Abstract: Achieving impact and remaining sustainable is one of the significant challenges of the social or non-profit sector. Uncertainties around the loss of funding because of misalignment with the expectations or measurements of fund providers is a constant threat.
Drawing on theory and experience in consulting and practice at FATE Foundation, this paper outlines the critical metrics for non-profits around impact, value and, critically, sustainability. It proposes the Theory of Change as a guide. With the Theory of Change at the core, the strategic plan must consider beneficiaries, mission, vision, objectives. Measurement and evaluation must be consistent to ensure alignment. Non-profits need to integrate sustainability into their strategic goals. Strong corporate governance is critical and involves an engaged and accountable Board and management.
Why is impact, and sustainability important for social sector leaders?
The social sector space has experienced an evolution in the last few decades. Traditional non-profits have begun to understand the need for a sustainable business model that looks at operational efficiency and resource viability while still working to achieve their mission. The evolution draws on the reality that most social sector organisations, particularly those within the non-profit space, may never become fully self-sustaining if always subsidised by non-earned sources through philanthropy and grants. Such a situation leads to the puzzle of achieving impact while still trying to achieve sustainability.
This dilemma is something I had to deal with personally on my journey in the social sector space. After working wholeheartedly within the non-profit sector for seven years, I realised there were always the twin uncertainties around aligning funding with impact measurement and mitigating the risk of funder’s loss that could lead to program or organisation discontinuation. Despite the fantastic work we did and the impact I achieved within those organisations, the puzzle remained.
I then sought to spend a few years understanding the concept of an effective business model and how I could learn to apply that on my journey to leading organisations to a path of sustainability. That journey led me to spend the next seven years as a strategy consultant at KPMG Nigeria, working with non-profits, public sector institutions and even entrepreneurs on organisational sustainability, effectiveness, and strategic planning. The experience eventually became a significant influence in my joining the FATE Foundation. Our work supporting entrepreneurs on their venture building journey was the perfect place to keep my impact-focused heart and align it with my recently acquired business model mind.
As Jim Collins (2005) noted in Good to Great and the Social Sectors, a great organisation delivers superior performance and makes a distinctive impact over a long time. For a business, financial returns are a legitimate measure of performance. However, you must assess performance relative to mission, not financial returns, for a social sector organisation. In the social sectors, the critical question is not “How much money do we make per dollar (or naira) of invested capital?” but “How effectively do we deliver on our mission and make a distinctive impact, relative to our resources?”
As a social sector leader, your business model should be viewed from a financing perspective and sustain your work, providing in-depth quality and scale and reaching more of your target community in more impactful ways. As we look to be more effective in our work, we must be very clear in framing our activities in the context of a well-defined strategy that would help us deliver on our mission and objectives. A defined strategy helps to model how to achieve impact sustainably and efficiently. It also considers the institution’s target audience or beneficiaries as a centrepiece of whatever the institution does in strategy and planning. For me, that is the essence of why that is important.
How can a social sector leader think through developing and implementing a strategic plan?
The first and crucial step for a social sector leader when developing and implementing a strategic plan is centring the organisation’s purpose in a framework that provides a pathway to think through how to achieve its mission, vision, and strategic objectives. As with any typical organisation, impact-driven ones (should) have clear goals and targets typically in line with their focus, such as improving learning outcomes within the education sector or reducing infant mortality rates. It also must state the key strategic objectives and define details clearly – who does what? When? What objectives are we delivering to help us meet our mission or fix the gaps that might limit us from achieving our mission? With what resources? By what time and how do we then monitor those actions and deliveries? What would be the look of success (or otherwise)?
Coming up with our 2019-2024 Strategy Blueprint at FATE Foundation took time, but it was worth all the time, work and investment. This living document guides our work, operating model, and mission achievement three years down the line. In starting that process, we had to clearly define our two target demographic groups – the first aspiring and emerging entrepreneurs and the second the entrepreneurship ecosystem.
Once we had clarity on our target audience, we engaged with representative groups to understand the challenges and opportunities for supporting and enabling them. The process helped us gain clarity on our theory of change which we also aligned with existing data mined on effectively supporting entrepreneurs and the ecosystem. With the board, myself and key members of our management team, we spent a whole day (with the facilitation support of the Senior National Partner of Accenture Nigeria at the time) to brainstorm and agree on our mid to long-term objectives. We looked at the operating model and financing required to deliver the objectives and year by year KPI dashboard to put us in check. We review this dashboard annually for progress or otherwise and learnings.
