Identify and Define a Market

As is true in the for-profit world, the first challenge for a nonprofit is to identify a market need. Similar to entrepreneurs in the for-profit world, founders of nonprofits typically identify this need because it is something of interest to them. One might even describe this as a “passion.” The National Association of Women Business Owners (NAWBO) was created by a group of women in 1975 that saw a need to foster the development and growth of women-owned businesses. Head Start was created in 1965 as a part of President Lyndon Johnson's War on Poverty to help preschool children of low-income families prepare for lifelong learning and “break the cycle of poverty.” Shelter 37 was founded in 1993 by James Washington, a former UCLA and Dallas Cowboys football player, who saw a need to help young people in Los Angeles whose lives have been affected by crime, drugs, violence, or abandonment to improve their ability to get and keep a job. InterfaithFamily was founded by Edmund Case in 2001 to help people in interfaith relationships engage in Jewish life and help Jewish communities welcome those in these relationships. Freedom Writers Foundation was founded by Erin Gruwell, a former teacher with a passion for reducing high school dropout rates, engaging at-risk youth, and increasing overall academic performance—for all students.

Nonprofit entrepreneurs are typically very passionate about the market that they are working to serve. James, Ed, and Erin had experiences that were significant drivers for the creation of their enterprises. James grew up in the Watts neighborhood of Los Angeles and witnessed firsthand the impact of unemployment on young people. Ed experienced the displeasure of his family and his religious community when he decided to marry a non-Jewish woman. Erin was a high school teacher who found that traditional educational methods would not engage students and create the motivation required for at-risk youngsters.

In addition to the clients, members, and families that these organizations are working to serve, most nonprofits also need to view funding sources as “customers” because they provide the financial resources to support continued operations. Successful nonprofits have a good understanding of who their funding sources are or will be and what these funding sources needs are. For example, Head Start agencies are federally funded and know that they need to meet certain performance standards to continue receiving their funding. NAWBO, at the national and local levels, obtains some of its revenue from its members and some from corporate sponsors who are interested in funding the development of women-owned businesses. Other nonprofits like Shelter 37 and InterfaithFamily receive private donations from individuals and companies interested in their work and may also apply for grants. In all cases, however, nonprofits need to find ways to attract and maintain these “customers” through the impact that they have on the people that they serve.

Develop Products and Services

Most nonprofits provide services (versus products per se) to the market that they are focused on serving. NAWBO, for example, provides training and networking opportunities to its members and advocates for women business owners at the federal, state, and local levels. Head Start provides a comprehensive set of services—educational, emotional, social, psychological—to help promote school readiness and lifelong learning. Shelter 37 provides 16- to 24-year-olds with life skill and job training and assists the participants in these programs in securing employment. InterfaithFamily provides web-based resources, training, networking opportunities and other support to interfaith couples and Jewish community-based leaders. Freedom Writers Foundation creates stories of overcoming adversity through education.

For funding sources, the “product” provided by nonprofits is “outcomes.” Funding sources—whether they are individuals, corporations, or foundations—want to see that the organization they are investing in is delivering results. In some cases, these results need to be systematically measured and reported to funders (e.g., in Head Start agencies). In other cases, the “business” that the organization is in—for example, transforming the lives of young people, providing meals and shelter to homeless, or serving meals to seniors— is enough to keep funders engaged because, typically, the work being done is something that they are interested in. In these latter cases, the nonprofits' focus will need to be on continuing to keep these funding sources engaged.

Manage Resources and Develop Operational Systems

There are few differences between how non- and for-profit organizations build these two levels of the pyramid. Both types of enterprises face challenges with respect to acquiring needed human, technological, physical, and financial resources; and developing the day-to-day systems needed to support current and anticipated future operations.

There are, however, a few differences that need to be considered and managed. First, some nonprofits cannot afford to pay salaries that are competitive with for-profits that operate within their markets. This can lead to a situation where the nonprofit actually becomes a training ground to supply for-profits with skilled personnel. Sometimes, this problem can be solved by increasing salaries. In other cases, the nonprofit either needs to look to other ways of retaining personnel (e.g., a strong, inspiring, well-managed organizational culture) or accept that this is going to happen and prepare for it. This latter alternative would mean having a well-developed pipeline of potential employees to fill the vacancies when they occur.

