . . . . . . . . . . . . . . . . . . .31 Table 4. Fund-raising Probability, by Category . . . . . . . . . .43

Figures

1. Steps Involved in the Integrated Strategic and FinancialPlanning Process . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

2. Continuous Process of Strategic Planning . . . . . . . . . . . .27Worksheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

Contents


Through local partnerships, The NatureConservancy assists countries to build the capabil-ity and commitment to conserve biological diver-sity and the natural systems necessary to sustainlife. Since 1988, the Conservancy has worked tostrengthen the institutional capacity of our in-country partner organizations to achieve ourshared conservation goals.

In 1993, the Conservancy published its watershedinstitutional development manual, Resources forSuccess, to share the lessons learned from the firstfive years of its work with in-country partners. Itproved to be a groundbreaking document for liter-ally thousands of conservation and other nonprofitorganizations. Initially designed as an easy-to-useprimer for strengthening Conservancy partners,Resources quickly became a classic reference bookin countries where local nonprofit organizationshad little access to practical advice and best prac-tices on issues of institutional development. Eightyears later, Resources for Success continues to be astandard reference for Conservancy staff and part-ners, as well as other conservation and organiza-tional development practitioners around the world.

Given the importance and impact of Resources forSuccess, the thought of improving upon it was atfirst daunting. But the Conservancy and its part-ners have learned many important lessons in orga-nizational development in the intervening years.We now work with more than 90 in-country part-ners in Latin America, the Caribbean, Asia, thePacific, and Canada. These partners vary in naturefrom small, fledgling groups to powerful nationalorganizations that have the capacity to provide

assistance to others. As we have continued to workwith our partners, we have learned from themhow to develop new and better approaches tobuilding strong local organizations with sustain-able, lasting capacity to pursue their missions.

We have collected the lessons of our partnership-based best practices and field-tested tools in ournew Resources for Success series, which replacesthe earlier edition. The new series is designed tobe even easier to use than its predecessor, withpractical, hands-on tips and approaches, clearertext, and more in-depth background information.The series is presented in accessible booklets, eachcovering a particular organizational strengtheningtopic. The first two volumes, already published,are Institutional Self-assessment and Four Pillars ofFinancial Sustainability.

We are proud to present the latest volume in theseries, Integrated Strategic and Financial Planning.Upcoming volumes include such topics as:

Developing Membership Programs

Human Resource Management

Fund Raising

We think you will find the new Resources forSuccess series beneficial to your organizationalneeds, and hope it will encourage your organizationto develop and share its own best practices.

Marlon FloresActing Director

International Partnership ProgramThe Nature Conservancy

Foreword


Introduction

This volume, in the updated Resources for Successseries, expounds on the relatively new concept ofintegrating strategic and financial planning, basedon continuing work with partner organizations inLatin America, the Caribbean, Asia, and thePacific. While the Conservancy’s in-country part-ners around the world are familiar with the con-cept of strategic planning, it is only in the pastfour years that we have begun to recognize theinherent need to analyze the financial viability ofimplementing the strategic plan.

In strategic planning, organizations define howthey plan to work in the upcoming three-to-fiveyears, detailed through a combination of goals,objectives, strategies, and activities. In IntegratedStrategic and Financial Planning, the activities areprioritized, the implementation costs are esti-mated, and then are compared with the availableresources to execute them.

If an organization lacks the resources to implementat least 70 percent of its strategic plan, it will findit has developed a “wish list” of good intentionsrather than a document that can guide the organi-zation’s future actions.

This logical continuum of the strategic planningprocess provides organizations a methodology todetermine their financial and human-resourcescapacity to implement their strategic plan.

After completing the Integrated Strategic andFinancial Planning process, organizations will havedeveloped a tool that not only serves as a realitycheck, but that also provides the basis for develop-

ing annual operations plans, establishing quantifi-able fund-raising goals and priorities for upcomingyears, and measuring the organization’s success.

The organization’s managers will obtain a clearidea of which strategic objectives are the mostimportant and possible with the availableresources, and which are beyond the scope ofshort-term action.

After completing the Integrated Strategic andFinancial Planning process, some organizationswill find the need to adjust their expectations toreflect more accurately what they can accomplish.This could include revisiting or revising the strate-gic plan, re-prioritizing activities, eliminating cer-tain proposed activities, or postponingimplementation of some activities by a year ortwo. In some instances, it could also includedevelopment of an aggressive fund-raising plan. Itis imperative that the organization become awareof its needs, abilities, and resources so that it canmake informed decisions on the best course offuture action.

As nonprofit organizations, we dream of makingthe world a better place for humanity. We hopethis methodology helps such organizations reachtheir dreams by developing realistic plans thatare achievable.

How To Use This Manual This manual is designed as a self-paced tool thatyour nonprofit organization can use to develop itsIntegrated Strategic and Financial Plan. It isdivided into chapters and sections describing a


series of steps to follow. A case study has beenincluded to provide concrete examples of how todevelop the work at each step. At the back of themanual, a set of blank worksheets is available foryour use.

This methodology assumes that your organizationhas an existing strategic plan or is in the process ofcompleting one. If it does not have a strategicplan, Chapter 4, “Reviewing the Strategic Plan,”provides fundamental concepts, as well as a list ofreferences for further assistance on the topic.

The case study presented in this manual is basedon the Conservancy's work with an Ecuadorianorganization, Arcoiris, to whom we are extremelygrateful. Arcoiris' willingness to openly share itsIntegrated Strategic and Financial Plan is yetanother example of its desire to assist other non-profit organizations, in this case those who areworking through the Integrated Strategic andFinancial Planning process for the first time.

The version of Arcoiris’ strategic plan presented inthis document is the organization’s first draft, withall of the inherent flaws that a first draft implies. Forthis reason, it provides a classic example of how todevelop an Integrated Strategic and Financial Plan.

Based on subsequent work, including review of theconclusions of the Plan's first iteration, Arcoiris wasable to improve and refine the document; as aresult, the organization now has a realistic guidethat can strategically direct its future work.

Practical ApplicationsThis Integrated Strategic and Financial Planningtool will assist your organization in:

❖ Articulating its organizational goals, objec-tives, and activities;

❖ Prioritizing activities detailed within thestrategic plan;

❖ Identifying the cost of implementing thestrategic plan;

❖ Estimating its annual administrative costs;

❖ Identifying potential funding gaps or surpluses,based on the cost of implementing the proposedactivities compared to current financial capacity;

❖ Identifying fund-raising goals;

❖ Determining whether it needs to revisit or reviseits existing strategic plan to more accuratelyreflect what can be accomplished within theproposed time frame; and

❖ Validating the feasibility of implementing itsstrategic plan.


ActivitiesSpecific actions that will produce services or prod-ucts to achieve stated objectives. Provide the mostdetailed information on what is to be implementedin a strategic plan.

GoalsOutcome statements that define what an organiza-tion is trying to accomplish, both programmati-cally and organizationally. Describe how theorganization will achieve its mission.

Integrated Strategic and Financial PlanDocument that translates the strategic plan intofinancial projections of funding needs and proba-ble available funding capacity.

MissionA succinct statement articulating the organization’spurpose or business. (Some missions also includeorganizational values and beliefs or describe howthe organization will achieve its purpose.) Shouldanswer the following:Who is doing the work?What is being done?Where is it being done?Why is it being done?(for) Whom is it being done (beneficiary)?

ObjectivesPrecise, measurable, time-phased results that sup-port reaching a goal. Describe how the goal will beachieved. Should be:

S SpecificM MeasurableA AchievableR RelevantT Time-phased

Operations PlanType of plan that usually covers one year (calendaror fiscal) and includes the annual budget. Usuallyincludes details on the types of activities to beimplemented. Is not a component of IntegratedStrategic and Financial Planning, but can be derivedfrom it, based on activities detailed for each year.

Program AreasHow the nonprofit organization is structured (usu-ally by programs, themes, or geographic areas).

Strategic PlanDocument that clearly defines an organization’spurpose and establishes realistic goals and objectives,consistent with its mission, with a defined time frame.

StrategiesBroad, overall priorities or directions adopted byan organization. (optional)

SWOT AnalysisMethodology organizations use to assess theirinternal capacity (strengths and weaknesses) andexternal environment (opportunities and threats)that could affect the organization.

S StrengthsW WeaknessesO OpportunitiesT Threats

VisionStatement that describes how the world would beimproved, changed, or different if an organizationis successful in achieving its purposes. (Note:while many organizations find a vision statementessential, an equal number have not articulated one,although they may have a unified vision.)

Glossary


“We now utilize the Integrated Strategic and

Financial Planning process in all our activities,

down to project planning and design. This tool

has proven an invaluable resource for Arcoiris.”

— Fausto LópezDirector, Arcoiris Foundation

Ecuador

Definitions and Descriptions of Relevant TermsThe term strategic planning refers to a set of con-cepts, procedures, and tools designed to help anorganization think and act strategically through aconsensus-building process. Strategic planning is adisciplined effort to produce fundamental deci-sions and actions that shape what an organizationis, guide what it does, and demonstrate why andhow it does them.

The strategic plan clearly defines the organization’spurpose, establishes realistic goals and objectivesconsistent with the mission and vision within adefined time frame, and identifies the organiza-tion’s implementation capacity. Its focus is on thefuture, and its fundamental concern is adaptationto a changing environment. The more changes thatoccur in the environment, the more frequent theplanning process needs to be revisited.

In Integrated Strategic and Financial Planning, theindividual activities of a strategic plan are trans-lated into financial figures to estimate future fund-ing needs, and corresponding resources areanalyzed for the strategic plan’s implementation.

Preparing a financial plan is essential in determin-ing the feasibility of the strategic plan, as it allowsthe organization to verify that income will be suffi-cient to cover the projected expenses of plannedactivities. If an organization does not implement aminimum of at least 70 percent of its strategic plan,it has not complied with its promise to society onthe goods, services, or results it was to provide.

EvolutionNonprofit organizations in developing countriesconfront several obstacles when trying to financetheir activities. The reduced per capita income, aswell as high concentration of wealth in a few indi-viduals, tremendously limits the number of indi-vidual donors and the amounts to be raised locally.

The relative absence of tax incentives significantlylimits the funds donated by the corporate sector.Although in recent years some governments haveplaced more funds at the disposal of these organi-zations, turning to governmental institutions isstill not a valid solution, as these incipient fundsare usually insufficient to finance a long-term,large-scale operation. The economic, political, andsocial fluctuations that can affect such countriescreate an insecure environment that leads heads ofhouseholds to ensure the well-being of their fami-lies before distributing any excess income to sup-port social causes.

Furthermore, the policies and principles that manynonprofits defend presume a short-term change inlocal customs and activities. Changing these habitsgenerally requires substantial time, effort, andresources. As a result, organizations in developing


Chapter 1

What is Integrated Strategic

and Financial Planning?This chapter answers the question by covering thefollowing points:

❖ Definitions and Descriptions of Relevant Terms

❖ Evolution

❖ Importance of the Plan

❖ How a Budget Differs

❖ Steps in the Process

❖ Expected Results

countries have needed to direct their fund-raisingefforts toward international donors. In addition totraditional fund-raising, many organizations havebegun to assess the feasibility of becominginvolved in business projects that would allowthem to diversify their income sources.

These two types of activities require organizations todevelop a greater degree of sophistication in plan-ning and control mechanisms. A large part of thesuccess in obtaining financing from internationaldonors is the ability to carefully plan medium-termactions, as well as specific financing requirements-something that may only be done if the organiza-tion is able to tie its strategic plan to its financialplan. The successful launch of business-orientedactivities requires developing strategies that identifybusiness opportunities and monitor their results.

The variability caused by these types of activitieshas complicated the planning procedures of non-profit organizations. In addition to the need tofinance administrative (fixed or overhead) costs,managers now encounter business initiatives withuncertain profitability and project cash flow thatpossibly may not be secured. Poor planning maylead an organization to involve itself in projectsthat may not obtain enough future financing toensure their completion, or even focus so much onproject financing that there is insufficient fundingto cover administrative costs.

The Integrated Strategic and Financial Planningtool avoids this type of scenario. It transforms theobjectives and actions stated in the strategic planinto financial figures that estimate and predictprobability of future funding needs and resources.Preparing an Integrated Strategic and FinancialPlan is essential to determining the feasibility of thestrategic plan, as it allows the organization to verifysufficient future income levels to pay for expensesincurred in implementing the strategic plan.

Importance of the PlanAs an organization grows and becomes involved inan increasing number of activities, it runs the risk of

concentrating too much effort on the challenges ofday-to-day management, thereby losing sight of itslong-term objectives. Strategic planning is the mech-anism whereby the organization clarifies its objec-tives and prioritizes the actions needed to achievethem. Sound planning allows managers to determinehow the organization’s generally limited resourcesshould be invested. In addition, having a solidstrategic plan has become an essential prerequisitefor gaining access to available international funds.

In general, strategic planning is limited to analyz-ing the organization, including its strengths andweaknesses, in the medium-term. As a result ofthis analysis, managers are able to determine theorganization’s mission and objectives, as well asthe appropriate actions to achieve them.

Because it is developed on a conceptual level,strategic planning has one inherent weakness: itdoes not account for the organization’s availableresources to implement the plan or the ability toobtain new resources. This is why strategic plan-ning should be integrated and implemented in con-junction with financial planning, which allows theorganization to translate the actions described inthe strategic plan into measurable financial figures.

How a Budget DiffersThe basis of an Integrated Strategic and FinancialPlan consists of an organization’s projected incomeand expenditures. Although a financial plan mayappear similar to a budget, the two differ in signif-icant ways. A budget is a detailed, annual account-ing of an organization’s costs and income sourcesthat serves to assign a monetary value to the orga-nization’s activities, clarify the relationshipbetween programmatic and administrative costs,identify when financial resources are needed, helpcontrol expenses, and evaluate the results of spe-cific activities.

A financial plan, by contrast, is a dynamic docu-ment that changes frequently. Its ultimate objectiveis to determine whether the organization will havesufficient financial resources available to meet the


objectives described in the strategic plan in themedium-term (Table 1).

In the financial planning process, the final resultsare as important as the mechanisms used toachieve them. The planning process is a tool thathelps managers periodically evaluate their organi-zation’s strengths and weaknesses.

Steps in the ProcessThe Integrated Strategic and Financial Planningmethodology includes nine basic steps, asdescribed below. The flow chart that follows thedescriptions of these nine steps shows the processof moving through them, based on responses tokey questions (Figure 1).

Step 1. Planning To PlanBefore beginning the Integrated Strategic andFinancial Planning process, it is important todefine several issues that will influence howyour organization will move forward, at whatpace, who will be included, who will beresponsible for which components, and howmuch funding will be needed for the plan-ning process. You should establish a timelimit for the process, as well as for identify-ing project leader(s) who will ensure followup with the work team(s) on progress andmeeting deadlines. It is useful to identifyexternal or internal individuals who can serveas facilitators, as well as someone who will

record and report conclusions to the rest ofthe staff.

Step 2. Reviewing the Strategic PlanThe more accurate the strategic plan, with regardto your organization’s current view of future direc-tion, the more accurate the Integrated Strategicand Financial Plan. Your organization shouldreview and update the strategic plan annually tomonitor and evaluate the organization’s perform-ance and adapt to changes in its situation. If yourorganization’s strategic plan has not been reviewedin the past six months, this should be done. Ifyour organization does not currently include activ-ities describing how each objective will bereached, then these should be articulated.

Step 3. Establishing the Organization’s PrioritiesOnce the various strategic objectives and activitieshave been agreed upon, your organization’s man-agers need to assign a clear priority for each activ-ity. In a later step, once current funding has beenidentified and compared with projects, yourorganization will need to determine whether suffi-cient funding exists or can be raised to cover allactivities, or whether the reality is that only thehighest-priority activities can be implemented.

Step 4. Estimating Costs of ImplementingActivitiesYou should estimate the cost of implementing eachactivity. If an activity can be divided into sub-activ-


Factor Budget Integrated Strategic and Financial Plan

Time Frame Annual Medium-term (One year) (Three to five years)

Application Monitor and evaluate Projects future financial situation;current financial situation Medium-term planning tool

Degree of Detail Detailed and precise General, projected estimates;Subject to greater uncertainty

Variability Not subject to change Constantly modified to include once approved the organization’s most recent changes

Table 1. Key Differences Between a Budget and a Financial Plan

ities, then estimate the costs associated with eachsub-activity.

Step 5. Estimating Administrative Costs In addition to the costs associated with imple-menting each activity, your organization will incuradministrative (overhead or fixed) costs, which arenecessary to provide administrative support to theprograms. You should estimate these for each yearof the planning period.

Step 6. Projecting IncomeYou should draft a list of all potential incomesources and assign each source a percentage prob-ability of receiving funds.

Step 7. Projecting Income and Expenses byProgram AreaThis step summarizes the information fromSteps 4-6 to provide an overview of each pro-gram’s funding situation. Only funds that are,for all practical purposes, guaranteed areassumed to be available. This includes dona-tions approved by the donor, contracts withthird parties for services, and possibly historicalproduct sales data. This allows your organiza-tion to evaluate which programs have fundingallocated, determine which ones require morefunding, and how much is needed. You can usethe results of this step as the basis for develop-ing a fund-raising plan.

Step 8. Developing ScenariosBased on the information from Steps 3-6, threecase scenarios can be developed that project theorganization’s financial capacity to implementthe strategic plan: modest, moderate, and opti-mal. Under the modest case scenario, securedfunding is compared with the cost of only high-priority activities. Under the moderate case sce-nario, secured funding is compared with thecost of both high- and medium-priority activi-ties. Under the optimal case scenario, securedfunding is compared with the cost of implement-ing all activities. In addition to income andexpenses projections, this process provides your

organization with a second form of evaluatingits current financial capacity to implementactivities.

Step 9. Evaluating Feasibility of the PlanAt this stage, your organization needs to analyzethe results of the previous steps to determinewhether implementing the strategic plan is feasi-ble. Its decision should be based on the amount ofsecured funding currently available, and the evalu-ation of its capacity to raise funds, based on pastexperience. An additional component in the evalu-ation is the staff capacity and time available toimplement the stated activities—in all too manyinstances, organizations do not adequately accountfor the number of human resources needed; as aresult, the staff becomes overextended and unableto achieve the desired results. If your organizationdetermines that the plan is feasible, it now has aviable strategic plan, as well as the basis for devel-oping its future annual operations and fund-rais-ing plans.

If your organization decides that the strategic plandoes not realistically detail what can be accom-plished within the time frame, it will need todetermine how to adjust its expectations to moreaccurately reflect what it can accomplish. Thiscould include revisiting or revising the strategicplan, re-prioritizing activities, eliminating certainproposed activities, or postponing implementationof some activities by a year or two. In someinstances, this could include development of anaggressive fund-raising plan.

Expected ResultsIn general, engaging in Integrated Strategic andFinancial Planning allows your organization’s man-agers to determine their priority actions in accor-dance with the availability of funds. Other benefitsinclude the following:

❖ Your organization’s managers will obtain a clearidea of which strategic objectives are possible withthe available resources, and which are beyond thescope of short- or medium-term action.



Figure 1. Steps Involved in the Integrated Strategic and Financial Planning Process

Step 1. Planning To Plan

Step 2.Reviewing the Strategic Plan

Step 3. Establishing the

Organization’s Priorities

Step 4. Estimating Costs of

Implementing Activities

Step 5.Estimating

Administrative Costs

Step 6.Projecting Income

Step 7.Projecting Income and

Expenses by Program Area

Step 9.Evaluating Feasibility of the

Strategic Plan

Step 8. Developing Scenarios

Does the organizationhave the Human Resourcesand Financial Capacity to

implement the plan?

Develop andImplement AnnualOperations Plans

Develop andImplement

Fundraising Plan

PeriodicallyMonitor and Evaluate

the Strategic Plan

H a v e t h eO b j e c t i v e sB e e n M e t ?

YESNO

YESNO

❖ Your organization’s managers may determinemedium-term fund-raising objectives based onpriority activities they wish to carry out. Thiscan allow implementation of multi-year fund-raising or income-generation campaigns withspecific monetary amounts for specific activitiesor projects.

❖ Financial planning allows your organization toprovide donors with a clear and coherent pictureof medium-term financing needs, generatingmore credibility and avoiding the need to revisitdonors to raise funds year after year. The latteris especially important in avoiding “donorfatigue” (potential to cause a negative donorreaction due to recurrent funding requests).

❖ Project staff will have detailed activities fordeveloping annual operations plans and a meansof monitoring and evaluating effectiveness inimplementing these plans.

❖ If business-oriented initiatives are desired,financial planning allows these initiatives to belinked to your organization’s funding needs,and makes it possible to analyze and determinewhether the expected results would match theexpectations created.



As 1997 drew to a close, Fausto López deserved tofeel proud, but he also had reason to worry. TheArcoiris Foundation, which he ran, was approach-ing its tenth anniversary. Arcoiris had undergonean important transformation over the past fouryears, becoming one of southern Ecuador’s leadingconservation organizations. The prestige it hadobtained through conservation work in thePodocarpus National Park had allowed Arcoiris toattract an increasing number of internationaldonors. Through their support, Arcoiris hadexpanded its activities. It had undergone an insti-tutional restructuring to supervise and coordinatethese activities more effectively, which resulted in astrategic plan. Fausto could already see the bene-fits of the restructuring, but still had doubts aboutthe organization’s future.

Arcoiris had grown significantly over the previousyear. The strategic plan, which mapped out activi-ties through 2001, had allowed Arcoiris to specifyits goals and objectives, as well as the actionsrequired to meet them. But satisfying the ambitiousgoals established in the strategic plan wouldrequire diversifying and increasing the Foundation’sfinancing sources. Fausto was unsure whetherfinancial resources would be sufficient to allow hisorganization to implement the proposed activitiesand cover the increased administrative expensesneeded to service the program’s expanded activities.

Fausto was beginning to realize that the method-ology Arcoiris had been using for its strategicplan did not allow managers to visualize theirfuture financing needs or determine the sourcesof such financing.

History and Early ActivitiesIn 1989, a group of university students decided toestablish the Arcoiris Ecological Club, with guid-ance and assistance from the national EcuadorianNature Foundation. Two years later, the clubbecame known as the Arcoiris Foundation and setoff on a path to preserving the biological wealth ofthe Podocarpus National Park.

Arcoiris’ initial actions focused on determiningthe magnitude of ecological damage from min-ing, as well as bringing lawsuits to stop destruc-tive mining practices in the region. With thehelp of the Imperial College of London, Arcoirisanalyzed water pollution in the local rivers,which showed high levels of mercury and othertoxic metals. In 1993, it won legal support, obli-gating the large mining companies to cease theiractivities immediately.

By the mid-1990s, Arcoiris had evolved from anactivist organization into one that took a moreactive role in managing and preserving thePodocarpus National Park. It obtained funding tocarry out a wide range of activities, including Parkmanagement, educating local community membersliving in or around the Park, and launching sus-

Chapter 2

The Arcoiris Foundation Case Study

This chapter provides the backdrop for the concrete

examples provided for each step in the Integrated

Strategic and Financial Planning process. The authors

recommend that you become familiar with this case

study to better facilitate your understanding of the

Arcoiris examples, which are presented following the

descriptions of the steps.

tainable development projects. The Foundation’sinfluence expanded when it joined the Inter-insti-tutional Committee to Defend the PodocarpusNational Park, a group comprising several publicand private organizations. Thus, Arcoiris had grad-ually become one of the most highly regarded con-servation organizations in southern Ecuador,enabling it to expand operations into other areasin the region.

Podocarpus National Park Created in 1982, the Podocarpus National Parkcovers more than 146,000 hectares and is situatedat 800-3,700 meters above sea level. It is the onlyprotected area in southern Ecuador that encom-passes ecosystems ranging from mountainous rain-forest to the Amazon forest. The region contains alarge variety of animal and vegetative species andserves as the principal water source, not only toareas adjacent to the Park, but to more than half ofsouthern Ecuador’s population.

