Strategic planning and management for small nonprofit organizations ...

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Most strategic planning includes the following steps: initiation, clarification of the mission, vision, and values, envi...

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Strategic Planning for Community-Based Small Nonprofit Organizations: Implementation, Benefits, and Challenges Qian Hu, University of Central Florida Naim Kapucu, University of Central Florida Lauren O'Byrne, University of Central Florida Executive Summary Although strategic planning can help organizations develop strategic thinking and adapt to environmental changes, small nonprofit organizations may run into challenges when using strategic planning in their management practice. Strategic planning can be time-consuming and cost extra human capital and monetary resources that many small nonprofit organizations have limited access to. Hence, it is worthwhile to examine the application of strategic planning and management to small nonprofit organizations and evaluate the benefits and challenges that strategic planning can bring to small nonprofits. Using a mixed methods approach, this research investigated how managers in community-based small nonprofit organizations perceived the importance and use of strategic planning and management. This research also evaluated the key elements of the strategic plans and the unique challenges in strategic planning. This research suggests that strategic planning, if executed properly, can provide small nonprofit organizations opportunities to not only improve their existing services, but also more importantly, build capacity to sustain and expand their programs in an uncertain environment. Introduction Facing the sluggish economic recovery, most nonprofit organizations are experiencing the unprecedented challenges of seeking sustainable funding and donations, retaining highquality staff, effectively providing services, and attracting qualified volunteers (Mosley, Maronik, & Katz, 2012). Community-based small nonprofit organizations are more vulnerable to the constantly changing political, economic, financial, and demographic environment (Mara, 2010). Strategic planning can serve as a management tool for capacity building of small nonprofits and help organizations develop strategic thinking and adapt to environmental changes (Bryson, 2011). Yet, strategic planning takes time and costs extra human capital and monetary resources that small nonprofits do not have (Mara, 2010). To address this dilemma, this study examines the application of strategic planning to small nonprofit organizations, which has been less studied. A large number of studies have examined the organizational and environmental factors influencing the use of strategic planning, strategy formulation and implementation, and the impact of strategic planning on organizational performance outcomes (Crittenden & Crittenden, 2000; Poister & Streib, 2005; Poister, Pitts, & Edwards, 2010; Siciliano, 2006; Stone, Bigelow, The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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& Crittenden, 1999). Strategic planning has demonstrated potential for improving social performance and financial performance for small nonprofit organizations (Siciliano, 2006). Yet, most of the existing studies on strategic planning in the nonprofit sector have focused on the well-established nonprofit organizations, while few case studies have explored the benefits and challenges of utilizing strategic planning and management in smaller, less established organizations (Mara, 2000). Knowledge remains limited about the use of strategic planning in small nonprofit organizations. Hence, it is worthwhile to identify the role of strategic planning and management for small nonprofit organizations in their management and capacity building. This research examines the following questions: Can strategic planning help small nonprofits improve management and performance? What are the major challenges facing small nonprofit organizations when using strategic planning in their management practice? To answer these questions, we conducted an online survey and focus group studies of executive directors and senior staff of small nonprofit organizations in a southeastern state in the United States. This research suggests that with leadership and other organizational support, small nonprofit organizations can use strategic planning to develop and sustain in an uncertain economic environment. Literature Review & Background Considerable literature has focused on the adoption and implementation of strategic planning in public, private, and nonprofit organizations (Allison & Kaye, 2005; Bryson, 2011; Moore, 2000; Morrisette & Oberman, 2013; Poister et al., 2010). This section begins with reviewing the impacts of strategic planning on public and nonprofit organizations, and then addresses the potential benefits of strategic planning for small nonprofit organizations. Next, it identifies factors influencing the use of strategic planning in nonprofit organizations and discusses the challenges facing strategic planning for community-based nonprofit organizations. Strategic Planning for Public and Nonprofit Organizations Since the 1980s, strategic planning has been widely adopted by public, private, and nonprofit organizations (Bryson, 2011; Heriot, & Loughman, 2009; Mintzberg, 1993; Moore, 2000; Poister & Streib, 1999; 2005; Poister, et al., 2010). According to Bryson (2011), strategic planning is “a deliberative, disciplined approach to producing fundamental decisions and actions that shape and guide what an organization (or other entity) is, what it does, and why” (p. 7-8). There are core steps of strategic planning across a large number of studies (Allison & Kaye, 2005; Bryson, 2011; Moore, 2000). Most strategic planning includes the following steps: initiation, clarification of the mission, vision, and values, environmental assessment, strategic issue identification, strategy formulation, implementation, and assessment (Allison and Kaye, 2005; Bryson, 2011). Public and nonprofit organizations adopt a variety of strategies to adapt to the constantly changing environment (Alexander, 2000; Boyne & Walker, 2004; Mosley, Maronick, & Katz; The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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2012). Public agencies may decide to move into new markets or exit the service markets, provide new services to existing users, seek additional revenues, improve internal management practices, and enhance relationships with external organizations (Boyne & Walker, 2004). Facing financial uncertainty, nonprofit organizations can add new programs, cut off existing program or staff, build or expand a joint program through collaboration, increase earned income, and start or increase involvement in advocacy (Mosley et al., 2012, p. 286-289). In sum, public and nonprofit organizations can either examine the organization internally and focus on existing programs and services, or look externally at the external stakeholders and organizations to establish collaboration and provide joint services. Strategic planning has been found to be beneficial not only for private businesses and public agencies (Moore, 2000), but also for nonprofit organizations (Allison & Kaye, 2005; Bryson & Roering, 1988). Strategic planning can help organizations develop organizational adaptability to environmental changes, improve organizational decision making, set up organizational development priorities, and develop and enhance relationships with key stakeholders (Allison & Kaye, 2005; Brown, 2010; Bryson, 2011). Nonprofit organizations often utilize formal strategic planning because they are required to do so from funders (Stone et al., 1999); however, strategic planning can have a significant impact on nonprofit organizations beyond the potential funding benefits (Crittenden & Crittenden, 2000). Strategic planning may initiate a change in mission, structure, board, and management roles (Stone, Bigelow, & Crittenden, 1999). Benefits include thinking strategically, clarifying the direction of the organization, improving performance, building teamwork and expertise, solving problems, and decision-making (Bryson & Roering, 1988; McHatton, Bradshaw, Gallagher, & Reeves, 2011). Small nonprofit organizations can use strategic