A second difference is that many nonprofits are limited in terms of what they can invest in infrastructure development activities—including the development and implementation of new operational systems, bringing in outside resources to provide training, and (as stated above) increasing compensation—because they have very specific standards that need to be met with respect to how they allocate and manage their budgets. In some cases, these problems can be addressed through seeking and obtaining approval to allocate a specific amount of the organization's current budget to infrastructure development. It is also possible to secure new funding (e.g., small grants, donations from board members, etc.) that is specifically targeted for use in infrastructure development. For example, we facilitated a strategic planning process for one nonprofit that had obtained a grant for this purpose. In another case, a board member agreed to fund a two-day meeting to develop a strategic plan for the organization.

Develop Management Systems

All organizations need to develop effective planning and performance management systems, a structure that is aligned with their strategy, and a process for ensuring that those in leadership positions have the skills needed to effectively execute their roles. A major difference for most nonprofits in developing and implementing these systems is the presence of a volunteer board that, in effect, is part of the organization's management system.

While the board's composition and role can differ, somewhat, from organization to organization, its basic purpose is to provide input and advice to the people (typically referred to as “staff”) who work in and manage the nonprofit's day-to-day operations. The most effective nonprofit boards are those where members clearly understand that their role is strategic (focused on the long-term development and success of the organization) versus tactical (involving themselves in day-to-day operations). This role is sometimes difficult for some people to embrace because, chances are, they are on the board as a result of what might be termed their keen interest or passion for the nonprofit's work. Frequently (although not always) nonprofit boards will have fiduciary responsibility—that is, they are charged with ensuring that the organization is financially sound and that resources are being wisely invested to achieve desired outcomes. At the most basic level, this role involves reviewing, approving, and holding the CEO or executive director and his or her team accountable for effectively managing the organization's budget, and, if necessary, replacing them.

For nonprofits, effectively implementing the management systems level of the pyramid involves clearly defining both staff and board roles (a part of the organization's structure). This should be done in writing (e.g., in the organization's bylaws). The role description for the board can be used to identify and engage new members as well as to remind existing board members about the boundaries of their roles.

As will be described later in this chapter, the development and implementation of the four management systems is basically the same in nonprofits as it is in for-profit enterprises—except that if a board is present, it will participate in this process. For example, the board will provide input on and in some cases will have the authority to approve the organization's strategic plan; and will sometimes have responsibility for selecting and evaluating the organization's CEO or executive director. The board may also be asked to approve structural changes—particularly if they involve the creation of new leadership positions or title changes that result in higher compensation for the occupant of the role.

Manage the Organizational Culture

Many nonprofits have a unique advantage with respect to culture management—people tend to join and remain a part of a nonprofit because they believe in and are supportive of the organization's purpose and values. People sometimes remain on the staff of a nonprofit even though they might receive higher compensation elsewhere because they are rewarded by the work that they do.

However, as is true in other organizations, this advantage can erode over time if the culture as a whole is not systematically managed. For example, in one $5 million (budget) nonprofit that had grown dramatically over a decade, the founder (who was the CEO and who was approaching retirement) simply would not let his senior leadership team do their jobs. He was critical of their performance and periodically berated individuals in front of the team. Everyone felt that they needed to be on guard against a possible outburst, and some employees came to literally hate going to work. Even though employees were passionate about the work that they were doing, many were considering leaving the organization. When the CEO “exploded” during a board meeting, the decision was made that he needed to retire or be terminated. Upon the founder's departure, a member of the senior leadership team, who had been with the organization for many years, was appointed by the board as the new CEO. The culture of the organization changed almost overnight—people felt a sense of relief, began to share and work together to address key issues, and many told the board that they were now “happy to come to work because the fear is gone.”

As is true of for-profits, nonprofits need to build into their organizational planning a focus on culture and culture management. They also need to ensure that the culture, as appropriate, evolves as customer and employee needs change.

Step 1: Complete the Environmental Scan

The trend analysis for nonprofits will be the same as that in for-profit businesses—that is, it should focus on identifying the environmental trends (e.g., economic, demographic, regulatory) that will have the most significant impact on the organization over the next three to five years; and then identifying the opportunities and threats presented by these trends. A trend that is being closely monitored by some Head Start agencies, for example, is an aging population in the geographic areas that they serve accompanied by a decline in the number of children 0 to 5—which represents this organization's “target (service) market.” With respect to the market and competitive analysis, there are some special issues that need to be addressed by nonprofits.

For nonprofits, the market analysis needs to focus on both the customers (e.g., members, clients, audiences, etc.) that the organization is working to serve (the target service market), as well as present and potential funding sources (the target funding market). In completing this part of the environmental scan, the organization's leadership team needs to work to identify the extent to which it is currently meeting both customers' needs and what might be done or done differently to enhance their effectiveness. Information about customers/clients can be collected in a variety of ways. Some nonprofits (like NAWBO) conduct regular customer (in their case, member) surveys and use this information as input to plan development and performance assessment. Some draw upon the best thinking of their leadership teams and board to identify what's working and what's not with respect to meeting customer needs. With respect to funding sources, the nonprofit's leadership team should clearly identify funding sources (present and potential) and assess the extent to which they are or can meet their needs.

It is sometimes difficult to convince nonprofit leadership that there is a need for a competitive analysis. Some believe that what they offer is unique enough that they don't really compete with anyone. Some even believe that the word “competition” has negative connotations. The fact is that nonprofits do compete—they compete for financial resources (funding), and they compete for people's time. While it may be true that there are no other entities providing exactly the same services to exactly the same customers, there are probably other entities that are targeting the same potential donors. There may also be entities that are serving or could serve the organization's targeted customers and/or who are providing or might provide similar services. The overall questions that need to be addressed in completing this aspect of the environmental scan are:

• Who are our present and potential competitors with respect to securing funding? That is, who might a present or potential funder give their resources to if they didn't give them to us?
• Who are our present or potential competitors with respect to serving our target market? That is, where might our targeted customers go to meet the needs that we are trying to satisfy, if they don't come to us?
• What are the strengths and limitations of each competitor?
• What can we do to minimize any potential negative impact of these competitors on our continued success?

It should also be noted that another deliverable from the competitive analysis can be the identification of potential strategic partners—that is, other organizations with whom the nonprofit might join in the provision of services to a particular customer or client base.

To illustrate these concepts, Table 11.2 presents excerpts from Healthy Beginnings Child Services' environmental scan. To preserve their anonymity, we have disguised their location and size.

Step 2: Complete the Organizational Assessment

As described earlier in this chapter, the Pyramid of Organizational Development can be used as the lens for completing the organizational assessment—in very much the same manner as it is used in a for-profit business. In brief, this involves assessing the organization's strengths and limitations or opportunities to improve with respect to each key driver of long-term success. This information can be collected from the organization's employees—using surveys, interviews, or focus groups—and/or the organization can ask an independent consultant to assist in the completion of the assessment. The deliverable from this process should be a written report that summarizes key strengths and opportunities to improve at each level in the Pyramid of Organizational Development. An example of the output of this assessment—based on the work completed at Healthy Beginnings Child Services—is presented in Table 11.3.

Step 3 and Step 4: Analysis and Resolution of Key Strategic Issues and Development of the Strategic Plan

In developing their plans, both nonprofits and for-profit businesses need to address the same seven issues—which were identified and discussed in Chapter 6—with the resolution of each issue being incorporated into a specific element of the strategic plan. There are, however, some specific challenges that nonprofits face in addressing these issues and developing specific aspects of the strategic plan, as will be discussed below.

Developing the Business Definition/Concept Statement (Addressing the Strategic Issue, “What Business Are We In?”) As is true for for-profits, answering this question involves clearly identifying the target customers and what the nonprofit will be doing to meet those customers' needs. Effective nonprofit business definitions sometimes focus exclusively on the customers that the organization is working to serve, while at other times they focus on both these customers and meeting the needs of funders. As an example, the business definition for Healthy Beginnings Child Services is presented below:

Sample Business Definition for a Nonprofit—Healthy Beginnings Child Services

We provide eligible families with comprehensive and individualized services that support school readiness and help parents understand and embrace the role they play in their children's education and development. Our services include high-quality preschool classrooms, parent engagement opportunities, home visits, family support and training, and health, safety, and nutrition guidance.