The socioeconomic consequences of environmen-tal degradation became evident in the 1960s,when a series of prolonged droughts forced themassive emigration of regional inhabitants. Atpresent, the municipalities of the region’s two citiesare concerned about preserving the river basinsthat provide their water, which are located withinthe Park’s perimeter and buffer zone.

A final factor leading to the Podocarpus NationalPark’s degradation was colonization, or the expan-sion of the human frontier. Traditionally, inhabi-tants of the Park’s surrounding areas usedslash-and-burn techniques to prepare fields forfarming or to produce firewood. As these woodedareas diminished, incursions into the boundariesof the Park became increasingly frequent.

With Success Came ComplicationsThrough the years, Arcoiris’ success had begun togenerate expectations reaching far beyond whatthe organization was founded to do. There was aperception among certain circles that Arcoiris hadaccess to large financial resources and should

“share” them with other local public and privateorganizations. The government entity charged withoversight of the region’s natural resources was anx-ious to expand Arcoiris’ programs in order toobtain more private financing for the government’sconservation activities. The situation had becomepressing for government park administrators as anew law eliminated the access to funding from thebetter-known Galapagos Islands National Park,decreasing an important income source for thePodocarpus National Park’s activities.

In general, all of the Arcoiris’ members agreed thatthe Foundation’s basic objective was to preservesouthern Ecuador’s natural environment. However,perspectives on action priorities differed. Somethought Arcoiris should concentrate on protectingthe Park, dedicating more resources to scientificresearch and field work. Others thought theFoundation should focus on strengthening educa-tional activities at both academic and local-com-munity levels (including sustainable developmentand agricultural activities). Another group wishedto devote more time and effort to natural resourcesactivities in the region’s capital city, such as cityparks, urban waste, and sewage treatment, asrequested by the local mayor. Several members ofthe management team and board of directors hadbecome especially interested in diverse projects,such as construction of permanent exhibitions toeducate city dwellers on environmental issues.

As the number and complexity of the activitiesincreased, Arcoiris found it necessary to attractnew qualified personnel with technical skills rang-ing from scientific knowledge to education andadministration of personnel. Although Arcoiris hadthe advantage of being situated in Loja, a city withtwo universities, it was difficult to attract staff whowere both motivated and sufficiently qualified.This situation required additional expenses toincrease its work force.

Although Arcoiris had achieved success in pre-serving the Podocarpus National Park from largemining development, the number of individual



miners seemed to be increasing rather thandecreasing. The solution would require achievingconsensus among local authorities, the federalgovernment, police forces, mining unions, and theNational Mining Directorate. Arcoiris had suc-ceeded in obtaining the backing of some localforces, but still lacked the ability to exert pressureat the federal level.

As activities conducted during its early years pri-marily relied upon volunteer time and effort,Arcoiris had not needed to worry about generat-ing income or preparing financial statements.However, as the Foundation became moreinvolved in the daily management and conserva-tion of the Park, the need became clear forimproved planning and funding to finance activi-ties. This realization led Arcoiris to prepare itsfirst strategic plan in 1997. The plan provedtimely, as the credibility generated from submit-ting it to donors enabled Arcoiris to be named bythe Netherlands as one of the managing organiza-tions for funds distributed in the region.

The Foundation’s recent restructuring andgrowth had increased administrative expenses tonearly US$30,000 per year. While most of theseexpenses were covered through current projectfunds, it was unclear whether this would con-tinue to be the case. Arcoiris received most of itsfunding from four sources, one of whichaccounted for about 75 percent of theFoundation’s entire budget. This primary fund-ing source was about to draw to a close as theproject neared completion.

As Fausto began to evaluate the strategic plan, hesoon understood its limitations when he tried todecide which projects were high priority, how todistribute limited funding between projects, whichtypes of projects needed funding, and what typesof resources he should seek from various donors.These questions led Fausto to consider usinganother tool to help Arcoiris’ growth: theIntegrated Strategic and Financial Plan.


The first step in developing an Integrated Strategicand Financial Plan is to begin mapping out a “planto plan.” While investing time in this step mightseem absurd to some, it helps organize the process,determine responsible parties for all steps in theplanning process, evaluate the financial and humanresources needed to complete the strategic plan,and set a timetable to ensure expedient completionof the process. A time limit should be establishedfor the process, as well as for the identification ofproject leader(s) who will ensure follow up withthe work team(s) on progress and deadlines.

The Integrated Strategic and Financial Planningprocess should begin by establishing the coreteam, as well as setting deadlines for completingthe process, determining the desired degree of par-ticipation, and identifying the key actors to beinvolved. The following steps detail the chronolog-ical order for implementing the methodology.

Educating Participants and Decision Makers Integrating financial planning, like strategic plan-ning, involves a participatory process. Program andproject staff often balk at participating in “financialplanning,” assuming this task is the responsibilityof the financial or administrative staff. However,when financial and administrative personnel con-duct the process in isolation, the end result maynot accurately reflect the organization’s futurefinancial needs. Project and program staff knowhow many workshops need to be conducted, howmany field visits will be needed, and how muchgas they will likely consume for different types ofactivities in order to reach stated objectives.

If this is the first time that your organization hasparticipated in Integrated Strategic and FinancialPlanning, you should share information with andeducate staff and board members to achieve a highdegree of their participation and buy-in. This stagecould be as simple as sharing materials or con-ducting a brief meeting.

Determining Who Should FacilitateWhile hiring an outside facilitator will increasethe cost of developing an Integrated Strategic andFinancial Plan, in the long run, it can help movethe process forward more expediently. If an indi-vidual in your organization is experienced in bothformulating financial plans and facilitating partici-patory processes, you may not need an externalfacilitator. However, not all financial managers oraccountants are born facilitators, in much the sameway that all scientists are not necessarily goodaccountants. If you determine your organizationhas an appropriate individual, then have this per-son facilitate the process. Otherwise, hiring anoutside facilitator can save time, promote partici-pation, and help your organization move theprocess forward quickly and efficiently. Regardless

Chapter 3

Planning To Plan(Step 1)

This chapter covers the following points:

❖ Educating Participants and Decision Makers

❖ Determining Who Should Facilitate

❖ Determining the Timetable and Method

❖ Determining Who Participates and AssigningResponsibilities

❖ Involving Board of Directors

❖ Determining Financial Resource Needs

of who is selected to facilitate, ensure that allparties are aware that the process can only moveforward if your organization’s staff membersactively participate in the process.

Defining the Timetable and MethodBegin by determining when you would like tocomplete the process, then work backwards todetermine when other activities should be con-ducted. In many instances, if the appropriate indi-viduals participate, the bulk of the work can bedone in one or two days with follow-up from thefinance department to smooth out historicalfinancial information when needed. If full-dayretreats are not possible, the process can be con-ducted in periodic weekly meetings. However, theentire process should last a maximum of four-to-six weeks.

Determining Who Should Participate and Assigning ResponsibilitiesIt is up to each organization to determine whoshould participate in the process. In organizationswith fewer than 20 employees, it is common thatall staff members are invited to participate fre-quently. In larger organizations (50 or moreemployees), directly involving all staff is impracti-cal. At a minimum, the work groups should com-prise four primary categories:

1. A core team charged with moving the process for-ward—A small group, whose size varies, basedon that of the organization. The team shouldadequately reflect the different levels within theorganization. The team should choose a teamleader and define the roles and responsibilitiesof each member.

2. Programmatic, technical, and administrativedirectors—Those individuals in a supervisoryrole for programmatic, as well as support, areaswithin the organization. Their participation isnecessary to identify the organization’s capacityfor income generation, growth rate, personnel,and other requirements.

3. Project directors and/or staff—Those who supportthe majority of project details, from the types ofactivities needed to comply with proposed objec-tives to the cost of implementing them.

4. The rest of personnel—Other staff members,who provide ideas and feedback through con-tact with the core team. Depending on the sizeof the institution and the individuals involved,their degree of participation in the process mayvary from joint planning sessions with the entirestaff to informative presentations or distributionof written information to facilitate involvement.

Involving Board of Directors If your organization has an active board of directors,some members may choose to become involved andcontribute to the sessions. Their participation canbecome important, especially if a feeling of owner-ship is to be created in a process that can greatlyaffect the organization’s future. In many instances,the board is educated about the process before itbegins and then informed of the results to assist intheir decision-making. How you choose to involveyour board will depend on the nature of yourorganization; in any case, you should consider thisissue before beginning the process.

Determining Financial Resource Needs Once your organization has defined how it will goabout the planning process, it can determine theamount of time staff will need to invest, as well asfunding needs for staff time, meetings, retreats,and printing and distribution of drafts and thefinal document. If your organization lacks theseresources or is unwilling to invest in them at thistime, it is wise to delay developing the IntegratedStrategic and Financial Plan until resourcesbecome available.



Arcoiris Case StudyPlanning To Plan Worksheet

1. Do you wish to use an external facilitator: Yes___X___ No_______

1a. If yes, indicate how much time will be allotted to contract the facilitator, as well as individualswho could potentially fulfill this role.

Time needed to locate facilitator: 1 monthPotential facilitators: P. León, P. MacLeod

2. Ideally, when would you like to finish the planning process: 2 months (December)

3. Work Team:

4. Assigning of Responsibilities:

Individual Role

Executive Director Involve board, contract facilitators, oversee strategic-plan updatingFinancial Director Prepare historical data on previous years’ costs for activity implementation,

as well as administrative costs

Technical Director Inform key staff about and involve them in the process

Executive Assistant Follow up with E.D., F.D., and T.D. to ensure process stays on track

Action Responsible Party Other Participants Date1. Involve board of directors E.D. 10/972. Revise/update strategic plan All staff and board Invite partner organizations 10/97

to participate3. Prioritize and cost out activities All staff and board 10/974. Obtain feedback from the teams on All staff and board 10/97

prioritizing and costing of activities E.D. and F.D. 10/975. Evaluate future income-

generation capacity 6. Develop income/expense projections Consultants, F.D. 10/97

and implementation scenarios7. Conduct final feedback session All staff and board 11/978. Carry out monitoring and evaluation E.D., F.D., and T.D. 12/97

STEP 1 Planning To Plan


As you begin the process of Integrated Strategicand Financial Planning, it is essential that youhave a well developed strategic plan that readilyarticulates what your organization plans to accom-plish in the upcoming years. If your organizationhas had a strategic plan longer than six months, itis important that you review it to ensure that itstill portrays what your organization wishes toaccomplish in its current environment. In general,strategic plans should be reviewed and updatedannually, and more frequently if the local environ-ment changes often. You should conduct progressreviews every three months to evaluate your orga-nization’s performance against the stated objectivesand to determine whether any adjustments areneeded because of external or internal changes.

It is extremely important that technical andadministrative staff participate in this exercise aspart of the integrated team. If you find the need tomake revisions or adjustments, the following sec-tions can provide a basic framework, as well asinformation on where to find more in-depth mate-rials. Once the review is complete, the team willbe asked to define any activities that were not partof the original strategic plan.

What Is a Strategic Plan?A strategic plan clearly defines an organization’spurpose, establishes realistic goals and objectivesconsistent with the organization’s mission state-ment, and defines the organization’s implementa-tion-capacity time frame (in the medium term).The plan’s focus is the future, and its fundamentalconcern is adaptation to a continuously changingenvironment. The more frequently the environ-

ment changes, the more frequently the planningprocess needs to be revisited.

A strategic plan is an organization’s most powerfultool for expressing its vision of how the worldshould be to the rest of society. It is an opportunityto describe those issues the organization believesare key, as well as how to address or resolve themmost effectively. The strategic plan details how theorganization will affect change to address these keyissues, the local community, region, or the world atlarge by capitalizing on its strengths and/or devel-oping new skills. Above all, a strategic plan repre-

Chapter 4

Reviewing the StrategicPlan (Step 2)

This methodology assumes that your organizationalready has a strategic plan or is in the process ofcompleting one. In the event it does not, this chapterprovides fundamental strategic planning concepts,as well as a list of references on this topic, to assistyou further.

