Charity strategic planning toolkit - SWOT and PESTLE analysis for your non profit fundraising and business plan.
We can't change what's happening in the outside world, but we can respond the threats and exploit opportunities. This toolkit does the spadework for you.
How effective are charities at strategy? The Charity Sector Data Store strategy indicator is at amber, showing that the majority of charities report they are not doing this well. Weaknesses include, not assessing funding needs effectively, a lack of realism in target and objective setting, not focussing on delivering impact and not engaging people in the strategy. To find out how to make your strategic planning more effective, complete the CEF Strategy questionnaire. It takes 2 mins to register here and 30 mins to do so; everything is free.
What are the sector's key weaknesses? Of the 21 top level indicators, 3 others are also at amber. Sustainability will come as no surprise, but weak management of fundraising and ineffective planning might. More positively, communications has moved from amber to green, over the course of the year.
The impact of the crisis was and will continue to be felt unequally across the sector. Use this sector PESTLE assessment to identify the issues of most importance to you.
The economy had a huge bounce back, post lockdown, but whether this will translate into a sustained recovery, or not remains to be seen. However, the March budget projections estimated that the long-term damage from Covid will leave the economy 3% smaller in 5 years’ time. Moreover, the budget made no allowance for pandemic-related spending after next year and a further £4 bn in cuts were announced. The Institute of Fiscal Studies was sceptical that these cuts are deliverable.
Substantial NHS funding has been made available, but is still far short of what’s needed and the recent tax increase was the largest since 1975. This, coupled with the cut in universal credit and rising energy costs, may make this a hard winter for many. Our staff are often low paid and this may well impact them too.
The Chancellor will unveil the autumn budget and Spending Review on 27 Oct, and provide details of how he plans to balance the books over the next year. In Sep 21, the Culture Secretary said charities 'should not become overly reliant on government grants' and the tax increases announced were the largest since 1975. There is also a risk that the Spending Review may see a return to austerity for the sector.
These factors create a risk of increased demand for services (and costs), impact on staffing (wellbeing/recruitment) and funding.
A Charity Commission report (Trustee Research 2021) found that quarter of charities had to draw on their reserves during the crisis. That's what reserves are for, but we are now less resilient to any further shocks and these will have to be replaced in due course. Around 4 in 10 charities suspended some of their services, while 1 in 7 ceased all activities.
A Pro Bono Economics Civil Action Report (Nov 20) found that civil society is under-valued and overlooked, and 35% of the public think charities are wasteful and 31% that there are too many. More positively, trust in the sector has grown to its highest levels since 2014 (Charity Commission, Public Trust In Charities 2021), but it's been falling for years. Is that just a Covid blip and how might we build on this to make sure it isn't?
Tackling the long standing abuse and lack of diversity would be a good start. It not only damages public trust, but also our single greatets asset - our people. They don't need any more apologies, commitments or reviews - they need action.
New risks are emerging, but the existing risks have not gone away and, if anything, may even be more urgent.
Government Budgets. With the focus on the economy/jobs, more funding for the sector seems unlikely and departmental budget cuts may well both reduce income and drive increased demand. A British Academy Report (March 2021), predicts a “Covid decade” of social and cultural upheaval and that failure to deliver change will result in a rapid slide towards poorer societal health and more extreme patterns of inequality.
2020 was the worst economic decline since the Great Depression of the 1930s. The IMF has predicted global growth in 2021 will be driven primarily by countries such as India and China. Recovery in big, services-reliant, economies, such as the UK, is expected to be slow.
A crisis is a catalyst for new ideas and better ways of doing things. Finding and exploiting these gives us a way forward. And whether an issue is a threat, or an opportunity, may well depend on what you do about it.
Some opportunities are now becoming apparent, but there will be others that we don't yet know about, and some of these could have a huge impact in the longer term. Which will matter will vary from charity to individual charity. Ues this analysis to identify what is, or may be, important to you.
We need to recognise, at both sector and individual charity level, that we would achieve far more by working in a genuinely collaborative way, to identify and share the emerging opportunities and new ideas, work to develop and roll out scalable models, and funders need to be willing to invest in making this happen.
Let's admit it, collaboration is often superficial. The all too frequent competition hinders the exploitation of new ideas, wastes scant resources and splinters our voice to Government.
COVID has created changes, some of which will change the way we work in the future.
Others may be specific to certain charity sectors or even individual charities.
Unexpected opportunities - Ash found that a million people have given up smoking since the crisis began.
A Brexit opportunity - Environmental Land Management (ELM), replacing EU farm subsidies, will pay farmers to prevent floods, plant trees and protect wildlife.
There isn’t enough funding and there isn’t going to be. Boards that act strategically to the emerging threats and opportunities, will be far more able to mitigate risk, and find new ways of working to increase their impact and use resources more effectively.
Strategy is about making the best decision you are able to, based on the best evidence you have. It doesn’t have to be complicated, but you do need to have a logical, structured process, challenge positively, be prepared to think about new ways of doing things, take people with you and make decisions based on the available evidence.
We cannot control the events in the outside world, so effective strategy isn’t about deciding what we want to do, but rather understanding how that may impact your work, and focussing our resources to exploit the opportunities and mitigate the threats facing us.
These are the O and T in your SWOT. What the threats and opportunities may be for your organisation, depend on a range of factors specific to you and may appear at global, national, regional or even local level.
You need to be looking outwards to identify, and then assess and respond to these. Think through what the issues above may mean for your charity.
These are the S and W in your SWOT. If you’re a trustee, download the CEF Board Bingo game for your next meeting to find out what yours are.
We’re usually feel able to identify our strengths, but it’s always worth thinking through this.
Write down every strength you can think of, then test each in turn by asking yourself what measurable evidence do we have that demonstrates that to be the case? Identify the key ones.
Even the very best amongst us have weaknesses, but many find identifying these the most difficult aspect of strategy. But, these are usually the best opportunities we have to achieve more.
Sector Weaknesses - The CEF Data Store aggregates all user data anonymously to create Big Data for the sector. The metrics at amber are strategy, fundraising, communications, sustainability and how realistic we are in our planning and target setting. That is the majority of charities do not do these well. Are you one of them?
Challenges - We have fantastic people, but people are often resistant to change and talking about ‘weaknesses’ almost always makes people react defensively. I find that approaching this as looking for opportunities to achieve even more helps.
Bring your Strengths and Weaknesses together with you Opportunities and Threats to create your SWOT analysis. If you wish to, you could identify those that are particularly important or urgent. Then use this to create your strategy. Watch this Charity Excellence ‘How To’ video (3 mins) for how to do your SWOT really well.
This image at the top is an example, which highlights those that are particularly important, or urgent. The arrows show linkages that can be used to create a strategy; using strengths to exploit opportunities, and/or to address weakness, and/or to mitigate/avoid threats. Or better still, could you turn a threat into an opportunity?
However, strategy isn’t a plan, it’s what an organisation does and that involves everybody, ideally from the outset. It’s important to engage people and turn your plan into the timetable, budgets and actions needed for them to deliver it and your progress to be monitored.
Whatever you do, don’t do nothing.
Strategy can be confused with Theory of Change. These are similar and can support each other so, if you're thinking about incorporating ToC into your strategy, this Charity Excellence resource enables you to understand what it is, how it works, how to do it and the key points on ToC.
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