Nonprofits face several challenges in addressing the question, “What business are we in?” and, in turn, creating an effective business definition/concept statement. First, as stated at the beginning of this chapter, staff and/or board members may not view what they do as a business, and, therefore, even using the term “business definition/concept” becomes a problem. In these cases, leadership teams agree that there is a need to clearly define what the organization is and should be doing, but the term “business definition” doesn't work for them. When this view is present and strongly held, changing the “label” of this component to something like “purpose” (while retaining the definition of the component) can be enough to address these concerns.

A second and somewhat more difficult problem to manage relates to reaching agreement on what the business definition/concept should be. The very strong focus on “service,” “serving others,” and “serving as many people as we can,” can sometimes undermine the ability to clearly define what the organization does. In addition, sometimes successful nonprofits are presented with so many requests to provide their services that it is difficult to choose because it means giving something up.

In one nonprofit, for example, board and staff spent nearly four hours debating whether it was better to focus on providing their services (which included education, counseling, and peer support) to the target customers that they had been focused upon since the organization's founding 10 years before or expand their services to very different types of clients who had similar needs. Some were passionate that there should be no limitations on whom the organization should serve. Others (including the organization's CEO/executive director) believed that the potential for growth within the existing market was very high, that the organization had expertise and a reputation in this market, and that there weren't adequate resources (including knowledge of the other potential markets, as well as financial resources) to expand. As is true in many nonprofits, board and staff were very passionate about what the nonprofit was set up to do and wanted to serve as many people as possible. While this is admirable, trying to provide service to everyone can lead to significant problems. The decision was finally made to focus on the current market for the next three years and revisit possible expansion into others after that. The rationale was that by focusing on this market, the nonprofit could continue to build its capabilities and that when adequate resources were available, it would be able to expand into other areas.

How can this second challenge be effectively managed? As was true in the example above, one way to manage this issue when it arises is to revisit and discuss environmental scan and organizational assessment findings. In brief, what do they suggest about what business the organization should be in? What offers the most potential for impact? A specific area that needs to be focused on is the level of funding and why current funders are providing resources to the organization. In the example above, the fact that the organization had no experience with the other potential markets and weren't even sure that their current services would meet these market's needs was a factor that led to a more narrow business definition. Another factor that contributed to this decision was the assessment that current funders were most interested in helping to support work in the current market.

Developing the Strategic Mission (Addressing the Question, “What Do We Want to Become in the Long-Term?”). As is true of for-profits, a nonprofit's strategic mission needs to identity the big-picture results that the organization will be working to achieve in its markets (that is, with its customers), which (unlike for-profits) will not be measured in revenue growth and profitability. Instead, measurements of success can include the number of clients served, the level of funding achieved, expansion of services provided, and other factors.

Nonprofits are becoming increasingly focused on measuring and documenting outcomes—that is, tracking the impact that their services have had on their target markets. Funders, in fact, are increasingly asking to see evidence of outcomes before making an investment. Sometimes, as is the case with Head Start agencies, the full impact of their programs and services cannot be measured for many years (e.g., one measurement is a Head Start child's success in school, as well as in life over the longer term). In these cases, it may be difficult to include an outcome measurement in the strategic mission. In other cases, as is the case with Shelter 37, mentioned earlier in this chapter, outcomes are shorter-term (e.g., the number of Shelter 37 youth who have earned a high school diploma, the number of youth who have secured jobs and are still employed over X period of time, etc.). When outcomes can be assessed within the timeframe of the strategic plan, this metric should be included in the strategic mission.

It should be noted that some nonprofits find it very difficult to identify realistic measurable and meaningful quantitative measurements to include in their strategic missions. In our work with nonprofits, we encourage staff and board members to think about possible quantitative measurements of success (e.g., target funding level, numerical measurements of outcomes, etc.), but there are times when measurements simply don't exist or where the ability to achieve a target is so dependent on an uncontrollable source (such as securing funding from a governmental agency) that it just doesn't make sense to include it. Therefore, some nonprofit strategic missions will be more qualitative in nature, as illustrated in the example below from Healthy Beginnings Child Services:

Sample Strategic Mission for a Nonprofit—Healthy Beginnings Child Services

By July 31, 20XX, we will be the provider of choice for early childhood education and early intervention services in the geographic areas we serve by improving quality while operating more effectively. We will maintain quality programs and compete effectively for additional programs and services, based on need. We will be recognized by our funding sources, early childhood entities, and local communities for the dedication and specialized skill sets of our staff, high quality services, and continued program development.

