Investment Plans as a strategic planning tool

March 23, 2021

Filed under: Strategic Planning — jonathanpoisner @ 10:58 am

In many strategic planning processes, prioritization among competing potential ideas or strategies becomes the linchpin of the process.

If organizational identity isn’t at stake (e.g. vision/mission), the organization doesn’t face a financial crunch, and the organization pretty much knows its goals and major strategies, the question often comes down to: what should we do more of with our resources? 

By resources, I don’t just mean money.  Sometimes it’s a question of where time gets invested. 

I’ve had a few clients now for whom an “Investment Plan” was the answer.

What is a strategic planning Investment Plan?

And how do you create one?

In short, an Investment Plan identifies major new areas of spending spread out over a period of time, with the sequencing of investments as a means of prioritizing them.  Some investments may be contingent upon other investments happening and having their desired impact first. 

Here are three scenarios where an investment plan comes in handy:

  1. To deal with an unusual infusion of resources that’s sufficiently large that incorporating them in annual budgeting makes no sense.  This may be a bequest that’s unrestricted at a time the organization either doesn’t desire an endowment or doesn’t want to grow its endowment.

  2. The organization has, over time, built up a reserve fund larger than it deems necessary, and in the early stages of the strategic planning process it’s determined that it makes sense to use some of the “excess” in order to accomplish an important objective.

  3. The organization identifies an urgent priority of increasing its fundraising capacity and is willing to cut back on program work in the short-turn by making a series of targeted investments in fundraising capacity with the desired effect of leading to more revenue and increased program work in the long run.

On at least one occasion, an organization I worked with knew it needed an investment plan up-front before the planning process.  On a few other occasions, the desire for an investment plan emerged during the design and research phases of the planning process.

How do you create one?

It starts by letting your team imagine new things.  That means asking the right questions early in the planning process that gets people thinking beyond just doing things as you’ve done them in the past.  Many standard questions accomplish this, like: “What are 2-3 big goals you’d like to see accomplished in the next 3-5 years?  “What’s holding you back from having a bigger impact?”

Other questions can be more explicit:  What would you want to do a lot more of if you had more resources?  What’s something new you’d love to do if you had more resources? 

The next step is to synthesize the input into a series of ideas that get lumped together into categories and described as an actionable investment.  Examples:

  • Hire a new development staff person. 
  • A major update to our website. 
  • Upgrade our facilities. 

Once you have a manageable and categorized list, start identifying price tags both in estimated dollars and time.  This may take some research, so build in a little time to do that. 

Then identify contingencies.  Some contingencies are temporal: do this before do that. Others are linked: Only do this and that at the same time. 

Here’s a temporal contingency example:  One of my client really wanted to add another program staff person to grow a program where they are confident there is greater community need.  But it needed to know it had a higher level of sustainable revenue before taking the leap.  Their plan:  Invest a portion of their reserve in more development staff and an upgraded website, and then add the new program staff when more revenue materializes. 

I often describe this as sequencing instead of prioritizing because it helps board members get past the natural inclination to always say “program” is the highest priority.  When you describe it as sequencing instead, they may feel more comfortable letting “more program” happen later on in a multi-year plan.   

A linked contingency example: the same one above focused on the fact that the organization wanted to hire development staff and upgrade their website at the same time.  They determined that their existing website was so poor that putting more time into development made no sense if they were driving donors to something that would turn them off.  Likewise, they lacked the staff time to manage a website upgrade.  The solution: have the new development staff person oversee the website upgrade as a first major task. 

Of course, sometimes investments have nothing to do with organizational fundraising.  Another former client owned multiple properties and had to weigh upgrades to facilities at one property serving one program against building a new building at a different property serving a different organizational program. 

How do you decide what’s most important?  Sometimes you just need to look at the overall strategy of the organization and weigh the relative value of each investment and say this before that since we can’t do both at the same time. 

For the investment that gets put “last” in this process, it’s still incredibly helpful to include them in the ultimate investment plan contingent on revenue exceeding forecasts.  This allows the champions within your organization of that program to not feel completely left out of the overall strategic plan, even if it’s not being prioritized in the investment plan.

Have you used an investment plan or something like it to prioritize?  How was your experience?

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