Internal Environment Assessment in Reviewing

Internal Environment Assessment

In reviewing the article Relationships between Organizational Characteristics and Strategic Planning Processes in Nonprofit Organizations several points are clear. By and large nonprofit organizations have not utilized strategic planning process effectively in their organizations. While in the for-profit sector the variables are clear cut and the goals focused on the profitability of the business, in the nonprofit sector these goals had become somewhat fuzzy and vague. There needs to be a transition between the for-profit business model of strategic planning and the nonprofit model. Almost all areas of the current model need to be reassessed and adapted for a better strategic implementation of long-term goals.

By a review of the available literature this study also finds that there are two types of nonprofit organizations, each with particular needs regarding strategic planning. The first is defined as "instrumental" nonprofits. These are organizations that provide benefits and services to members outside of the organization. These would be agencies such as Community Action Organizations, etc. Agencies such as these would need to focus on long-term goals as they relate to external factors rather than internal. The second is "expressive" organizations; these are the opposite of the first. They are only of benefit to the members of the group and hence focus on internal goals and functions for their strategic planning. This difference becomes one of the fundamental factors regarding strategic planning.

Another factor that is a major difference between the corporate and nonprofit environment is that quite often the strategic planning goals of nonprofits are not necessarily focused on a budget basis. Instrumental nonprofits may concentrate instead upon the number of consumers assisted and so on without regard to an appreciable rise or fall in net profit for the agency at large.

Seeing that there are differences between non- and for-profit organization and there are also differences between types of nonprofits, this study focused on a multi-organizational survey of a sample of 600 nonprofit organizations out of a possible 11,300. The survey analyzed the makeup of the agencies (boards, staff, gender, diversity, etc.) and their strategic planning models that were in place.

It was noted in this study that there was a general lack of understanding the influence and focus of internal vs. external factors as regards nonprofits. A greater understanding of these influences would significantly benefit the application of strategic planning in these organizations. For instance, pressure from outside organizations or groups such as funding sources and volunteer oversight groups played a major role in the strategic planning process. It was also suggested that Instrumental nonprofits could more easily align themselves with the current corporate strategic planning models than would expressive organizations. Focusing internally, expressive nonprofits would only seek out member benefits and not look to profits or increase in activities as a way of gauging strategic success. Instrumental organizations benefited more from the focus on long-term goals and thereby are more aligned with the corporate model of strategic planning.

The study also provided several noticeable differences between the profit and nonprofit sectors, "More numerous stakeholders, conflicting criteria for performance assessment, public accountability, and the social service nature of nonprofit organizations tend to make replication difficult between sectors" (Crittenden & Crittenden, 2000). The two major differences that appear to impact exact replication seem to go to the very nature of nonprofits. The accountability of nonprofits is one of a zero sum game. Although balance sheets should always zero out, profit and loss statements for nonprofits are also a zero sum or loss figure. The logic here, as opposed to the private sector, is that a nonprofit showing profit means that the funding sources gave too much money and that during the next budget submittal, their grant size could possibly be reduced. Showing a loss is a positive incentive at these agencies in some respect. This will show that the agency cannot operate without more funding. The mindset is often just the opposite in for-profits and the strategic planning a long-term objective for finance certainly needs to be adjusted.

The other factor is the social service nature of nonprofits. This pervades not only the consumer-ship but the staff as well. Social service agencies are geared toward the fundamental benefit of their clients. Everything else becomes secondary. Staff is almost always given the same benefit, often to the detriment of the organization. Employees are often kept on, making more in salary through automatic increases, long after they have perhaps outlived their usefulness. Although education is often provided in abundance, much is wasted on training that will never be utilized. This has a negative impact on long-term strategies regarding staff retention and viability.