Strategic Planning for Societies and Charities

Why plan strategically?

Strategic planning is required of councils under the Local Government Act 2002, and Parliament presumably believed that this would improve the performance of local authorities – this principle may have wider applicability.   The rules of societies and the deeds of charitable trusts set out the purposes (objects) and powers of those entities, and in previous generations that sufficed.   In my article Personal Liability of those in Governance LINK  I quoted a statement by Ralph Chivers, Chief Executive of the Institute of Directors, Dominion Post, 5 March 2012, that “Crucially, the board will … take time to reflect, appraise and evaluate its own performance, to regularly ask: ‘What could we be doing better?’”  This statement reflects good modern governance practice, which suggests that planning is essential – if you don’t plan where you’re going, how can you know you’re going in the right direction?  In recent years, astute not-for-profit sector trustees and committee members have adopted the practice of planning strategically.

In my experience:

  • Constitutional purposes and objects should not be overly prescriptive as an organisation needs to be able to evolve as it realises the reasons why it was founded but, also, adapts to a changing world, but
  • Too much is left unsaid if the constitutional provisions are not fleshed out further in a strategic plan which identifies what the entity will do to accomplish its purposes.

Is strategic planning of interest or value for not-for-profits?

An experienced company director, Richard Westlake, was quoted in a Dominion Post article, 10 March 2012, as saying that in some respects it is easier to be a director of a business than a not-for-profit.  “In commerce if you make shareholders rich, they are reasonably forgiving.  Defining success in the not-for-profit sector is often more complex.”  I suggest that having a strategic plan should help identify what success should look like (and, therefore, what failure would look like).

There is no legal requirement that a not-for-profit entity have a strategic plan, but if it acts outside its purposes or objects it runs a number of risks.  Further, on liquidation the adequacy of the performance of those in governance may come under the liquidator’s critical scrutiny, and as my Article Personal Liability of those in Governance LINK pointed out, sections 300 and 301, Companies Act 1993, apply on the liquidation of an incorporated society or charitable trust; and those in governance may be personally liable if the entity they have governed has suffered losses caused by them.  Good strategic planning may be one effective way of minimising those risks.

How to plan strategically

Exactly what is required depends greatly on the nature of the organisation, and especially on the degree to which what happens is achieved by volunteers or paid staff.  Whatever the nature and scale of the organisation, a strategic plan needs to be practical.  It is of little value to end up with dozens of pages of platitudes and meaningless jargon (possibly dreamt up by consultants) that will end up gathering dust on a shelf.  I’ll stick my neck out and say that, in my view, a strategic plan should come from those involved, requires governance buy-in, needs to be capable of being realised by management and “workers,” should be under regular review (for relevance and immediacy), and should be pithy enough to fit within a couple of pages.

Running a strategic planning session

There are people who can effectively facilitate preparing a strategic plan, but the costs need to relate to the actual benefits.  Checking with previous clients of a consultant about how useful the consultant’s plan is a year or two after its preparation is one simple litmus test of a consultant’s potential value.

While external consultants can be usefully external or objective, they may not fully understand the organisation, its people, its resources, its finances, its target “market,” and what it does; all of which takes perceptiveness and time and therefore usually comes at a cost.  There may well be people in an organisation with the necessary skills to conduct an effective strategic planning session, and utilising those skills can save time and money, as well as producing a plan that is truly responsive to an organisation’s needs, people, and potential (however, internal facilitators all too frequently seek to have their personal agendas adopted).

Preparation before a strategic planning session

A strategic planning session for most organisations should not be a talk-fest, and should usually take no more than 2-3 hours.  Prior preparation will pay dividends, and participants should be briefed about the purposes of a strategic planning session and how to prepare for it:

  • The goal of the session is to formulate a strategic plan for the next 5-10 or so years.
  • In preparation for the session participants should:
    • Re-read the purposes of the organisation, and consider what that means in terms of the organisation’s strategic direction now.
    • Think about high-level, aspirational strategic policies and goals, and their own strategic vision for the organisation in the next 10 years.
    • Participants:
      • Should not engage in pre-session discussion about this with others in the organisation, as that may skew the process,
      • While not being unrealistic, should not focus on how policies might be implemented – the session is to consider governance issues, not management (whether and how the policies and goals adopted can be implemented is something to be considered later), and
      • Should leave pre-conceived notions at the door when they arrive at the session, and have faith in the process to be followed.
  • Participants should focus on these questions:
    • In one or two sentences, identify the organisation’s current vision, and
    • Identify 2-5 specific activity areas should the organisation focus on, and
    • Set out What the organisation’s medium to long term objectives (specific things to achieve) should be over the next few years.
  • The intention of a strategic planning session is to formulate a strategic plan for the next 10 or so years by the end of the session.  I do not believe there is a template for what it will look like, as every organisation is different, but what is needed is a brief Strategic Plan which is discussed at least at each Annual Meeting with:
    • A clearly stated vision, defined activity focus areas, and critical (and time-lined) strategic priorities, and
    • Some defined and achievable medium to long term objectives in each of the activity focus areas.

In more complex organisations an Implementation Plan may also be required, but this will take more time to prepare, with primary input from management and staff, and sign-off at governance level.

  • When half the objectives have been achieved it may be time for a full, formal review of the Strategic Plan.  Any Strategic Plan should have a regular review date to ensure it remains relevant and “fit-for-purpose,” probably once every 2-5 years.

For specific advice the issues discussed in this article, please contact Mark at mark@nfplaw.co.nz.

This is one of a series of articles on societies and charitable trusts by Mark von Dadelszen, a lawyer and author of Members’ Meetings, 3nd Edition, 2012, and Law of Societies, 3nd Edition, 2013 (both texts being in the course of editing for 4th editions to be published after the new Incorporated Societies Act is enacted).