planning to better utilize their limited resources and examine external opportunities and challenges to build their capacity rather than focus on daily operations (Kapucu, 2012). Based on the survey results of 240 YMCA organizations, it has been found that formal strategic planning may help nonprofit organizations improve financial and social performance (Siciliano, 1997). Through surveying human service nonprofits located in Los Angeles County in California, Mosley, Maronick, and Katz (2012) found that engaging in strategic planning may allow organizations to deal with funding uncertainty by carrying out complex adaptive tactics such as “joint programs” or “expanding earned income” (p. 296). In sum, as Allison & Kaye (2005) noted, successful strategic planning in nonprofit organizations improves focus on mission and values, offers a blueprint for action, provides ways to monitor and assess actions, and delivers information to the organization that can be used to market the organization to the public and possible funders. A Need for Strategic Planning for Community-based Small Nonprofit Organizations Existing strategic planning research focused on large, well-established public and nonprofit organizations, despite several exceptions (for example, Mara, 2000). Few studies have examined the application of strategic planning to small nonprofit organizations. There are no widely agreed-upon ways to define small nonprofit organizations (Mosley et al., 2012). The size The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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of nonprofit organizations can be measured by the amount of total expenditures, number of staff members, or annual revenues (Mosley et al., 2012; Siciliano, 2006). This study used the amount of annual expenditures to define small nonprofit organizations as those nonprofits have total expenditures under $ 1 million. According to the National Center for Charitable Statistics, nonprofit organizations with less than $1 million in total expenses account for over 80% of public charity services (Blackwood, Roeger, & Pettijohn, 2012) . However, only a small number of case studies have investigated the specific elements of strategic planning, and the unique benefits and challenges of strategic planning for small nonprofit organizations (Inglis & Minahan, 2001; Mara, 2010). Strategic planning has become a useful tool for capacity building of nonprofit organizations. There has been concern over community-based small nonprofit organizations lacking capacity and technical expertise to keep up with the changing environment (De Vita, Fleming, & Twombly, 2001). Strategic planning is a tool that nonprofit organizations frequently utilize in capacity building activities, along with other tools such as strengthened internal management using information technology, team building activities, reorganization, and leadership development (Allison & Kaye, 2005). Many capacity building programs include a strategic planning component as a part of a capacity and intervention strategy. Capacity building activities include workshops and training and custom-based technical assistance for small nonprofit organizations in the US (Kapucu, Augustin, & Krause, 2007; Kapucu, Healy, & Arslan, 2011; Weiss, 2000). There are other unique benefits of strategic planning for community-based small nonprofit organizations. Strategic planning can help small nonprofit organizations efficiently utilize limited resources to support program objectives and missions (Mara, 2000; McHatton et al., 2011; Medley & Akan, 2008). As small nonprofit organizations have smaller budgets, they can benefit from enhanced management techniques that strategic planning may require. These techniques may include team building and collaborating, strategic thinking, planning, and program evaluations. Factors Influencing the Use of Strategic Planning among Nonprofit Organizations A number of factors may influence an organization’s participation in strategic planning, such as the size of the organization, characteristics of the board, type of management, agreement on organizational goals, and funding requirements to adopt planning (Stone et al., 1999). Larger nonprofit organizations are more likely to plan (Crittenden & Crittenden, 2000; Siciliano, 2006; Stone et al., 1999). In addition, planning in nonprofit organizations is related to the age of the organization (Crittenden & Crittenden, 2000). Previous planning experience can also affect the organization’s future engagement in strategic planning. Organizations that have been planning longer tend to have more formalized strategic plans (Crittenden & Crittenden, 2000). Through surveying 240 YMCA organizations, Siciliano (2006) found that organizations are less likely to go through a formal strategic planning process when they are facing less favorable financial conditions. However, there is some conflicting research that has shown that it is larger The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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organizations, not necessarily older organizations that are more likely to engage in strategic planning (Stone et al., 1999). Crittenden & Crittenden’s (2000) study sampled 11,300 nonprofit organizations from a State Office of Voluntary Citizen Participation. They did not find a positive correlation between the strategic planning process and organizational characteristics such as member age, funding source, administrator education, and bureaucracy (p. 166). Leadership, transformational leadership in particular, enables small nonprofits to overcome resource constraints, use strategic planning in management practice, and become more sustainable. Leadership plays a crucial role in initiating, supporting, and championing the strategic planning process (Bryson, 2011). Leaders can help other members understand the opportunities and challenges facing the organization and develop strategic thinking. Furthermore, leaders can mobilize resources to support and facilitate strategic planning (Bryson, 2011). Leaders not only work with employees to accomplish personal goals and organizational goals, but also need to think strategically about the long-term development of an organization. This is why transformative leadership is important for successful strategic planning. Transformational leadership inspires other members to pursue high organizational performance by setting up role models, challenging existing assumptions, and proposing creative approaches to address issues (Avolio, Waldman, & Yammarino, 1991; Bass & Avolio, 1993; Bass & Riggio, 2006; Burns, 1979). Transformational leadership allows small nonprofits to initiate and facilitate the process to challenge the status quo, think outside of the box, and seek creative ways to implement strategic planning in their organizations. Challenges of Strategic Planning for Nonprofit Organizations Strategic planning is not without flaws (Mintzberg, 1993). Planning is inherently turbulent in nature (Mintzberg, 1993). Lengthy strategic plan are often ignored in nonprofit management practice (Mara, 2010). Small nonprofit organizations may encounter more challenges. It is difficult to measure performance of nonprofit organizations, whose sole purpose is to fulfill a social mission (Crittenden & Crittenden, 2001; McHatton et al., 2011; Moore, 2000). Empirical support is still lacking that strategic planning improves performance (Poister et al., 2010). Additionally, studies have shown that larger nonprofit organizations that offer certain services, receive funding from the federal government or the United Nations have greater success in program management and evaluation (Carman & Fredericks, 2010; DiMaggio, 1988). Small nonprofits, by contrast, face even greater challenges because they often lack financial and human resources to budget for strategic planning practices. Dart, Pat, Vic, and Jacob (1996) found that strategic planning is a time consuming activity and therefore, it is optional for a board. Mara (2010) noted that the strategic planning process could be very time consuming and cost resources that small nonprofit organizations lack (2010). She noted that adequate, competent staff members, a capable facilitator, and prior education on the strategic planning process is needed for effective strategic planning (2010). Yet, small nonprofit organizations may not have access to these resources.

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Strategic planning has the potential for benefitting small nonprofit organizations. Yet small nonprofit organizations may encounter unique challenges when using strategic planning as a management tool. As shown in Figure 1, a variety of organizational and environmental factors such as organization size, leadership, resources, financial uncertainty, and mandates can influence the adoption of strategic planning in nonprofit organizations. This study first explores the useful elements of strategic planning for small community-based organizations, and the strategies small nonprofit organizations adopted to tackle financial uncertainty. Then it explores the impacts of strategic planning on organization management and performance. Lastly, it investigates how executive directors, board members, and staff working in community-based small organizations perceive the benefits and challenges of strategic planning. Factors

Strategic Planning

Outcomes

Figure 1: The adoption of strategic planning and its impact on organizations Methods A mixed method, including an online self-administered survey and a focus group study, were conducted. In fall 2012, we surveyed executive directors and senior staff of twenty community-based small nonprofit organizations in a southeastern state that participated in a federally funded capacity-building program in 2009-2011. We also conducted a focus group to have more in-depth conversations about the use of strategic planning in small nonprofit organizations. These small nonprofit organizations serve in the area of human services, mainly providing employment assistance to local residents who need help with employment. Although these small nonprofits have clearly-defined organizational missions, these organizations have very limited access to resources such as funding and staff.