Core Strategy (Addressing the Questions, “What are Our Competitive Strengths and Limitations?” and “Do We Have or Can We Develop a Market Niche?”). Having a core strategy that identifies the overall way that the organization will compete is as important for nonprofits as it is for for-profit businesses. In developing a core strategy in nonprofits, one issue that needs to be addressed, if it exists, is the belief that “we don't have any competition” (described earlier in this chapter). Once competitors are identified, there needs to be an assessment of their strengths and limitations. This assessment can then be used as the basis for identifying true competitive advantages (or whether the nonprofit has or can develop a market niche). One specific question that can be used by nonprofits to help identify their competitive advantages and whether they have or can develop a market niche is, “Why would a potential funder provide our organization with funding versus another?”

Based upon an analysis of their competitors' strengths and limitations (excerpts were presented earlier in this chapter), Healthy Beginnings Child Services' leadership team identified the following as their key competitive strengths:

• Our very good reputation in the community for providing quality service.
• The diverse and comprehensive nature of our programs and services.
• The experience and qualifications of our staff and our leadership team.
• Our culture of caring about employees and of being willing to invest in their development.
• A very strong financial base that is supported by effective management of our administrative costs.

After some discussion, they crafted the following core strategy:

Build upon our reputation for providing quality services, our ability to provide comprehensive services, and the positive aspects of our culture to grow the number of families served and attract and retain the qualified (and caring) employees needed to meet our families' needs.

Identify Key Result Areas (Address the Strategic Question, “What Are the Critical Factors that Will Make Us Successful over the Long-Term). The same seven key result areas that are used in for-profit businesses should also be used in developing nonprofit business plans (because research has shown that these are key drivers of long-term success). However, the labels used to identify these key result areas are difficult for some nonprofit leadership teams to apply and use in practice. In brief, the terminology used (not the underlying concept) doesn't seem to fit. When this is the case, the nonprofit may adopt (although we do not recommend this) a different set of designated key result areas; but if they do, they need to be very careful to ensure that the seven drivers of success are actually included in the revision. This can be accomplished by clearly defining the areas of the pyramid addressed by each key result area. As an example, one nonprofit that adopted this approach presented their key result areas as follows:

1. 1.0 Outreach and Communications (markets, operational systems)
2. 2.0 Advocacy (markets, products/services)
3. 3.0 Partnerships (markets, products/services, resources, operational systems, financial results)
4. 4.0 Program Design and Delivery (products/services)
5. 5.0 Fund Development and Management (financial results)
6. 6.0 Capacity and Infrastructure (resources, operational systems, management systems, culture)
7. 7.0 Board Development (Management Systems)

Nonprofits may include one or two specific additional key result areas beyond the core seven. One of these relates to the board, per se. The strategic plan for a nonprofit should include objectives and goals related to what the organization is looking for from their board and what they will do to develop their board's capabilities (e.g., identifying what the board's composition should be, selecting new board members, providing training to their board, etc.). In some cases, as illustrated in the example above, there is a separate key result area in which objectives and goals for the board can be recorded and managed (e.g., “board development”). In other cases, the goals for the board are presented under an objective under the “management systems” key result area.

A second key result area that might be added is something like “strategic partnerships” (which can also be a distinct key result area in a for-profit plan). This is most appropriate when these strategic partnerships are serving multiple purposes—for example, they are being used to help secure additional funding, and they are also providing specific services to the nonprofit's clients.

Objectives, SMART Goals, and Action Plans. These three concepts should be developed and used in nonprofits in the same manner as they are in for-profits. It should be noted, however, that there seems to be a greater tendency in nonprofits to define goals as “broad, long-term results to be achieved” and objectives as specific, measurable, time-dated results (SMART). As described in Chapter 6, when this is the case, there is no problem relabeling the two components. It is, however, important that these two components be present and used consistently within the plan. Table 11.4 presents excerpts from Healthy Beginnings Child Services strategic plan as an illustration of objectives and SMART goals in a nonprofit.

