Nonprofit leaders appreciate the value of strategic planning. They understand that organizational reimagining is done best with intention and method. Yet many often overlook the need for financial planning, which connects strategic goals to their financial implications.
Poor planning happens despite good intentions. Senior staff and board members welcome the opportunity to partake in visioning and values creation. They embrace their responsibility to take stock of organizational impact. They fall short, however, when they delegate financial planning to the finance director as part of the annual budget cycle. The result? Surprises, when programs don’t secure resources needed to grow, or when changes in direction open up a structural deficit.
A good financial plan plots a realistic route to fiscal health. It makes visible whether, and how, an organization is achieving its financial goals. It anticipates the goal of sustainability, but recognizes that the direction of travel won’t always be a straight line. It enables flexible decision-making by identifying targets that have been missed or exceeded.
Does your organization’s strategic plan include a financial roadmap for its business model and balance sheet? A strategy without an aligned financial plan is not a sound strategy!
Every financial plan needs these six critical components: