What a Strategic Plan Actually Is

Most nonprofit strategic plans are not strategy. They are inventories of activity dressed in goal-setting language. They restate the mission, list the existing programs, attach numerical targets to each one, and call the result a five-year plan. Many of them are produced by serious people working in good faith. They still are not strategic plans.

I have written, read, and lived inside enough of them to be honest about why. Producing a strategic plan that an organization will actually use is an unusually difficult institutional act. It asks a board and a leadership team to write down what they will and will not do, in a document they will be measured against, in a sector where most of the incentives push in the other direction. Saying yes to everything is easier. So most plans say yes to everything, in slightly different language each cycle.

This essay is about what a strategic plan actually is, and what has to be true for one to be worth the work.

A Strategic Plan Is a Written Argument

A strategic plan is, at root, a written argument. It has a thesis. The thesis is a claim about what the organization is for in the next phase of its life, and why that purpose is worth the cost of pursuing it. Everything in a real plan ladders up to that claim.

This is what distinguishes a strategic plan from an operating plan. An operating plan describes what an organization will do next year and how much it will cost. A strategic plan describes what an organization is becoming over a longer time horizon, and what it is willing to give up to become that. An operating plan is a deliverable list. A strategic plan is a position.

Three tests usually expose whether a document is doing strategic work. First, can a reader who has never met the organization summarize its thesis in one sentence after reading the plan once? Second, does the plan name things the organization will stop doing, or refuse to start, in order to pursue the thesis? Third, will the board be able to use the plan, two years from now, to decide whether a real opportunity should be accepted or declined? If the answer to any of those three is no, what was written is not a strategic plan. It is an annotated wish list.

What a Strategic Plan Is Not

A strategic plan is not a long-form mission statement. The mission tells the world why the organization exists. The strategic plan tells the organization what it will do about that mission in the period in question, given current capacity, current environment, and current honest assessment of where the work is and is not landing. A plan that simply restates the mission in a heavier document has skipped the work.

A strategic plan is not a marketing artifact. The temptation to write the plan for external audiences, especially funders, is one of the most common reasons plans fail to be useful internally. A plan written to impress funders will tend to be ambitious in tone, vague in operational specifics, and silent on the hardest tradeoffs. Funders are not the audience. The board, the executive team, and the staff who will live inside the plan are the audience. If the plan also makes a good external case, that is a useful consequence, not the purpose.

A strategic plan is not a list of all the priorities. The phrase “strategic priorities” is so overused it has lost most of its meaning. If a plan lists eleven priorities organized into four pillars under three guiding principles, the organization does not have priorities. It has a taxonomy. A real plan limits itself to a small number of choices it will defend in resource allocation.

A strategic plan is not a board exercise that ends when the document is approved. A plan that is approved and then filed has not done its work. A plan that is approved and then reviewed at every board meeting, used as the framing for the CEO’s report, and consulted when a major opportunity arises has done its work.

The Two Hardest Questions in Strategic Planning

The hardest questions in strategic planning are not the ones that get the most airtime. The most-discussed questions are usually about ambition: how big can we get, how many people can we reach, how much can we raise. Those questions matter, but they are not the hardest ones.

The hardest two are these.

First, what will we stop doing, or never start, in order to do the things in this plan well? Every program inside a nonprofit has a constituency that loves it. Every program has a staff lead who can make a sincere case for its importance. Real strategic planning forces a board to confront the question of opportunity cost, which most boards avoid because the cost of avoiding it is paid by future leaders and the benefit of avoiding it accrues to current ones.

Second, what will be true about our balance sheet, our reserves, and our operating leverage at the end of this plan period? Most nonprofit strategic plans are silent on the balance sheet. They focus on program growth and revenue growth and treat the balance sheet as a residual. Serious plans treat the balance sheet as a primary objective. They say, at the end of this period, the organization will have this much in reserves, this much in unrestricted net assets, this much in invested capacity. That is the language of an organization planning to last.

Boards and CEOs who can answer those two questions in writing have produced a plan. Boards and CEOs who cannot have produced a document.

How the Process Should Be Run

A few process disciplines tend to separate plans that work from plans that don’t.

The board should set the thesis before the staff fills in the details. Most planning processes invert this. They start with staff-generated content from each program area, then attempt to roll it up into a thesis at the end. The result is almost always a plan that reads like a federation of programs rather than an institution with a point of view. Better practice is for the board, in partnership with the CEO, to take a position on the thesis first, and only then ask staff to build out the operating implications. This is harder, more conflict-laden work for the board. It is also the board’s job.

External facilitation is worth the money, sometimes. The best external facilitators provide three things an organization usually cannot provide for itself: a structured assessment of where the organization actually is, language for tradeoffs that the internal team finds politically expensive to articulate, and the patience to insist on a small number of choices. The worst external facilitators produce slide decks that everyone agrees with and no one will act on. The difference is worth attending to before the engagement begins, not after.

The plan should be short. The most useful strategic plans I have read in the nonprofit sector fit comfortably in twenty pages. Many fit in fewer. Length is not a proxy for seriousness. The discipline of compression is the discipline of strategy. A plan that cannot be summarized in twenty pages probably has not been thought through to the level of choice.

The plan should be revisited annually, not quietly abandoned. Most plans are written for a multi-year horizon and treated as fixed. Better practice is to treat the plan as the constitution of the period and the annual operating cycle as the legislation. Each year, the board and leadership team should ask, explicitly, what the plan still calls for, what the environment has changed, and what should be amended in writing. A plan that is amended in writing is a plan that is being used. A plan that is silently revised by accumulating exceptions is a plan that is being ignored.

A Strategic Plan and a Capital Plan Belong Together

The companion to a strategic plan is a capital plan. I have written elsewhere about why unrestricted capital is the hardest money to spend well. The strategic plan and the capital plan are not separate exercises. They are the same exercise from two angles.

A strategic plan that does not name the capital it requires is fiction. A capital plan that is not organized around the strategic plan is opportunism. A serious organization writes both, treats them as parts of a single document, and asks its board to approve them together. That sequencing reduces the chance that a year’s unexpected gift gets spent inside the operating budget rather than inside the strategic plan.

This is the operating discipline that makes the difference between organizations that grow and organizations that scale. Growth is more activity. Scale is more capacity, deployed against a clearer purpose, with the financial architecture that allows it to last.

What a Plan Says About an Institution

A strategic plan is, in the end, a statement of self-knowledge. It says, this is who we are, this is what we are for, this is what we will refuse, this is what we will be measured against. Organizations that can write that down honestly are organizations that have done the harder work of knowing themselves. Organizations that produce decorative documents in the language of planning have not.

The next phase of nonprofit leadership in this country, in my view, will demand more institutions willing to do that harder work. The environment is too volatile, the public-purpose case for civil society too contested, and the operating margin too thin for organizations to be governed by inertia and good intentions. The plan is not the strategy. The strategy is the work of choosing. The plan is what choosing looks like in writing.

A good plan tells you what an organization is becoming. A great plan tells you what it is refusing to become in order to get there.