While there are no perfect plans, having a strategic plan in place is key to unlocking your growth potential for the future and guiding against uncertainty. All leaders (not just social sector ones) skilled at strategic planning would be in a better place to handle uncertainties and unexpected events that could come up at any time given our now volatile, uncertain, complex, and ambiguous (VUCA) world with events like the pandemic.
The scenario above is the central context for strategic plans that move us faster along the sustainability pathway. Defining the resources required and developing the fundraising plan for these requirements are easier when backed up with a clearly defined strategic plan.
How do you measure if your strategic plan is working, and how do you sustain the growth?
The first measure for me will be ensuring that the strategy plan, content, and details centre on the organisation’s theory of change. The theory of change is essentially the need that an organisation has identified and seeks to address this need. This need can be based on global goals and targets like the UN Sustainable Development Goals (SDGs) or critical issues central and relevant to the organisation’s operating environment and community.
Once the need is clear, the theory of change then describes the solutions and interventions that the organisation is developing to address them. It then raises questions such as: what are the outputs? What are the outcomes? i.e., the organisation’s actions and whether the changes are behavioural changes or impact changes, and how these align with the organisation’s mission. Thus, having clarity on the theory of change is a measure for an effective strategic plan.
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While different organisations have different impact measures, social sector leaders need to clarify the indicators that define when they have achieved that impact (i.e., what success would look like). For example, at FATE Foundation, once we defined our theory of change, we then identified the key performance indicators (KPIs) that drive our strategic plan.
Our theory of change highlighted issues in the Nigerian entrepreneurship space around the building and growing sustainable businesses and limited or no growth for about 90% of companies. It was more so for those in the micro and small spaces, of which a significant percentage are youth-led businesses.
In line with our defined issue areas, our interventions then focused on initiatives that would enable our target audience to get the knowledge, tools, resources, and support to start and grow businesses that could create decent jobs. As these develop, they can generate and sustain employment for the founder or the entrepreneur and eventually other people. The intervention also involved the FATE Foundation supporting these entrepreneurs to grow their businesses to a level of increased cash flow, capacity, growth in the value sector, product and service quality assurance, and other relevant indicators. We set these KPIs only once there was clarity on our theory of change. They also had to be easily remembered and articulated by our key internal stakeholders, particularly our board, staff, and volunteers.
What are the critical success factors for delivering a successful strategic plan?
The first success factor will be aligning the sustainability (funding and resource generating plan) with the overall strategic plan. As a social sector leader, our mission and theory of change provide the context for the KPIs defined in our strategic plan. Our strategic plan defines how we will deliver this key impact area, while our sustainability plan answers the questions on how our strategic goals and objectives will be resourced and financed. A clear sustainability plan will answer the questions on what you would require delivering your strategy, when you need it, where you can get them from, and the method you will deploy to source them.
Secondly, accountability of the delivery of that strategy at the board and the management levels is required. Speaking on the board level, I have found out from experience that most successful social sector organisations have very active and robust boards that buy into the mission and vision of the organisation. They take ownership of the strategy to ensure clarity, implementation, monitoring, and organisational learning from the process.
An excellent example in this regard is a leading Nigerian social enterprise that also has accountability at its core. I have served as a member of the BudgIT Advisory Board from 2019 to date. BudgIT is a leading civic tech social enterprise that informs, educates and advocates for transparency and accountability in government spending. The Founders, Seun Onigbinde and Joseph Agunbiade, working with the management team, have been very intentional in ensuring the board is their accountability partner in the design, implementation and review of their mid to long-term strategic objectives.
A third important factor would be having a strategic plan that puts the target audience or the beneficiaries at the centre of the design. They let them buy into the design and delivery of the programs and make sure that they also have ownership in terms of the success and implementation of the plan.
The hallmark of sustainable strategies, particularly with impact as a core, is those who, on the one hand, have clarity on their theory of change models while also having on the other hand clear goals and KPIs required to deliver on the mission. These two serve as the foundation that will define their operating models, delivery approach and sustainability strategies. As we live in a constantly changing world with more need for impact-driven organisations, sustainability must be at the centre of any social sector organisation relevant in the mid to long-term.
Adeyemi, an expert in social entrepreneurship, institutional transformation, non-profit sustainability, and corporate governance, writes from Lagos