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All of the organizations selected for this study have participated in strategic planning training sessions that were provided through a federally funded nonprofit capacity-building program. Then, these organizations individually conducted their strategic planning process. Formal strategic plans were developed at the end of the strategic planning process and were approved by their respective Board of Directors. This unique group of nonprofit organizations allows us to have in-depth conversations with them regarding their experience with strategic planning and implementation. Furthermore, these small nonprofit organizations that participated in this study do share similar challenges and opportunities with other small nonprofits, such as limited staffing, tight budgets, and struggles with daily operations, even though these small nonprofit organizations may not represent a large population of small nonprofit organizations. This study explores whether strategic planning can be a useful management tool for small nonprofit organizations; and if so, how strategic planning can be better utilized for small nonprofit organizations. Survey questions ask participants their perception about the strategic planning process, the unique need for the organizational strategic planning and management, the impacts of developing and implementing the strategic plans, the perceived challenges and opportunities, and the strategies developed to deal with financial uncertainty. The survey questions about the impacts of strategic planning were built upon Poister and Streib’s (2005) survey instruments with adaptations to nonprofit organizations (p. 52). A series of questions examine the impacts of strategic planning on organizational mission, goals, and priorities, relationships with key stakeholders, organizational management and decision making, organizational development and change, and organizational performance. Another set of questions was developed according to Mosley et al.’s (2012) categorizing of nonprofit management strategies and other research on public sector strategies (Boyne & Walker, 2004; Brown, 2010). These questions examine what strategies these small nonprofit organizations adopt in response to financial uncertainty. Analysis of the survey results were used to develop focus group questions which aimed to collect more detailed information about their management experience with strategic planning. Seven representatives from six organizations participated in the focus group study. Among them six participants are executive directors, and the other one is a program officer. All of the seven participants have been working in the nonprofit field for many years and have accumulated hands-on knowledge about using strategic planning in their organizations. The focus group study provides the platform for the nonprofit leaders to reflect on their strategic planning experience. The conversation was later transcribed and analyzed to supplement the survey data to provide more contextual information and additional insights. Findings and Discussions Out of the twenty community-based small nonprofit organizations, seventeen organizations completed the survey. Among these seventeen respondents, twelve are executive directors, four are staff members, and one is the program director. The majority of these organizations have small budgets and limited staff, as shown in Table 1. Only two organizations The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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have more than ten paid full-time staff members, and thirteen have less than five paid full-time members. Table 1 Characteristics of the community-based small nonprofit organizations Year of Formation Before 1980 4 1981-2000 2 2001-current 10 Paid full0-5 13 time staff 6-10 2 Over 10 2 Paid part0-5 15 time staff 6-10 2 Unpaid 0-5 10 Staff Size staff 6-10 1 Over 10 6 Number of members on 2-5 5 the Board of Directors 6-10 8 Over 10 4 Budget Status Increase 9 Decrease 4 No Change 4 Total Budget $ 0-100,000 8 $100,001-300,000 4 $ 300,001-$500,000 1 Over $500,000 4

23.5% 11.8% 58.8% 76.4 % 11.8 % 11.8 % 88.2% 11.8% 58.8% 5.9% 35.3% 29.4% 47.1% 23.5% 52.9% 23.5% 23.5% 47.1% 23.5% 5.9% 23.5%

Elements of Strategic Planning for Community-based Small Nonprofit Organizations Most of the survey respondents perceived the elements of strategic planning as a useful management tool for their organizations, as shown in Table 2. These respondents agreed that it is beneficial for their organizations to identify stakeholders’ needs and concerns, review organizational missions, clarify organizational mandates, analyze internal weaknesses and strengths, external challenges and opportunities, develop a vision, identify strategic issues, and develop goals and objectives, and implementation plans. The elements of strategic planning for community-based small nonprofit organizations are similar with the counterparts that were widely used in public agencies and large nonprofit organizations (Allison & Kaye, 2005; Bryson, 2011). Only two respondents noted that they are neutral about the usefulness of clarifying organizational mandates in the process of strategic planning. One respondent did not think reviewing the organizational mission is useful.

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Table 2 Useful elements of strategic planning for community-based small nonprofit organizations Elements of Strategic Planning

Very Useful

Not Neutral Useful

Not Useful At All

Identification of stakeholders’ needs and concerns

10(58.8%) 6(35.3)

1(5.9)

0(0)

0(0)

Review of organizational mission

12(70.6)

4(23.5)

0(0)

1(5.9)

0(0)

Clarification of organizational mandates

5(29.4)

10(58.8) 2(11.8)

0(0)

0(0)

Analysis of internal strengths and weaknesses

9(52.9)

8(47.1)

0(0)

0(0)

Assessment of external threats and opportunities

6(35.3)

10(58.8) 1(5.9)

0(0)

0(0)

Development of a vision for the future

11(64.7)

5(29.4)

0(0)

0(0)