This chapter covers the following points:

❖ What Is a Strategic Plan?

❖ Strategic Plan Time Frames

❖ What Is Strategic Planning?

❖ The Vision

❖ Review of the Mission Statement

❖ Review of Internal and External Environments(SWOT Analysis)

❖ Program Areas

❖ Review of Goals

❖ Review of Objectives

❖ Review or Development of Activities

❖ For Further Reading

sents the promise an organization makes to civilsociety about what it wishes to accomplish.

A nonprofit organization is accountable to societyfor its actions. If it does not achieve progress andthe changes proposed in its strategic plan, theorganization has no reason to exist. A strategicplan becomes the only tool that allows society tomeasure the organization’s results. For this reason,it is extremely important that an organizationimplements at least 70 percent of what its strategicplan proposes; otherwise, it has, in effect, brokenits commitment to society.

While strategic plans have no exact time frames,most organizations tend to draft three-to-five yeartime frames, which are divided into 12-month peri-ods. If the external environment is extremely volatileand subject to frequent change, then the strategicplanning time frame should be shorter. For example,when a country experiences extreme inflation orunstable economic and political conditions, such asPeru’s 7,000 percent annual inflation rate during thelate 1980s or Indonesia’ recent civil unrest, the busi-ness sector will adjust its medium- to long-termplanning from the traditional 3-10 years to a muchshorter time frame of about 45-90 days.

The following are time-frame definitions thatassume relatively stable conditions:

❖ Short term—One year or less. This time frame isstandard for annual or operations plans.

❖ Medium term—Three to five years. This timeframe is used to project tendencies and expectedresults. For example, many Mexican institutionsuse six years for medium-term planning to corre-spond with the country’s six-year presidential term.

❖ Long term—Ten years or more. This time frameassumes a relatively stable external environment,reflecting a frequently encountered situation instrategic planning of the past. Through the endof the 1980s, U.S. businesses used this type ofplanning; some studies cite this as one of themain reasons many U.S.-based companies lostsuch a large portion of the international market.

What Is Strategic Planning?Strategic planning is a participatory, systematic, andcontinuous process that helps an organization focusall activities on achieving its mission and ensuringmembers that they are working toward the samegoals. Strategic planning signifies anticipating thecourse of action that should be adopted to reach adesired situation. The definition of the desired situa-tion, as well as the selection and course of action,form part of a sequence of decisions and actions thatare to be accomplished in a systematic and organ-ized manner (IDB, EAIO, and FGC [Brazil]; 1985).

Participatory ProcessA strategic plan should not be developed by oneindividual working in isolation, as some organi-zations have done. The end result of one personproviding all strategic leadership is staff andboard members who do not feel they are con-tributing to the direction of the organization’sfuture growth. In strategic planning, the partici-patory process is as important as the end result,which is a documented strategic plan. The higherthe degree of staff involvement in the process, themore valid the strategic plan becomes as a docu-ment that reflects the vision of the entire organi-zation. To be valid, a planning exercise shouldgenerate consensus on the organizational direc-tion, providing an opportunity for open dialogueamong those involved to promote arriving atjoint conclusions. For this reason, it is essentialthat representatives from all organizational levelsare involved in the process.

Systematic ProcessNumerous strategic planning methodologies existthat could be implemented by any one organiza-tion. The method used is often dictated by accessto resources (e.g., consultants, books, board mem-bers) and previous staff experience with any givenmethodology (see “For Further Reading” sectionbelow). All methods involve a process that followsspecific steps to develop the strategic plan,develop key elements (mission, goals, and objec-tives), contemplate the organization’s strengths andweaknesses, and consider the external factors that


influence how the organization works. (Informationprovided later in this chapter details the key ele-ments and steps needed to undertake any type ofstrategic planning.)

In general, once the objectives are defined, thestrategic planning process is considered completed,and emphasis turns to developing annual imple-mentation or operations plans. However, theConservancy has observed that one of the greatestobstacles to an organization’s achieving an effectivestrategic plan has been the lack of financial projec-tions to test the organization’s implementationcapacity. For this reason, the methods presentedhere include identifying activities to reach objec-tives, as well as conducting a financial analysis.This integration of the strategic and financial plansis an essential component of the strategic planningprocess that better determines the plan’s viability, aswell as future financial needs.

Continuous ProcessOnce the strategic plan has been developed, someorganizations consider their planning efforts com-plete. However, to maximize the time and effortalready invested, the process should include peri-odic revisiting of the strategic plan. This allows theorganization to monitor and evaluate progress andreflect on any internal or external changes thatmight influence the organization’s ability to imple-ment the plan or need to adjust it. Strategic plan-ning should be able to incorporate, accommodate,and reflect changes to the organizational environ-ment. If the planning process is not periodically

revisited, the plan itself can become obsolete andof little value as a guide to direct the organization(Figure 2).

The Vision Confusion often surrounds the distinction betweenan organization’s vision and its mission. A visionstatement describes how the world (society at largeor local community) would be theoretically if yourorganization were successful (e.g., people living inharmony with nature). Organizations may have aunified vision that may or may not be articulatedin the form of a vision statement. A mission state-ment, essential for all organizations, succinctlycommunicates who your organization is, what youare trying to accomplish and why, and where andfor whom the work is being done (e.g., TheEvergreen Foundation is dedicated to conservingour country’s natural environment for the benefitof present and future generations).

Regardless of whether your organization choosesto articulate its vision in a formalized statement, itis nonetheless the dream you aspire to achieve.Visions have led some of the world’s most famousindividuals, such as Mother Teresa of Calcutta,Mahatma Gandhi, Siddhartha Gautama (Buddha),Adolf Hitler, Joseph Stalin, or Bill Gates to trans-form the world for good or evil, focusing efforts onattaining world peace, elimination of hunger, ahigher quality of life, social and economic equality,or world domination. Similarly, a vision guides anorganization’s mission and strategies and motivatespersonnel to work together. As Robert Greenleafstates, “The vision of many is more powerful thana charismatic leader.”

Review of the MissionThe mission statement articulates the organiza-tion’s purpose or business. It should be shortand succinct, with a maximum length of 40words (fewer words is better). All employeesshould be able to readily articulate it, and thoseoutside the organization should be able to easilyunderstand it.


Figure 2. Continuous Process of StrategicPlanning

Plan Evaluate

Implement

The mission statement should convey:

Who is doing the work

What is being done

Where it is being done

Why it is being done

(for) Whom it is being done (beneficiary)

Some organizations opt to include the organiza-tional values and beliefs and/or “how” they willachieve their purpose. Research has shown that aclear, agreed upon mission statement is one of thefour primary characteristics of successful nonprofitorganizations (the other three are a strong andcompetent executive director, dynamic board ofdirectors, and an organization-wide commitmentto fund-raising) (Knauft, Berger, and Gray ).

While it is not advocated that the mission state-ment be changed frequently, some circumstanceswarrant it. Some organizations have found thattheir mission no longer accurately reflects whatthey would like to do or are currently doing. Thisoccurs when the mission was either narrowlydefined or when the organization’s growth hasevolved away from its primary purpose. Undersuch circumstances, the organization will need todetermine whether its mission should be redefinedor whether its current and future work need to beredirected to accomplish its mission.

In some instances, organizations have discoveredthey have drifted away from their mission. Thishas been known to occur when organizationsdecide to take advantage of available donor fund-ing that does not necessarily fit within the organi-zation’s stated mission or strategic plan. In someinstances, this may prove a beneficial move for theorganization; more often, however, the result isthat donors drive the type of work the organiza-tion implements. The existence of a strategic planused to guide the organization will help ensurethat the organization directs itself, rather thanallowing others to decide how and where it works.

If your organization believes it is warranted,review the mission statement. You may need toreformulate it if your answer to any of the follow-ing questions is “no”:

❖ Do the employees and board members know themission?

❖ Can they readily repeat it?

❖ Is it easily understood by individuals outside theorganization?

❖ Does it reflect what the organization currentlydoes?

❖ Does it reflect what the organization wishes to do?

Review of Internal and External Environments (SWOT Analysis)The SWOT Analysis (Internal Strengths andWeaknesses, and External Opportunities andThreats) is one of the best known and most oftenused tools in the strategic planning process. Thisessential step allows an organization to reflect onwhat it would like to achieve and to use thisinformation to refine what the strategic planshould encompass (Table 2). Allison and Kaystate that

No organization exists in a vacuum. The definitionof strategic planning stresses the importance offocusing on the future within the context of an ever-changing environment—taking into account themyriad political, economic, social, technological,demographic, and legal forces that affect ourworld daily. In addition to assessing the externalenvironment, it is important to understand the orga-nization’s internal environment—what resourcesand capacities the organization brings to the workof its mission (Allison and Kay, 1997).

If more than a year has passed since your organi-zation conducted a SWOT Analysis, conduct oneat this time. If you have the conclusions of a cur-rent SWOT Analysis, it should be reviewed byall participants in the planning process and keptin mind when reviewing the goals, objectives,and activities.



Internal Analysis: Strengths and WeaknessesTo help your organization define exactly how itshould be working, it is essential that it have aclear idea of how its current situation (includingabilities and deficiencies) affects its capacity toimplement activities. This internal analysis allowsyour organization to capitalize on its strengths anddecide which weaknesses need to be addressed.The following items might be evaluated, but in noway represent a comprehensive list of what yourorganization may wish to include in its evaluation:

❖ Capacity of board of directors,

❖ Capacity and experience of personnel,

❖ Volunteers,

❖ Reputation of organization and its programs,

❖ Program quality,

❖ Information management,

❖ Accounting and financial systems,

❖ Contacts, and

❖ Financing sources.

External Analysis: Opportunities and ThreatsThe external analysis helps determine what exter-nal factors might affect the organization. An addedbenefit to assessing the external environment is thepossibility of determining strategic partnershipsthat could be developed with other groups orcompanies that may be able to help your organiza-tion reach its goals more efficiently. In this portionof the SWOT Analysis, you should consider:

❖ Financing source trends (many donors changetheir focus every few years);

❖ Changes or trends in your organization’s field ofwork;

❖ Political, social, and economic environment;

❖ Demographic factors;

❖ Technological innovations;

❖ Regulatory or legislative changes; and

❖ Competition (for funds and provision of benefi-ciary services).

Program Areas Within a strategic plan, program areas are usuallybased on how the organization is currently struc-tured, such as existing departments. While pro-grams may be recognized as separate, it isimportant that areas of overlap be searched outand that programs or departments work togetherto avoid duplicating efforts. Program areas are usu-ally divided into the following categories:

❖ Programmatic—Organization’s thematic or geo-graphic areas;

❖ Organizational—Organizational developmentwork (e.g., creation of alliances or financial sus-tainability); and

❖ Operational—Administrative support systems(e.g., management or financial administration).

Review of GoalsGoals are outcome statements that define what anorganization is trying to accomplish. Typicallywritten in a general way, goals statements alsodescribe how an organization will work to achieveits mission and usually cover the same time frameas the Integrated Strategic and Financial Plan. Atthis stage, you will begin to use the SWOTAnalysis conclusions, along with the vision andmission statements, to verify the goals your organi-zation is responding to what it deems as the mostimportant issues. In some instances, certain pro-gram may have several goals. In others, one goalmay apply to more than one program area, inwhich case different departments need to ensurethey are working together to reach the same goalin the most efficient and effective way possible.

In general, developing programmatic-based goalsis relatively simple for most organizations.However, keep in mind the organizational andoperational areas. In an age of ever-increasingcompetition from increased numbers of nonprofitorganizations, it is essential that organizations plannot only for how they will make the world a betterplace, but how they will make their organizationstronger and more efficient over the long term.


