Non-profit organizations (NPOs) are in need of careful strategic planning, even more so than for-profit organizations.  NPOs have increasing challenges in terms of raising ongoing support and their value comes from good will directed toward the NPO and its reputation in the community.  Yet, NPOs appear to be reactive, rather than proactive.

Many NPOs, even large ones with significant budgets, are hard pressed to allocate executive time and energy or financial resources to the task of strategy.  NPOs are often under the carful glare of foundations and supporters to minimize overhead and marketing expenses so that the maximum amount of revenue drops to the bottom line.  One way to maximize the percentage of money going to good causes is to eliminate everything else.

Often strategic planning is a casualty.  One reason is that it is somewhat intangible.  It is one of the things that is important, but not urgent—and therefore gets shunted.  It is also time-consuming and drains resources.  Finally, there may be unfamiliarity with the tools to assess and implement strategy.

One of the best tools to organize strategy is Kaplan and Norton’s Balanced Scorecard (BSC).  One of the themes of their work, and indeed the subtitle of their book on strategy maps, is “converting intangible assets to tangible outcomes.”  This is of great concern to NPOs who are more heavily weighted to intangible assets.  Much of their value is the good will associated with their powerful brand names. 

The brands of the United Way, Salvation Army, YMCA and others are valued in the billions, as was recently revealed by a Cone Industry Report.  These brands generate instant recognition and typically elicit positive reactions; they are embedded in the fabric of our society.  The Salvation Army, indeed, is so pervasive throughout society that it is referenced in songs from Kris Kristofferson to Leonard Cohen.

Strategy is, of course, determined by working with the strengths of a company and working around it present weaknesses.  One appropriate vehicle for an organization to assess its CSR capabilities is through the BSC.  

Since the 1990s, the BSC has provided a rigorous way to measure performance by quantifying so-called intangible assets.  The BSC draws its strengths from four perspectives:  1) financial measures; 2) customers; 3) internal processes; and 4) learning and growth.  

Kaplan and Norton used this four perspective model to provide a visual representation of the organization’s strategy.  A strategy map is intended to create a powerful communication tool that enables employees to understand a strategy and translate it into actions to allow the organization to succeed.

Kaplan & Norton talk about the applicability of the BSC to NPOs as “one of the most gratifying extensions” of the BSC (Strategy Maps, p. 429).  Since NPOs strive to achieve mission outcomes rather than superior profitability, NPOs need to have a comprehensive system of nonfinancial and financial measures to motivate and evaluate their performance.

Kaplan and Norton use the example in Strategy Maps of the Boston Lyric Opera.  The Opera demonstrates how organizational performance can be measured even when the output is as intangible as a musical experience.  The BSC provided a clear strategy for the future that could be easily communicated to stakeholders, such as staff, board of directors and artistic directors.

The Opera strategy map outlines desired outcomes and performance drivers for its three key constituents:  donors, the national and international opera community and Boston-area residents.  The strategy map led to greater input from frontline employees, better alignment of the management and board processes and support for a major opera event in Boston.

In short, the BSC has become a management tool for setting priorities among initiatives, motivating employees, aligning the board, and soliciting external support for the Opera’s production and community outreach activities.

Other leading NPOs should closely consider the relevance of the BSC to assist with their strategic planning process and to demonstrative the value of their intangible assets, particularly in light of the high premium of their brand names.