0(0)

Development of strategic issues

8(47.1)

8(47.1)

0(0)

0(0)

0(0)

Development of goals and objectives

10(58.8)

6(35.3)

0(0)

0(0)

0(0)

Implementation plans with actions, resources, and timelines

9(52.9)

6(35.3)

1(5.9)

0(0)

0(0)

Useful

0(0)

Perceptions about Strategic Planning’s Impact on Nonprofit Organizations Overall, respondents understood well what strategic planning means to an organization. All but one respondent were familiar with strategic planning and implementation, as shown in Table 3. Respondents rated strategic planning highly and perceived strategic planning as a useful tool for their organizations to focus on organizational missions, goals, and priorities, strengthen relationships with stakeholders, improve management and decision making, increase organizational effectiveness, and foster organizational development. This finding is consistent with most existing studies that focus on the benefits of strategic planning for public agencies and well-established nonprofit organizations (Allison & Kaye, 2005; Poister & Streib, 2005). In other words, strategic planning brought about positive benefits to these seventeen community-based small nonprofit organizations.

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Table 3 Impacts of Strategic Planning on Nonprofit Organizations Areas

Mission, Priorities, Goals

External Relations with Key Stakeholders

Management and Decision making

Effectiveness Performance and Organizational Development

Items

Strongly Agree

Understand what a mission statement 10 (58.8%) means Focus on the 12 (70.6) important issues Enhance employees’ focus on 8 (47.1) organizational goals Define clear program 7 (41.2) priorities Understand the importance of 8 (47.1) stakeholders Maintain supportive relations with 8 (47.1) donors/funding agencies Maintain public 6 (35.3) support Seek new 8 (47.1) collaborations Enhance relationships 7 (41.2) with existing partners Maintain a functional organizational 4 (23.5) structure Implement effective 3 (17.6) management systems Target and utilize program evaluation 4 (23.5) tools Make sound decisions regarding programs, 5 (29.4) systems, and resources Maintain our organization’s overall 4 (23.5) financial condition Manage operations in 6 (35.3) an efficient manner Serve the needs of the 8 (47.1) community Initiate changes 7 (41.2) Strengthen abilities to 7 (41.2) change

Agree

Neither Agree Nor Disagree

Disagree

Strongly Disagree

5 (29.4)

2 (11.8)

0 (0)

0 (0)

5 (29.4)

0 (0)

0 (0)

0 (0)

6 (35.3)

3 (17.6)

0 (0)

0 (0)

8 (47.1)

2 (11.8)

0 (0)

0 (0)

7 (41.2)

2 (11.8)

0 (0)

0 (0)

7 (41.2)

2 (11.8)

0 (0)

0 (0)

10 (58.8)

1 (5.9)

0 (0)

0 (0)

9 (52.9)

0 (0)

0 (0)

0 (0)

10 (58.8)

0 (0)

0 (0)

0 (0)

9 (52.9)

4 (23.5)

0 (0)

0 (0)

11 (64.7)

3 (17.6)

0 (0)

0 (0)

8 (47.1)

5 (29.4)

0 (0)

0 (0)

8 (47.1)

3 (17.6)

0 (0)

0 (0)

10 (58.8)

2 (11.8)

0 (0)

1 (5.9)

9 (52.9)

2 (11.8)

0 (0)

0 (0)

8 (47.1)

1 (5.9)

0 (0)

0 (0)

9 (52.9)

1 (5.9)

0 (0)

0 (0)

9 (52.9)

1 (5.9)

0 (0)

0 (0)