Strengths:- Strong, diverse, and potentially “great” board- Assets (land and infrastructure)- Funding

- Five-year (donor 1)- Private donors- Good standing as national NGO- Income generation

- Good relationships with donors, other organizations,and private sector- Location (base work at supreme scuba diving spot)- Credibility with

- Local donors - National government- Link with local people respected

- Staff- Organizational infrastructure- Nonconfrontational vision- Programs receiving attention- Successful/good reputation- Research benefits- Developing partnerships (networking and alliances)

Weaknesses:- No strategic plan, operations, fundraising, marketing/PR- Few full-time staff- Little financial skill- New, inexperienced board- Little oversight/leadership from board, distant from proj-ect site

- New director - Lack of policies and procedures, as well as communica-tion among board members and staff

- Constitution not finalized/not completed- Funding

- No long-term funding secured- Overdependence on two donors- Not optimizing potential income generation

- Research potential not harnessed - Space constraints - Remote location- Success not measurable

Opportunities:- Interest in funding local nonprofits for:

- Education- Marine conservation- Research- Biodiversity conservation- Community-based conservation- Institutional strengthening

- Government (now supports NGO through policies)- Relationship with national/international universities,partnerships, government, and other NGOs

- Learn from others’ experiences- Leverage opportunity to other sights, expansion- Need for education work and skills,- Land tenure/resource management system- Local independence of resources- Other stakeholder involvement- Marine diversity undamaged- Terrestrial research opportunity- Archeological research- Location- Influence/learn from new universities focus- Local labor market- Alternative income sources, community guide training

Threats:- Jealousy- Rapid growth, over-extended- Poor financial management- Donor driven, donor dependency, nondiversified income- Staff turnover, recruitment, and salary competition- Too much funding now, conservation funding decreasing- Government views of NGOs, difficulty obtainingresearch permits, government support for researchmay drop

- Environmental threats:land-use practices, global warming, dynamitefishing, human-use impacts, modern fishing gear,timber harvesting, subsistence-level agriculture,storm damage, mining exploration, subsistence-levelhunting, anthropogenic fire, urbanization/popula-tion growth, indiscriminate fire lighting

- Economic situation, population growth, handout mentality - Land owner issues, lack of broad community support

Table 2. SWOT Analysis Conducted by a Conservation Organization Located in the Pacific


Review of ObjectivesObjectives should be precise, measurable, time-phased result statements that describe how yourorganization’s goals will be reached. They shouldallow your organization to not only plan what itwould like to achieve during the upcoming years,but also provide a means of monitoring progressand evaluating results. Each goal should have atleast one objective (some may have several). Formonitoring and evaluation to occur, the objectivesneed to be SMART (Table 3).

You should review your objectives to ensure thatthey meet the above criteria and to provide ameans of evaluating your progress.

Review or Development of ActivitiesActivities are the individual steps an organizationneeds to take during the upcoming years to pro-duce results. Most organizations think of activitieswhen putting together their annual operations orproject implementation plans; however, manyorganizations have not traditionally included activ-ities in strategic planning. It is important that theydo so in order to attain a degree of accuracy whenprojecting financial needs.

For example, a Honduran community develop-ment organization set an objective of “assistingfive communities obtain access to safe drinkingwater by the end of year three.” It might be diffi-cult to estimate how much funding would beneeded to reach this objective. However, if the

organization lists the corresponding activities, itbecomes possible to estimate more accurately thecost of each activity, as well as the number ofhuman resources needed.

Based on the above example, the activitiesincluded the following:

❖ Identify the five priority communities (thosewith the most crucial need for access to cleandrinking water);

❖ Contract studies on the design of appropriatewater purification systems for each community;

❖ Involve local communities in organizing andmanaging the project;

❖ Install five water purification systems;

❖ Train community members in the use and main-tenance of the purification system; and

❖ Assist the communities to protect water sources.

If your organization’s current strategic plan doesnot include activities, list them using the work-sheet (Steps 2, 3, and 4) found at the back of thismanual. This work can be done in conjunctionwith Establishing the Organization’s Prioritiesand Estimating Costs of Implementing Activities(Steps 3 and 4). The most effective way todevelop, prioritize, and estimate the cost of activ-ities is for the current staff involved in imple-menting the objectives (including field staff) towork in teams to develop this information. The

Table 3. SMART Objectives

Characteristic Description

S Specific What exactly will be doneM Measurable What the expected results will be, expressed in either

quantifiable or qualitative termsA Achievable Whether the objectives are realistic, given the amount of

time, funding, staff capacity and abilityR Relevant Whether the objectives address key issues and provide

solutions

T Time-phased How long it will take to accomplish the objective

teams will often mirror existing departments,such as environmental education, communitydevelopment, and conservation management.When two or more departments are working toachieve the same goal, it is recommended thatdepartment representatives work together todevelop the activities, which will also help themdetermine how best to work together and who isresponsible for which portions once the plan isunder way.

Once the individual teams have completed thetask, all teams should assemble to share informa-tion and provide constructive feedback. In manycases, based on this joint review session, activities,their costs, or their prioritization are adjusted toreflect the organization’s priorities or fundingcapacity more accurately.

For Further ReadingIf you would like additional information on orga-nizational development and strategic planning, theauthors recommend the following publicationsand web sites:

Allison, Michael, and Jude Kay. 1997. StrategicPlanning for Nonprofit Organizations: A PracticalGuide and Workbook. New York: Wiley.

Laycock, Kerry D. 1993. “Strategic Planning andManagement Objectives.” In The NonprofitManagement Handbook: Operating Polices andProcedures, ed. Tracey Conners. New York: JohnWiley and Sons.

Barry, Bryan. 1997. Strategic Planning Workbookfor Nonprofit Organizations. Saint Paul, Minn:Amherst H. Wilder Foundation.

Web Sites: http://www.allianceonline.orghttp://www.supportcenter.org.



Arcoiris Case Study

Arcoiris Strategic Plan

Program Area: Community Development

Goal 1: Increased public awareness of the importance of Podocarpus National Park and creation of afavorable environment for conservation activities

Objective 1: Actively involve seven communities in the support and management of the natural resourcesActivities:

1.1.A Subsidize community reforestation efforts in the Park’s buffer zone1.1.B Develop new compatible economic development activities with the communities1.1.C Expand the community strengthening program to reach all seven communities1.1.D Continue to implement environmental education, with heavy emphasis on educating adults in the community1.1.E Expand the irrigation program to promote farming in sectors more remote from the Park’s borders1.1.F Train community members in sustainable farming, economic development, and small business management

Objective 2: Educate population on the importance of conserving the ParkActivities:

1.2.A Train high school teachers in environmental and conservation related curricula1.2.B Provide internships on ecology research for 20 high school students1.2.C Promote student visits to the Park1.2.D Develop interactive educational games to be used by elementary school teachers1.2.E Make visits to the schools1.2.F Develop and distribute interactive games1.2.G Make student field trips to the National Park1.2.H Provide agro-ecological training1.2.I Create ecological clubs1.2.J Arrange student exchanges between schools1.2.K Create interactive teaching tools1.2.L Give presentations in local communities1.2.M Manage the school assistance program1.2.N Execute program1.2.O Purchase a bus

At the end of 1997, Arcoiris prepared its first strate-gic plan. The plan defined the organization’s mission,as well as four specific goals to be achieved over athree-year time frame. Specific objectives were

defined to describe how the goals would be achieved.The final step was to develop detailed activities toachieve each objective.

Mission: Contribute to the conservation of the environ-ment, biodiversity, and natural resources of PodocarpusNational Park and the southern region of Ecuador by

implementing environmental education, communitydevelopment, research, and public action programs.

STEP 2 Reviewing the Strategic Plan


Review the excerpt from Arcoiris’ strategic plan. Based on the information provided about Arcoiris thus far,answer the following questions:

1. Are the objectives measurable and attainable? Do they contribute to accomplishing the stated goals? 2. Have any changes occurred in the external environment that would merit changes in the objectives and/or

strategies?3. Are there objectives that contribute to accomplishing more than one goal? If so, should the objectives be

undertaken as one programmatic team charged with the entire responsibility or as a collaborative effortbetween teams?

4. Based on the list of activities supplied for Goal 1, Objective 2, do the activities appear to contribute toattaining the specified objective?

Program Area: Park Management

Goal 2: Protection of the integrated PodocarpusNational Park’s natural resources and surroundingareas

Objective 1: Demarcate 60 percent of the Park within

three yearsActivities:2.1.A Complete sign posting at the Park’s borders

Objective 2: Protect 60 percent of the Park withinthree years

Activities:2.2.A Purchase land in the Park’s buffer zone2.2.B Construct three community centers2.2.C Purchase and install a communications system

Program Area: Environmental PolicyGoal 3: Application of favorable environmentalpolicies and laws

Objective 1: Launch the environmental policy programActivities:3.1.A Obtain positive policies through public debates3.1.B Promote inter-institutional work3.1.C Local transportation

Program Area: Finance and AdministrationGoal 4: Efficient management of the Foundation

Objective 1: Administrate human resources efficientlyActivities:4.1.A Develop a policies and procedures manual4.1.B Institute a training program (e.g., accounting,

language, technical)

Objective 2: Administrate financial resources efficientlyActivities:4.2.A Develop budgets and ways to monitor them4.2.B Develop financial plans4.2.C Arrange for external audits

Objective 3: Administrate materials efficientlyActivities:4.3.A Monitor inventory4.3.B Obtain and install three computers4.3.C Remodel office space

Objective 4: Develop a public imageActivities:4.4.A Involve the media in Arcoiris’ activities4.4.B Celebrate the 10-year anniversary with a gala 4.4.C Create a TV program on environmental issues

Objective 5: Financial self-sufficiencyActivities:4.5.A Design and implement a self-sufficiency plan4.5.B Contract a self-sufficiency coordinator

Arcoiris Strategic Plan (continued)

Exercise Step 2


Revised Arcoiris Strategic Plan

Possible Revisions to Goals and Objectives

Note: The revised goals and objectives below are included only to provide examples ofhow goals and objectives should be structured (in light of the objectives that were poorlystructured for the purpose of this exercise, which you have just reviewed in the originalstrategic plan). The original strategic plan will be used in subsequent steps of the casestudy, not in this revised set of goals and objectives.

Goal 1: Increased public awareness of the importance of Podocarpus National Park and creation of a favorable

environment for conservation activities

Objective 1: Actively involve seven local communities in managing environmental conservation activities in

Podocarpus National Park

Objective 2: Educate 200 high school students per year on the value of conserving natural resources

Goal 2: Protection of the integrated Podocarpus National Park’s natural resources and surrounding areas

Objective 1: Demarcate 60 percent of the Park within three years

Objective 2: Develop an integrated Park management system comprising local community-member, govern-

ment, and nonprofit representatives

Goal 3: Application of favorable environmental policies and laws

Objective 1: Launch the environmental policy program

Goal 4: Strengthened internal capacity to function independently and efficiently in the long term

Objective 1: Establish efficient and accurate administrative, human resources, and financial management

systems

Objective 2: Develop a public image in the region as a serious and successful conservation organization

Objective 3: Establish a financial self-sufficiency program that generates a profit equivalent to 20 percent of

annual administrative costs by the end of year three


STEP 3. Establishing the Organization’s PrioritiesPrioritizing objectives and activities provides ahigh degree of flexibility within the strategic plan,affording space to include activities that may notyet have financing, while, at the same time, identi-fying activities that are indispensable if the organi-zation is to comply with its mission. In thismethodology, the objectives and activities aredivided into the following three categories:

1. High Priority—Actions that, if not completed,corresponding objectives will not be met, run-ning the risk of not fulfilling the institution’smission. As a general rule, when evaluating thestrategic plan, 100 percent of high-priorityactions should be completed.

2. Medium Priority—Actions that should con-tribute greatly to complying with the objectives.Under an ideal scenario, they would be com-pleted to the same degree as high-priorityactions.

3. Low Priority—Actions that could be imple-mented during a determined time frame if thefunding existed. They are not essential forcompliance with objectives, but are useful incontributing to the organization’s mission.

While various external and organizational factorsinfluence how activities are prioritized, you shouldalways consider the following four key factors:

❖ Long-term effect of the activity on contributingto achieving the proposed objective,

❖ Financial resources needed in relation to otherstrategies that might achieve the same or similarresults at a lower cost,

❖ Ability to meet the objectives during the pro-posed time frame, and

❖ Relationship of the activity to current ongoingactivities.