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Small nonprofit organizations are at the early development stage and may have difficulty focusing on what is expected of them by their stakeholders. All of the respondents thought that strategic planning helped their organization focus on important issues. Strategic planning can help small nonprofit organizations focus on their mission, as indicated in the comment by one focus group participant: We use our mission statement, for every monthly meeting, as part of either the opening or somewhere and that came because of the strategic planning. And if we are going to do a new program, it has to be something that will follow what our mission statement is. Most of the respondents noted that strategic planning could help their organizations understand the importance of stakeholders and maintain supportive relationships with funding agencies or donors. Even more respondents agreed that strategic planning could help organizations maintain public support, seek new collaborations, and enhance relationships with existing partners. Managing stakeholder relationships is crucial to nonprofit organizations because nonprofit organizations need different avenues of support from stakeholders, such as funding, human capital, and other resources (Abzug & Webb, 1999; Balser & McClusky, 2005). This is especially the case for small nonprofit organizations. Yet, many small nonprofit organizations are struggling with daily operations and may not invest their time and resources to identify key stakeholders, seek new collaborations, and build and sustain supportive relationships with key stakeholders. As indicated in one of the comments made by a focus group participant, strategic planning can help small nonprofit organizations realize the importance of stakeholders, and direct some of their attention from daily functions to identifying potential donors, collaborators, and competitors. “I think one thing that it [strategic planning] did for us is it brought many sectors of the community in to help do the thinking. It was not just the staff and the leadership team and the people we serve directly, but it was those people who have an interest in who we are, the donors, the board, a larger segment of the community that help us came in to help us decide what were those strengths and what were the weaknesses and how are we going to go about making a difference rather than just fumbling along on our own steam.” Regarding the impact of strategic planning on organizational performance, almost all respondents agree that strategic planning can help an organization better serve community needs, and strategic planning can help an organization manage operations in a more efficient manner. As the comment below shows, strategic planning can help small nonprofit organizations reflect on its strengths, weaknesses, challenges and opportunities to strengthen its performance. The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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Strategic planning is also perceived as an effective tool to initiate organizational change and strengthen abilities to change. One of the participants highlighted in the following statement: “Strategic planning gave my organization an opportunity to do a self-evaluation of where we were and where we needed to be. It also gave us a road map so that we can see the needs that our organizations needed through our weaknesses... the strategic plan allows you to really look at it and evaluate it and develop an action plan to put those things in place that strengthen your organization.” When it comes to the impact of strategic planning on organizational management and decision making, relatively fewer respondents agree that strategic planning can help target and utilize program evaluation tools. This finding speaks to the existing research that suggests although many public organizations have developed formal strategic plans, the use of evaluation and implementation tools remain limited (Poister & Streib, 2005; Vinzant and Vinzant; 1996). In these small nonprofit organizations, the use of evaluation tools and other effective management systems remain limited despite the fact that all of these organizations have developed formal strategic plans. This point can be better illustrated using the comments made by one of the respondents in the focus group studies. It’s a tool that we set, reviewed, revised… but it’s often a tool that is put in a drawer. We need to make sure we do what we say we are going to do. This finding reflects a common challenge in using strategic planning as a management tool, that is, how to ensure the implementation of strategies and the achievement of strategic goals set in the strategic plan. Drafting a formal strategic plan does not suffice. As suggested in Poister and Streib’s (2005) research on the use of strategic planning by municipalities, in order to maximize the benefits of strategic planning, organizations need to integrate the strategic plan into their budgeting process, develop clear implementation plans, and evaluate the performance by linking strategic plans with performance management. Strategy Use under Financial Stress As shown in Table 4 below, the most frequently used strategy to tackle economic uncertainty among these small community-based nonprofit organizations is to “collaborate with other organizations”, followed by “increasing fund-raising efforts” and “strengthening relationships with key stakeholders.” Only one respondent noted that his or her organization has done nothing. The use of passive strategies such as reducing marketing efforts, services, and staff has been very limited. This is an interesting phenomenon given that all of the seventeen The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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organizations are relatively small and have limited budgets. Different from the research that suggests that large organizations tend to have more diverse strategies to respond to financial challenges (Mosley et al., 2012), in this study, community-based small nonprofit organizations take proactive measures to tackle the challenges brought by financial stress. Although the adoption of diverse strategies by these small nonprofit organizations does not necessarily result from the strategic planning, this finding at least shows that despite the limited staffing and budgets, small nonprofit organizations can go beyond using passive strategies such as cutting off services or staff to be more proactive. Table 4 Strategies under Financial Stress My organization dealt with financial uncertainty in the following manner: Strategies Collaborate with other programs Collaborate with other organizations Strengthen your relationships with key stakeholders Increase fund-raising efforts Reduce marketing efforts Reduce services Reduce staff Done nothing Other (please specify)

Response Percent 47.1% 82.4% 70.6% 70.6% 5.9% 5.9% 17.6% 5.9% 5.9%

Response Count 8 14 12 12 1 1 3 1 1

Challenges to Strategic Planning and Implementation Existing research suggests that time commitment from leadership and staff members and financial resources are the factors that may affect the organization’s participation in strategic planning (Mara, 2010; Siciliano, 2006). As shown in Figure 2, more than half of the respondents agreed time commitment from leadership and staff has been a concern in the strategic planning process, and lacking financial resources is another barrier to their organizational participation in strategic planning.

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It is interesting to find that a few respondents disagreed that the time commitment and limited financial resources constrain their organizations’ use of strategic planning, as indicated in Figure 2. Previous research suggests that strategic planning is more likely to be adopted as a management practice in large well-established organizations (Crittenden & Crittenden, 2000; Siciliano, 2006; Stone et al., 1999). Although time and costs are legitimate and prominent concerns for small nonprofit organizations to take into consideration before going through a strategic planning process, small nonprofit organization can still adopt strategic planning in their management practices. Leadership, especially transformational leadership, is vital for small nonprofit organizations to overcome their weaknesses and think beyond the daily operations of their organizations. The small nonprofit organizations we studied successfully completed their strategic planning processes through the support from a federally funded capacity-building program. To save costs, leaders from these small nonprofit organizations need to be innovative and seek new ways of developing strategic plans, such as collaborating with education institutions and obtaining free professional services from education institutions.