Who Should Prioritize Activities?When implementing the priority-assigning exercisewithin an organization, it is often most useful forthe original work groups that defined the activitiesto assign priority levels and estimate implementa-tion costs. This information can then be sharedwith the wider planning group for input, com-ments, and discussion on any potential changes inprioritization. In some organizations, the workteams assign priorities in a plenary session, reach-ing consensus together on each activity.

Chapter 5

The Heart of IntegratedStrategic and Financial

Planning (Steps 3-8) This chapter covers the following points:

❖ Establishing the Organization’s Priorities

❖ Estimating Costs of Implementing Activities

❖ Estimating Administrative Costs

❖ Projecting Income

❖ Projecting Income and Expenses by Program Area

❖ Developing Scenarios

* * *Steps 3-8 consist of the financial projections andcost estimates for the Integrated Strategic andFinancial Plan. In most instances, Steps 3-6 can bedone in one or two days, if appropriate staff mem-bers are involved (detailed under each step).


Activity No. Reason for Priority PriorityActivity1.1.A

Activity1.1.B

Activity1.1.C

Activity1.1.DActivity1.1.E

Activity1.1.F

Program: Environmental Education and Community DevelopmentGoal 1: Increased public awareness of the importance of Podocarpus National Park and creation of a

favorable environment for conservation activities

Objective 1 Actively involve seven communities in the support and management of natural resources, over a three-year period

Arcoiris Case StudyPrioritizing Activities

The Arcoiris Foundation’s initial actions were focused ondetermining the magnitude of ecological damage causedby mining, as well as bringing lawsuits to stop destructivemining practices in the region. With the help of theImperial College of London, Arcoiris analyzed water pol-lution in the local rivers, which showed high levels of mer-cury and other toxic metals. In 1993, the Foundation wonlegal support, obligating the large mining companies toimmediately cease their activities.

By the mid-1990s, Arcoiris had evolved from an activistorganization into one that was actively engaged in Parkmanagement and preservation. It obtained funding tocarry out a wide range of activities, including Park man-agement, educating local community members living in oraround the Park, and launching sustainable developmentprojects. The Foundation’s influence expanded when itjoined the Inter-institutional Committee to Defend thePodocarpus National Park, a group comprising severalpublic and private organizations. The Foundation gradu-

ally became one of southern Ecuador’s most highlyregarded conservation organizations, enabling it toexpand operations into other areas of the region.

In general, all of the Foundation’s members agreed thatthe organization’s basic objective was to preserve south-ern Ecuador’s natural environment. However, perspectivesregarding action priorities differed. Some thought theFoundation should concentrate on protecting the Park,dedicating more resources to scientific research and fieldwork. Others believed educational activities, including sus-tainable development and agriculture, needed strengthen-ing at both academic and community levels. Anothergroup wished to focus more on natural resources activities(city parks, urban waste, and sewage treatment, asrequested by the local mayor) in the region’s capital cityof Loja. Several members of the management team andboard of directors had become especially interested insuch diverse projects as construction of permanent exhibi-tions to educate city dwellers on environmental issues.

Subsidize community reforestation effortsin the Park’s buffer zone

The communities are primarily subsistence farmers and will not stopdestructive farming practices without alternative income sources.

Initial success has been achieved through work with a pilot commu-nity, and its integration into conservation activities. This work willsupport ongoing activities and strengthen the organization’s posi-tion within the communities.Initial phase of this program has shown some limited success, butrequires ongoing attention to obtain desired results.

It is hoped that moving agricultural activities away from the park willreduce community encroachment, but this requires adequate water.

Local buffer-zone communities have been educated on environmen-tal issues and are interested in reforesting their properties, but lackfunds to purchase plants/materials.

Develop new compatible developmentactivities with the communities

Expand the community strengthening pro-gram to reach all seven communities

Continue to implement environmentaleducation; heavy emphasis on adults

Expand irrigation program to promotefarming farther from the Park’s borders

Train community members in sustainablefarming, economic development opportu-nities, and small business management

Training activities must accompany economic development activitiesto ensure long-term viability and success.

1. Based on the information provided thus far, what priority would you assign each activity if financialresources limit you to only two high-priority, two medium-priority, and two low-priority activities?

2. What reasons led you to these conclusions?

Exercise Step 3

STEP 3 Establishing the Organizations Priorities


STEP 4. Estimating Costs of Implementing ActivitiesEstimating the costs of implementing activities isthe very soul of financial planning. If the costs ofimplementing proposed activities are unknown, itis not possible to evaluate the feasibility of imple-menting them or to determine a strategy to obtainthe funds. By costing out activities, you can realis-tically identify potential financial goals.

Who estimates the costs of implementing?Many institutions charge the administrative teamwith this task. However, when this happens, infor-mation collection is often delayed or inaccurate, asthe technical personnel are more familiar with theactual costs of activity implementation. The teamthat implements the activities should be responsi-ble for estimating the cost of executing them. If amistake is made in calculating costs, these individ-uals will suffer the consequences. At the sametime, this team can always ask the administrativeteam for assistance with the exercise. The personcharged with supervising the area or projectshould be involved in the quality control of theinformation produced.

You can identify costs in three ways:1. Activities currently being implemented: If the

activities are already being implemented, thebudgeted costs are likely to recur, and adjust-ments to some projections can be made (often-

times, activities are being implemented withinthe budgeted costs that have been adapted tofinancial limitations). It is important that thecosts accurately reflect what the activity wouldcost to implement.

2. Activities that have been carried out in thepast: If a particular activity (or one similar toit) has been executed in the past, it is useful torefer to the historic costs. The accountingdepartment can be helpful in this area, as can arevision of past budgets. It is unnecessary toconduct exhaustive research; instead, refer tothe most recent costs that can be found. Ifdoubts exist on the validity of those actualcosts, it would be prudent to request one ortwo quotes to verify the most important costs.

3. Activities that have never been implemented:In addition to referring to the knowledge ofinvolved individuals in implementing activities,it would be prudent to verify costs or ask forquotes for some components, if possible.

When estimating costs, make sure to include stafftime for activity implementation. If this breakdown proves difficult for your organization, youcan include a line item for “salaries” under eachprogram area.


Projects to be carried out (US$) Priority 1998 1999 2000 TotalProgram 1: Community development High1.1.A Reforestation High 11,667 6,667 6,667 25,0011.1.B Production activities High 30,000 15,000 15,000 60,0001.1.C Community strengthening High 1,667 1,667 1,667 5,0011.1.D Environmental education High 6,667 1,667 1,667 10,0011.1.E Irrigation High 80,000 0 0 80,0001.1.F Training High 20,000 0 0 20,000

150,001 25,001 25,001 200,003Program 2: Environmental education High1.2.A Teacher training workshops High 1,500 2,000 2,500 6,0001.2.B Internships Low 2,000 2,000 2,000 6,0001.2.C Teacher selection Low 1,000 500 0 1,5001.2.D Inter-institutional agreements Medium 1,000 0 0 1,0001.2..E Observation tours Medium 5,000 10,000 0 15,0001.2.F Interactive educational gamesHigh 4,000 4,000 3,000 11,0001.2.G Visits to the National Park Medium 5,000 5,000 5,000 15,0001.2.H Agro-ecological practices High 6,000 4,000 1,000 11,0001.2.I Establishment of ecology clubsHigh 8,000 2,000 0 10,0001.2.J School exchanges Low N/D N/D N/D1.2.K Preparation of educational material High 15,000 10,000 10,000 35,0001.2.L Community talks Medium N/D N/D N/D1.2.M Internal management Low 1,000 1,000 1,000 3,0001.2.N Program implementation Medium 5,000 5,000 5,000 15,0001.2.O Bus purchase High 40,000 0 0 40,000

94,500 45,500 29,500 169,500Program 3: Conservation and management Medium2.1.A Signposting Medium 25,000 25,000 0 50,0002.2.A Purchase of land Medium 166,667 166,667 166,667 500,0012.2.B Construction of community centers Medium 50,000 50,000 50,000 150,0002.2.C Communication systems High 15,000 0 0 15,000

256,667 241,667 216,667 715,001Program 4: Policies and legislation Low3.1.A Environmental public discussions Low 5,000 0 0 5,0003.1.B Coordination of institutional work Low 6,667 3,333 0 10,0003.1.C Citizen mobilization Low 3,000 0 0 3,000

14,667 3,333 0 18,000Program 5: Consolidation and administration Low4.1.A Manuals Low 50 -- -- 504.1.B Training Low 5,000 5,000 5,000 15,0004.2.A Budgets Medium 500 500 500 1,5004.2.B Financial reports Medium 500 500 500 1,5004.2.C External audit High 1,000 1,000 1,000 3,0004.3.A Inventory Low 500 250 250 1,0004.3.B Office equipment Medium 2,000 1,000 1,000 4,0004.3.C Office space Low 1,000 1,000 1,000 3,0004.4.A Press involvement Low 500 500 500 1,5004.4.B Tenth anniversary High 4,000 -- -- 4,0004.4.C Television program Low 500 -- -- 5004.5.A Self-sufficiency plan Medium 500 -- -- 5004.5.B Contracting of self-sufficiency coordinator Medium 2,500 -- -- 2,500

18,550 9,750 9,750 38,050

Total 534,385 325,251 280,918 1,140,554

Arcoiris Case StudyEstimated Costs of Implementing Strategic Plan Activities

STEP 4 Estimating Costs of Implementing Activities


STEP 5. Estimating Administrative CostsAdministrative costs include all necessary expensesfor the organization to function, regardless of thenumber or type of projects it implements. Variouslyreferred to as “fixed,” “indirect,” “overhead,” or“operating” costs, these costs are usually expressedas a percentage of the overall institutional budget(such as administrative costs of 20 percent). Somepotential administrative costs include executiveoffices expenses, accounting, and fund-raising.

In theory, the greater the number of projects, thesmaller the percentage of administrative costs,based on the advantages of the economies of scale.However, there is a limit to this relationship, basedon the capacity of the infrastructure, equipment,and personnel needed to support an increasednumber of projects. For example, when an institu-tion begins with one or two projects, an account-ant can manage all of the accounting needs for theorganization. As the complexity of donor require-ments increases and the volume of projectsincreases, the organization will reach the pointwhere it needs to hire more accounting personnel.

Within nonprofit organizations, confusion oftenexists with respect to these costs. Many donors

refuse to pay them or will only pay a small por-tion. Consequently, many organizations includethese costs as direct project costs (percentage ofthe accountant’s time or of the electricity used forthe project). Unfortunately, a solution to thisdonor dilemma usually does not exist. Regardlessof how these costs are charged, it is imperativethat organizations understand their real adminis-trative costs. The greater risk is that many organi-zations lose sight of their real administrative costs,which limits their ability for planned futuregrowth or projecting potential deficits.

Who should identify administrative costs? Administrative or accounting personnel, in con-junction with the executive director, should com-plete this exercise. It is also recommended thattechnical area directors be involved to promote anincreased understanding of the need for these costsand to help determine whether there may beincreased need for administrative services, based onincreases in projected activities. It is also importantto involve some board members to facilitate laborsupervision. In the Arcoiris case, administrativecosts were based on historical data, which providedthe basis for an assumption of approximately a 10percent increase in costs each year.


Costs Historic Data Projected Costs1997 1998 1999 2000

Salaries 11,250 12,500 13,800 15,000Taxes 540 600 700 770Benefits 675 750 835 900Total administrative salaries 12,465 13,850 15,335 16,670

Rent/mortgage 2,070 2,300 2,530 2,783Utilities 1,125 1,250 1,375 1,511Communications 3,150 3,500 3,850 4,235Vehicle maintenance 270 300 330 363Equipment maintenance 400 500 550 605Equipment purchase 400 500 550 605Annual audit 900 1,000 1,100 1,210Public relations 360 400 440 484Annual report 270 300 330 363Newsletter 90 100 110 121Fund-raising (travel, grant writing) 4,500 5,000 5,500 6,050TOTAL 26,000 29,000 32,000 35,000

Estimated Annual Administrative Costs (US$)

STEP 5 Estimating Administrative Costs

STEP 6. Projecting Income In this step, you will project the organization’sfuture income. If you have done so for previousfund-raising efforts, activities can be grouped intoprojects, always taking into account that eachactivity corresponds to a specific objective. Theprojects are the instruments the organization usesto raise funds from potential donors and can coverone-to-several years. It is important to rememberthat fund-raising is an ongoing process—one thatseldom produces immediate results. In mostinstances, the average time period from initial con-tact with a potential donor to successfully receiv-ing funds from that donor ranges from six monthsto two years.

If the potential donor is a multilateral or bilateralinstitution, the time investment could easily dou-ble. If your organization lacks secured funding oris not currently cultivating donors to fund activi-ties during the first year of the strategic plan, youmay need to evaluate what can actually be accom-plished. At the same time, it is not uncommon forlittle funding to be secured for the third yearonwards of a strategic plan, as donor cultivationmay not have begun or may have just recently got-ten under way.

For the purposes of this manual, the probability ofraising funds has been divided into six categories(Table 4). The actual percentages your organiza-tion assigns to each category may vary from theones presented here, and should be based on yourprevious fund-raising experience and donor culti-vation activities. For some organizations with

strong fund-raising skills and experience, present-ing a proposal could represent a 90 percent proba-bility of receiving funding. For others who are stillhoning their fund-raising abilities, presenting aproposal could rank less than 50 percent.

To provide a more conservative overview of thecurrent financial situation, only income that is 90-100 percent secured (listed in Table 4 as “projectapproved/contract signed” or “projectapproved/contract not signed”) should be countedas secured income.

Who should project income?Those individuals charged with fund-raising anddonor follow-up, as well as technical and adminis-trative staff, should be involved in this exercise. Itis important that this group work as a team, notonly for this exercise, but also on an ongoing basisto fully coordinate fund-raising activities, ensureproper costs are included in proposals, and tomore accurately develop proposal concepts thatreflect funding needs.

This team should develop a comprehensive list ofcurrent donors, grants, and funding amounts. Inaddition, this team should draft a list of potentialdonors who might be approached for funding orother projects. For each activity or program area,this analysis should be conducted to determine theprobability of funding, as well as potential fundingamounts. This information will be summarizedand transferred to the consolidated ProjectedIncome and Expense worksheet (Step 7).


Table 4. Fund-raising Probability, by Category% Secured

Income Category100 Project approved/contract signed90 Project approved/contract not signed75 Proposal presented/donor has indicated interest50 Proposal being prepared/donor has indicated interest25 Project in initial discussion stage with donor0 No donors identified or limited probability


Arcoiris Case Study

3 Conservation and Management

3.1.A Signposting 1998 25,000 Border Foundation 25,000 100

1999 25,000 Border Foundation 25,000 100

3.1.B Land purchase 1998 166,667 Adopt an Acre 100,000 25

Land Rescue Foundation 50,000 25

Not Identified 16,667 0

1999 166,667 Generous Foundation 19,917 100

Adopt an Acre 100,000 25

Land Rescue Foundation 50,000 25

2000 166,667 Buy Land NGO 39,500 100

Adopt an Acre 100,000 25


3.1.C Community centers 1998 50,000 Rainforest Foundation 10,000 100

Education Foundation 25,000 25






3.2.A Communication system 1998 15,000 Green Fund 10,000 90

USAID 5,000 25

Program Area/Activities Year Estimated Potential Income Amount Probability Cost (US$) Source by Source Level (%)

STEP 6 Projecting Income


STEP 7. Projecting Income and Expenses by Program AreaIn this step, you will summarize, or simply addthe total estimated costs by program area, andthen do the same for projected income by programarea. While administrative costs are not a programarea, the projected annual expenses and incomeshould also be included on this chart to reflectfunding needs and availability for these expenses.This allows you to develop an estimate of the totalprojected annual costs by program area and com-pare them with the projected actual and potentialfunding for each program area. This permits yourorganization to determine which areas alreadyhave funding, which do not, and where you mightwant to focus future fund-raising activities.

The results of this summary provide a clear pictureof the funding needs by program area, and canhelp you determine future fund-raising goals. Theycan also help determine which program areas aremost in need of funding and which are projectingsurpluses. If surpluses are projected in programareas, your organization can try to negotiate withdonor(s) to see whether funds might be applied toother priorities, or whether funding could beapplied to future years.

The chart allows your organization to track itsfund-raising efforts in relation to its funding needs.

If a donor is listed at 50-percent probability in aprogram area with limited funding, your organiza-tion can determine whether or how aggressively itwants to continue pursuing funds from the donor.In the same way, if a program area is projecting asurplus and there are potential donors already linedup, the organization might wish to consider askingthe donor to fund other projects or programs.

To fill out this chart, complete the following steps:

1. Sum the annual projected costs for each programarea by year and fill in the corresponding spaces.

2. Similarly, for each program area, sum the annualprojected income by probability level by year,and fill in the corresponding space.

3. For each program area and year, subtract theamount of secured funding (90-100 percentprobability of receiving funds) from the amountof projected expense. This amount should bewritten in the surplus/deficit column.

Who should participate in projecting income and expenses?The administration or finance department oftenconducts this activity. However, if your organiza-tion lacks staff capacity to develop the projections,it can often draw upon board members experi-enced in developing financial projections.


1. Community development 1998 150,000 150,000 0 0 0 01999 25,000 25,000 0 0 0 02000 25,000 25,000 0 0 0 0

Total 200,000 200,000 0 0 0 02. Environmental education 1998 94,500 25,000 0 0 0 -69,500

1999 45,500 75,000 0 0 0 29,5002000 29,500 69,500 0 0 0 40,000

Total 169,500 169,500 0 0 0 03. Conservation & management 1998 256,667 35,000 0 0 200,000 -221,667

1999 241,667 59,917 0 0 150,000 -181,7502000 216,667 69,500 0 0 100,000 -147,167

Total 715,001 164,417 0 0 450,000 -550,5844. Environmental policy and legislation 1998 14,667 0 0 0 10,000 -14,667

1999 3,333 3,333 0 0 0 02000 0 0 0 0 0 0

Total 18,000 3,333 0 0 10,000 -14,6675. Consolidation and administration 1998 18,550 2,000 0 10,000 3,000 -16,550

1999 9,750 9,750 0 0 0 02000 9,750 9,000 0 0 0 -750

Total 38,050 20,750 0 10,000 3,000 -17,3006. Annual administrative costs 1998 29,000 17,000 -12,000

1999 32,000 14,000 -18,0002000 35,000 5,000 -30,000

96,000 36,000 0 -60,000TOTAL 1,236,551 594,000 0 10,000 463,000 -642,551

* Surplus/deficit equals projected expenses minus 90%+ projected income. Only funds that are 90-100% secured are consideredwhen calculating the projected surplus or deficit. Other projected income is for your information on the fund-raising effort, butthose quantities are not budgeted.

Arcoiris Case StudyProjected Income and Expenses by Program Area

The following is Arcoiris’ consolidated Projected Income and Expense worksheet by program area, summarizing theresults of Step 4 (Estimating Costs of Implementing Activities) and Step 6 (Projecting Income).

90%+ 75% 50% 25%Program Area Surplus/

Deficit*ProjectedExpenses

Year Probability of Receiving Funding

1. Based on the information in Arcoiris’ projected incomeand expenses statement by program areas, and on theactivities prioritization information, where should theorganization focus its fund-raising efforts?

2. What implications could projected surpluses in envi-ronmental education for years 1999 and 2000 havein regard to current contracts and proposals?

3. Given the large projected deficits for the first year ofthe strategic plan in several of the program areas,should Arcoiris consider adjusting its expectations ofwhat it can accomplish in the first year?

4. In relation to annual administrative costs and funding,what options should Arcoiris consider in regard toprojected deficits?

STEP 7 Projecting Income and Expenses by Program Area

Exercise STEP 7


STEP 8. Developing ScenariosBased on the previous work, three scenarios canbe developed to assist in your decision-making.This consists of projecting diverse situations thatyour organization may encounter in relation tosecuring financing. This step is intimately linkedto activity prioritization, as the “modest case” sce-nario demonstrates how much your organizationmust secure if it is to implement all high-priorityactivities—those essential to complying with yourorganization’s mission. As in the previous step, it isimportant to remember that only income that is90-100 percent secured is considered securedincome. This is a conservative way to projectlong-term scenarios.

The three proposed scenarios are as follows:

Modest case—Determines the absolute minimumlevel of activities the organization must implementto ensure it fulfills its mission. This scenario pres-ents the cost of implementing all high-priorityactivities and administrative costs, as well as corre-sponding income for their implementation. It pro-vides a view of the organization’s current financialsituation. It also helps to determine which priori-ties are essential to the organization, and if fixed(administrative) costs can be covered with thesecured income. If there is a difference in the costof implementing high-priority activities and pro-jected income, this becomes the essential financialgoal the organization should obtain to comply

with its mission. This hypothesis helps answer thefollowing questions:

❖ Can the organization implement high-priorityactivities with the projected secured funding?

❖ Can the organization cover its administrativecosts with the volume of projects and projectedown income?

Moderate case—Determines the funding needs toimplement both essential and medium-priorityactivities and administrative costs. The differencebetween this figure and the projected securedincome is the funding the organization needs togenerate/raise in the short-to-medium term. Thishypothesis helps estimate the income/fund-rais-ing goal that will help meet the strategic plan’sobjectives.

Optimal case—Determines the level of incomeneeded to carry out all activities stated in thestrategic plan and the administrative expenses.The difference between this figure and the securedincome is the funding the organization needs togenerate/raise in the medium term.

Who should participate in developing scenarios?The administration or finance department oftenconducts this activity. However, if the organizationlacks staff capacity to develop the scenarios, it canoften draw upon board members experienced indeveloping financial projections.


Arcoiris Case Study Scenarios

Modest Case ScenarioOnly high-priority activities and income that is 90%+ secured are included.

Projected High-priority Activity Costs 244,500 48,000 40,250 332,750Projected Administrative Costs 29,000 32,000 35,000 96,000Total Projected Costs 273,500 80,000 75,250 428,750Total Estimated Income for High Priority/Admin. 253,099 189,416 121,333 563,848Projected Surplus/Deficit (Income, Expenses) -20,401 109,416 46,083 135,098

Moderate Case ScenarioOnly high- and medium-priority activities & 90%+ secured income are included.

Projected High- and Medium-priority Activity Costs 507,717 311,667 268,917 1,088,301Projected Administrative Costs 29,000 32,000 35,000 96,000Total Projected Costs 536,717 343,667 303,917 1,184,301Total Estimated Income for High and Medium Priority/Admin. 229,000 187,000 178,000 594,000Projected Surplus/Deficit (Income, Expenses) -307,717 -156,667 -125,917 -590,301

Optimal Case ScenarioAll activities and income that is 90% secured are included.

Projected Cost of All Activities 534,384 325,250 280,917 1,140,551Projected Administrative Costs 29,000 32,000 35,000 96,000Total Projected Costs 563,384 357,250 315,917 1,236,551Total Estimated Income for All Activities/Admin. 229,000 187,000 178,000 594,000Projected Surplus/Deficit (Income, Expenses) -334,384 -170,250 -137,917 -642,551

1998 1999 2000 Total

Review the three Arcoiris scenarios.

1. Does Arcoiris appear to have the capacity to raise thefunds needed for the modest case scenario?

2. What implications could the three proposed fund-rais-ing goals pose for the organization in regard to timeand financial investments?

3. Based on the moderate and optimal case scenarios,does Arcoiris’ strategic plan appear viable?

4. Based on the information contained in the case studyand manual, what suggestions do you have on how tomodify Arcoiris’ strategic plan?