Figure 2. Constraints to Your Organization’s Participation in Strategic Planning and Management Besides the concerns about time and costs, two focus group participants highlighted the importance of getting buy-in from board members to the strategic planning process. “It is a challenge to get the board more active, actively engaged in the process. I think it also challenged us to, I think I remember we had a whole white board full of sticky notes and try to determine where is the best place that this particular service is to be given.” Two focus group participants noted that initiating changes could be very challenging for her organization.

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One of the challenges that we faced was getting staff that has been working with you for a period of time to start taking on and embracing like a new process or a new way of doing things. Other focus group participants noted that it is quite challenging to implement what has been proposed in the plan in reality. Also like time management, following up can be a barrier. Following up on where you are at … No one assigned to one project. People are jumping around, so who is following up on certain projects. To summarize, survey respondents agreed that time and financial costs may constrain their organization’s participation in strategic planning and implementation. The small nonprofit organizations also face the challenges of initiating changes and getting the support from board members. These challenges are similar with what large public or nonprofit organizations encounter in their strategic planning process. On the other hand, it is still likely for small nonprofit organizations to overcome these challenges and utilize strategic planning. That is to say, small nonprofit organizations may seek other ways to save costs and time to make it feasible to embrace strategic planning in their management practices. Conclusion Community-based small nonprofit organizations have grown rapidly and become an important provider of public services. Although a large number of studies have examined strategic planning for government agencies and well-established large nonprofit organizations, very few studies have explored whether and how strategic planning can be employed in the community-based small nonprofit organizations. Hence, it is worthwhile to study whether strategic planning can be used as a management tool for small nonprofit organizations to sustain in the tough economic environment and grow high-quality services. This research attempts to fill in an existing research gap by focusing on the application of strategic planning to community-based small nonprofit organizations. This research suggests that through the support of a federal capacity building grant, all of the twenty community-based small nonprofit organizations have successfully gone through the strategic planning process and completed formal strategic plans. Overall, the executive directors and staff members in the surveyed community-based small nonprofit organizations perceived strategic planning as a useful tool. One of the authors has been teaching strategic planning courses for the MPA program and the nonprofit management program. Through conducting service-learning projects and providing free consultation services to local small nonprofit organizations, we found that many community-based small nonprofit organizations were too focused on their day-to-day operations to think out of the box and prepare for the uncertain economic environment. Leadership in these small nonprofit organizations plays a key role in embracing strategic planning to envision the future and seek additional resources, and make small nonprofits more sustainable. Strategic planning, if executed properly, can not only provide small nonprofit organizations opportunities to improve their existing services, but also more importantly, help The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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small nonprofits build capacity to sustain and expand their programs in such an uncertain environment. This research provides an understanding of the challenges and opportunities of introducing strategic planning to small nonprofit organizations. Although existing research points out that strategic planning can be time-consuming and costly, this research shows that it is possible for small nonprofit organizations to overcome the barriers to develop successful strategic planning. It is possible for community-based nonprofit organizations to seek external resources such as funding and free facilitation through education institutions to support their strategic planning. Other than time and financial costs, the respondents noted that it is important to fully engage the board members and staff in the strategic planning process. This research not only provides suggestions about advancing strategic planning for small nonprofit organizations, but also presents broad implications for capacity building in a large number of emerging small nonprofit organizations. Small nonprofit organizations need to think big. Small nonprofit organizations can be creative in seeking funding and collaborations to support their strategic planning and other capacity-building efforts. In addition, strategic planning can take on various formats. Depending on the need, small nonprofit organizations may decide whether to go through a formal strategic planning or an informal strategic planning process. Small nonprofit organizations can partner with researchers to get free professional services or other types of consultation services. Furthermore, there are federal, state, and local funding opportunities that small nonprofit organizations may pursue to support their capacity building activities. This study is not without limitations. This study examines whether strategic planning can help small nonprofit organizations better adapt to an uncertain economic environment. The small nonprofit organizations in this study have already established long-term partnerships with the research center and the university. They are unique in the sense that the leaders of these nonprofit organizations reach out to communities and seek resources from external partners to help them use strategic planning as a management tool. This partially explains why these small nonprofit organizations can overcome the challenge of limited budgets and staffing to explore the potential of strategic planning for developing organizational capacity. This study does not claim that the perceptions presented in this paper can represent all community-based small nonprofit organizations. Rather, the findings of this exploratory study call for more systematic and large-scale research to explore the appropriate formats and effective approaches to strategic planning for small nonprofit organizations. Acknowledgement: We are grateful for the representatives of the nonprofit organizations who participated in this research. References Abzug, R., & Webb, N.J. (1999). Relationships between nonprofit and for-profit organizations: A stakeholder perspective. Nonprofit and Voluntary Sector Quarterly, 28(4), 416-431. The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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DiMaggio, P. J. (1988). Interest and agency in institutional theory. In L. G. Zucker (Ed.), Institutional patterns and organizations: Culture and environment, (pp. 3-21). Cambridge, MA: Ballinger. Heriot, K.C., & Loughman, T.P. (2009). Resolving the planning conundrum in new venture creation: An adaption of Mintzberg’s strategy formation perspective. Journal of Applied Management and Entrepreneurship, 14(4), 14-24. Inglis, L., & Minahan, S. (2001). Stakeholders and strategic planning: Experiences of an Australian nonprofit organizations. Retrieved from www.sba.muohio.edu/abas/2001/quebec/inglis_stakeholdersandstrategicplanninginnpos.pdf Kapucu, N. (2012). It takes a village: Capacity building of community-based small nonprofit Organizations through an Academic Center. Journal of Nonprofit Education and Leadership, 3(2), 172-185. Kapucu, N. Augustin, M., & Krause, M. (2007). Capacity building for community-based small nonprofit minority health agencies in central Florida. The International Journal of Volunteer Administration, 25(3), 10-17. Kapucu, N., Healy, B., & Arslan, T. (2011). Survival of the fittest: Capacity building for small nonprofit organizations. Evaluation and Program Planning, 34(3), 236-245. Mara, C. M. (2000). A strategic planning process for a small nonprofit organization: A hospice example. Nonprofit Management and Leadership, 11(2), 211-223. McHatton, P. A., Bradshaw, W., Gallagher, P. A., & Reeves, R. (2011). Results from a strategic planning process: Benefits for a nonprofit organization. Nonprofit Management and Leadership, 22(2), 233-249. Medley, B. C., & Akan, O. H. (2008). Creating positive change in community organizations: A case for rediscovering Lewin. Nonprofit Management and Leadership, 18(4), 485-496. Mintzberg, H. (1993). The pitfalls of strategic planning. California Management Review, 36(1), 32-47. Moore, M. H. (2000). Managing for value: Organizational strategy in for-profit, nonprofit, and governmental organizations. Nonprofit and Voluntary Sector Quarterly, 29(1), 183-204. Mosley, J. E., Maronick, M.P., & Katz, H. (2012). How organizational characteristics affect the adaptive tactics used by human service managers confronting financial uncertainty. Nonprofit Management & Leadership, 22(3), 281-303. Morrisette, S., & Oberman, W. (2013). Shifting strategic imperatives: A stage of leadership perspective on the adoption of corporate entrepreneurship. Journal of Applied Management and Entrepreneurship, 18(2), 59-82. Poister, T. H., Pitts, D. W., & Edwards, L. H. (2010). Strategic management research in the public sector: A review, synthesis, and future directions. The American Review of Public Administration, 40(5), 522-545. The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1