Exercise STEP 8

STEP 8 Developing Scenarios


Now that your organization has completed theIntegrated Strategic and Financial Planning exer-cise, you have come to the most important junc-ture: analyzing the results and determining thestrategic plan’s viability. You now know:

❖ Which objectives and activities are essentialto comply with your organization’s mission,and which ones could be set aside or delayed iffinancing is not readily available. (Step 3)

❖ How much funding is needed to accomplishthe stated goals and objectives. This informa-tion is further delineated by funding needed forimplementation of each activity, which providesthe basis for developing annual operations plans.(Step 4)

❖ Amount of funding needed for annual admin-istrative costs. (Step 5)

❖ Amount of secured financial resources by pro-gram area, or those resources for which a con-tract is to be signed or has already been signedwith a donor. This information can serve as thebasis for the fund-raising plan, and allows yourorganization to track and monitor the fund-rais-ing progress. (Step 7)

❖ Funding requirements for essential activitiesand administrative costs, based on the threescenarios. (Step 8)

Evaluating Feasibility of Implementing Current PlanBased on this information, does your organizationhave the financial capacity or fund-raising expert-ise to attain at least 70 percent of the strategic

plan’s projected results for the first two years?Does your organization have the capacity to raisenecessary funds for subsequent years? If youanswered “yes” to both questions, then you havecompleted the process and should move on toimplementation, along with periodic monitoringand evaluation. If you answered “no” to either orboth questions, then your organization shouldrevisit the results and determine a course of action.

While the strategic plan usually covers a three-to-five-year time period, it is unusual for organiza-tions to have funding secured for more than atwo-year time frame. As previously mentioned,fund-raising activities do not usually produceimmediate results; they require a time investmentranging from several months to several yearsbefore donor funding is secured.

Analyzing Funding Gaps or Surplus ImplicationsIf surpluses have been projected for any of theprogram areas, you will need to determine whythese exist and how to address them. Many organi-zations consider funding surpluses a windfall.

Chapter 6

Evaluating Feasibilityof the Strategic Plan

(Step 9)This chapter covers the following points:

❖ Evaluating Feasibility of Implementing Current Plan

❖ Analyzing Funding Gaps or Surplus Implications

❖ Analyzing Fund-raising Experience and Expertise

❖ Evaluating Need To Revisit Strategic Plan and Activities

Prioritization

❖ Monitoring, Evaluating, and Adjusting Strategic Plan

However, in most instances, surpluses imply thattoo much funding has been secured to implementcertain activities, or that funding was raised foractivities not included in the strategic plan. If theyare not part of the strategic plan, you will need todetermine whether these activities should havebeen included and, if so, add them in. If youdetermine that these activities are not strategic,given the direction your organization wishes totake, you will need to open a dialogue with thedonor(s) and determine how to proceed. If youhave simply raised too much funding for the activ-ities, you must discuss this with the donors todetermine whether the funds can be applied toother activities, can be deferred for implementa-tion of similar activities in future years, or must bereturned to the donors.

Analyzing Fund-raising Experience and ExpertiseA major factor in evaluating the feasibility ofimplementing the strategic plan is your previousfund-raising experience and level of expertise. Ifyour organization has a strong fund-raising trackrecord and believes this can be continued, youshould evaluate the funding requirements forimplementing the strategic plan to determinewhether you can meet the new fund-raising goals.If your organization has little fund-raising experi-ence or lacks a successful track record in this area,you will need to evaluate how this affects yourability to implement the strategic plan and deter-mine how to react accordingly.

If your organization’s funding needs are somewhatsimilar to the current annual funding requirementsand you have a strong donor base, then yourstrategic plan may be easily attainable. If you proj-ect huge increases in annual funding needs (basedon the current annual income), you should deter-mine if you can meet these needs with existingstaff and financial resources or if you will need toincrease them. If you determine that the fund-rais-ing goals are difficult to attain, you may want todevelop an aggressive fund-raising campaign oradjust expectations based on what can be accom-

plished in the upcoming years. If you opt toaggressively raise funds, then ensure that theneeded financial and human resources are avail-able. In too many instances, nonprofit organiza-tions become so focused on the daily activities ofimplementing projects that they lose sight of theneed to continuously fundraise for future projects,creating the need to conduct the ever unpopularand difficult “emergency” fund-raising.

Evaluating Need to Revisit Plan and Activities PrioritizationIf you have large projected funding gaps (projectedexpenses far in excess of projected income) or sur-pluses (funding in excess of projected expenses),your organization will need to determine how bestto interpret the information to make educateddecisions on future direction. In some instancesyou will need to revisit the strategic plan to adjustexpectations on what can be accomplished withinthe proposed time frame. When you take this step,remember what you want to accomplish inupcoming years and which actions will be mostessential to achieving your mission.

Revisiting the strategic plan can include adjustinggoals and adjusting or reducing the scope of someobjectives and activities. In some instances, youmay decide to postpone implementation of certainactivities a year or two. In other cases, you maydecide to reduce the projected expenses of certainactivities by reducing the scope of what is to beimplemented. In the direst situations, you mayneed to eliminate some activities or objectives.Once this work is completed, you should thencontinue to reprocess the financial projections todetermine your financial-resource needs under therevised strategic plan, and then re-analyze whetherthe plan is realistic and viable, given your fundingand fund-raising ability.

Short-term Implications (Year 1 of the Plan)For the first year of the planning period, if fundinghas not yet been secured to implement at least 70percent of the strategic plan, and if your organizationis not currently fund-raising in an aggressive manner



for the financial resources, you will need to revisitthe strategic plan, goals, objectives, and activities pri-oritization to adjust expectations on what can realis-tically be accomplished with available funding. Iffund-raising efforts are actively under way, you willneed to weigh previous fund-raising experienceagainst funding needs to determine whether you canraise the needed resources in the short term.

Medium-term Implications (Years 2-End of the Plan)For the second year of the strategic plan, deter-mine how much funding has been secured andevaluate current fund-raising efforts. Again, basedon your fund-raising experience, determinewhether you can raise the resources within theupcoming year. If you think it is feasible, then usethe funding gaps as the basis for developing yourimmediate fund-raising plan. If you think you lacksufficient experience to raise these funds, then youwill need to adjust expectations on what can rea-

sonably be accomplished by reducing the scope ofyour goals or cutting back on objectives and activ-ities. For subsequent years in the strategic plan,your analysis will be based primarily on past fund-raising experience.

Monitoring, Evaluating, and Adjusting the PlanOnce you have determined that the strategic planis viable, you should use the detailed goals, objec-tives, and activities as the basis for developingyour annual implementation or operations plan.You should revisit the strategic plan at least everythree months to evaluate progress and determinewhether the objectives are being met. Based onthis review, you can determine whether youshould continue to implement the plan as devel-oped or whether you need to revisit and adjust itbecause of internal or external conditions thatinfluence its implementation.

1. Based on the information contained in the case studythus far and on your own experiences, do youbelieve Arcoiris has the financial capacity or fund-raising expertise to attain at least 70 percent of thestrategic plan’s short-term projected results (1998)?What about medium-term results (1999-2000)?

2. What implications could Arcoiris’ strategic plan haveon its fund-raising efforts?

3. What implications could projected surpluses in1999 and 2000 have in regard to current con-tracts and proposals?

4. Given the large projected deficits for the first yearof the strategic plan in several of the programareas, should Arcoiris consider adjusting expecta-tions on what it can accomplish in the first year?Please use the following worksheet to demonstratehow you would recommend that Arcoiris re-priori-tize or re-evaluate funding needs for activity imple-mentation and/or eliminate some proposedobjectives/activities.

Exercise Step 9


Arcoiris Case StudyWorksheet: Revisiting the Strategic Plan


For Fausto López and the Arcoiris Foundation, thefinancial planning process was part of an intensive,year-long internal reorganization that provedextremely fruitful. Using the financial planning exer-cises to evaluate the strategic plan allowed Arcoiristo quantify its programmatic needs and successfullyintegrate them with its fund-raising priorities.

In 1998, the Foundation obtained US$800,000 inadditional financing from three new donors, basedon fund-raising activities that were already underway as the Integrated Strategic and Financial Planwas being developed. This allowed the Foundationto implement most of its high-priority activities, aswell as many medium-priority and several low-pri-ority activities.

The first source of financing was a European gov-ernment organization that contributed $100,000;the second was a Canadian government organiza-tion that also contributed $100,000; the third wasthe Pennsylvania state chapter of the Conservancy,through the Wings of the Americas program,which pledged $600,000 over a five-year period.

Another important aspect was training theFoundation’s personnel in the financial planningexercise and establishing an example that, at leastin Ecuador if not in the rest of Latin America,serves as a teaching tool for other nonprofit organ-izations that arrive at the same growth crisis.

In 1999, 18 months after initiating the IntegratedStrategic and Financial Planning process, Arcoiris

decided to monitor and evaluate its progress inorder to continue planning for upcoming years.The review included an evaluation of theFoundation’s accomplishments during the time theplan had been in effect, based on the stated goals,objectives, and activities. During the evaluation,Arcoiris quickly realized an added value of theIntegrated Strategic and Financial Planningprocess: a tool to evaluate progress of ongoingactivities.

The evaluation showed that the community devel-opment program had implemented 300 percent ofits original plan, having expanded its capacity andreputation to work with not only communities inand near the park, but also with other communi-ties. The environmental education program hadimplemented about 75 percent of its original planand had replaced other activities, due, in part, to achange in department leadership and priorities.

Administration had also been able to implementabout 75 percent of its original plan, recognizingthat the original plan had been somewhat ambi-tious and the need to keep the goals and objectivesin mind throughout the year. The big surprisecame when Arcoiris realized it had implementedonly about 25 percent of its proposed conservationactivities for the time frame, demonstrating somemission drift as the environmental organizationhad become more focused on implementing otheractivities. Arcoiris has since decided to redirectactivities to ensure that all program areas providesupport for the conservation priorities.

Conclusion: Arcoiris Case Study


Allison, Michael, and Jude Kay. 1997. StrategicPlanning for Nonprofit Organizations, A PracticalGuide and Workbook. New York: John Wiley and Sons.

Bryson, John M. 1995. Strategic Planning for Public and Nonprofit Organizations. A guide to strengthening and sustaining organizationalachievement. San Francisco: Jossey-BassPublishers.

Connors, Tracey Daniel. 1993. The NonProfitManagement Handbook: Operating Policies andProcedures. New York: John Wiley and Sons.

Diaz, Percy Bobadilla, and Luis del AguilaRodriguez. 1998. Strategic Planning for NGOs.Training Manual Series Number 2. Lima, Peru: PACT.

Greenleaf, Robert. In Leadership Crisis: A Messagefor College and University Faculty. Newton Center,MA: Robert K. Greenleaf Center.

IDB, EAIO, and FGC (Brazil). 1985. DevelopmentPlanning Projects, Implementation and Control.Mexico, D. F: Limusa Publishing.

Knauft, E. B., Renee Berger, and Sandra Gray.1991. Profiles of Excellence: Achieving Success inthe Nonprofit Sector. San Francisco: Jossey-Bass.

Laycock, Kerry D. 1993. “Strategic Planning andManagement Objectives.” In The NonprofitManagement Handbook: Operating Polices andProcedures, ed. Tracey Conners. New York: JohnWiley and Sons.

McNamara, Carter. Basics of Identifying StrategicIssues and Goals, Strategic Planning, Web Site:http://www.mapnp.org/library ManagementAssistance Program for Nonprofits.

References


WORKSHEETS






The chart used in this step summarizes the results of Step 4 (Estimating Costs of ImplementingActivities), Step 5 (Estimated Administrative Costs) and Step 6 (Projecting Income). This chartreflects an estimate of the total projected annual costs by line of action, along with an annualestimate of the actual and potential funding for each line of action. This, in turn, allows yourorganization to determine which areas already have funding and which do not.

To fill out this chart, complete the following steps:

1. Sum the annual projected costs for each line of action and fill in the correspondingspaces below.

2. Similarly, for each line of action, sum the annual projected income by probabilitylevel, and fill in the corresponding space below.

3. For each line of action and year, subtract the amount of secured funding (90-100percent probability of receiving the funds) from the amount of projected expense.This amount should be written in the surplus/deficit column.

STEP 7 Projecting Income and Expenses





Documents

Integrated Strategic and Financial Planning for