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Poister, T. H., & Streib, G. (2005). Elements of strategic planning and management in municipal government: Statuses after two decades. Public Administration Review, 65(1), 45-56. Siciliano, J. I. (2006). The relationship between formal planning and performance in nonprofit organizations. Nonprofit Management and Leadership, 7(4), 387-403. Stone, M. M., Bigelow, B., & Crittenden, W. (1999). Research on strategic management in nonprofit organizations: Synthesis, analysis, and future directions. Administration & Society, 31(1), 378-423. Vinzant, D. H., & Vinzant, J. (1996). Strategy and organizational capacity: Finding a fit. Public Productivity and Management Review, 20(2), 139– 57. Weiss, J. A. (2000). From research to social improvement: Understanding theories of intervention. Nonprofit and Voluntary Sector Quarterly, 29(1), 81-110. About the Authors Qian Hu, Ph.D., is an assistant professor in the School of Public Administration at the University of Central Florida. Her research interests include strategic and performance management, collaborative public management, network studies, and policy informatics. Her work has been published in academic journals such as American Behavioral Scientist, Journal of Community Informatics, Research Policy, and Journal of Public Affairs Education. Naim Kapucu, Ph.D., is a professor of public administration and founding director of the Center for Public and Nonprofit Management in the School of Public Administration at the University of Central Florida. His research focuses on decision-making in complex environments, collaborative governance, capacity building for nonprofit organizations, and organizational learning and design. His work has been published in Public Administration Review, Journal of Public Administration Research and Theory, and American Review of Public Administration among others. Lauren O'Byrne, is a Ph.D. student in the School of Public Administration at the University of Central Florida. She is interested in nonprofit management in general and capacity building for nonprofit organizations in particular.

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