Developing the Budget. For nonprofits, this step in the strategic planning process serves the same purpose as it does in for-profits—to identify how financial resources will be invested to promote the achievement of the nonfinancial (strategic) plan. While it is beyond the scope of this book to address this issue in detail, it should be noted that the budgeting process for nonprofits can sometimes be made more difficult by restrictions that are placed upon them in terms of the percentage of funding that can be allocated to G&A (general and administrative) costs.

Plan Review. To maximize the effectiveness of the planning process, the leadership of nonprofits (staff and board) needs to implement a plan review process like that described in Chapter 6. Typically, however, this process will involve two phases: (1) plan review conducted by staff, and (2) presentation and discussion with the board of results being achieved against the plan.

Plan review by staff will involve, as it does in a for-profit, preparing for and holding quarterly (or sometimes more frequent) plan review meetings. Prior to each meeting, each goal owner should prepare a written report summarizing progress being made in achieving goals, with these reports being circulated among the team. Meeting time should be devoted to discussing and resolving any problems with respect to achieving goals and to discussing any new issues. Following the meeting, the strategic plan should be updated (as described in Chapter 6), and a written report should be prepared for the board on progress being made against the plan.

The progress report or plan update report to the board should typically not include detailed progress against each and every goal in the plan. Instead, it should provide more of a big-picture look at what has been accomplished. One CEO of a nonprofit structured her report to the board based on key objectives (that had been identified as a part of the plan development process). For each of these objectives, her quarterly progress report answered the following questions: (1) What efforts have we made to achieve this objective? (2) How were we successful? (3) What are possible next steps? She and her team also identified specific challenges related to achieving plan goals that they wanted board input on.

The report to the board should be circulated in advance of the board meeting during which progress against the plan will be discussed. Some nonprofits hold plan review meetings with their boards on a quarterly basis, while others prefer to provide updates every four or six months. As the board is not (and should not be involved) in day-to-day operations, any of these options can be effective. The frequency of board involvement in plan review depends on the needs of the organization and its staff.

During the board's plan review meeting (which will typically occur in the context of a regularly scheduled board meeting), the focus should be on providing input to staff on plan achievement. This can be in the form of asking questions about information presented in the plan review report, providing input on strategies for increasing the probability of achieving key goals, and sharing ideas about what might be done to address specific problems or strategic issues. The goals of the organization should also be kept in mind during discussion of financial performance (budget review), which is a typical agenda item for most board meetings. Finally, time should be devoted to discussing how the board is performing against its goals—which should be included (as described above) in the strategic plan.

Wearing Multiple Hats

Small nonprofits (in Stages I and II, and sometimes in Stage III) frequently have people who occupy two or sometimes more roles. For example, the executive director of the organization might also be responsible for managing a specific function (e.g., IT, the delivery of a specific service, marketing). Sometimes, this is because the organization is so small that separating out the two (or sometimes more) roles doesn't make economic sense—that is, one person can still realistically fulfill both roles. Sometimes, this is the result of budget constraints—that is, there aren't the financial resources needed to support a person in each role.

Having people who wear multiple hats can be effective as long as the expectations are clear and as long as these expectations can reasonably be met. However, as the organization grows, there is a high probability that one person will no longer be able to effectively fulfill two (or more) roles due to an increase in workload. Nonprofits that have this as a part of their structures need to be aware of and manage it as a part of their strategic planning process because it can have a significant impact on overall performance. In one $10 million (budget) nonprofit that had two service delivery divisions and that had grown significantly over a decade, for example, the director (CEO) wore at least three hats. He was responsible for funding acquisition (including grant writing), partnership development and maintenance, managing one of the divisions, and overseeing the entire organization. While the organization, overall, was successful, the director and his board felt that significant opportunities were being missed in the market (from a funding perspective), and some team members felt that they were not receiving the direction and training they needed to be successful. The director was simply spread too thin. At one board meeting, the director and the board laid out the structure on a whiteboard. When they did, it was clear that the director's span of control was far too large (nine people) for anyone to be successful. The board voted and approved a new management position to oversee the day-to-day operations of the division, thus providing the director the time needed to focus on the strategic development of the enterprise.

The Role of Volunteers

Many nonprofits have volunteers (not employed by the organization) who help support the achievement of organizational goals. They might be involved in staffing a fund-raising event, in directly serving clients, in providing training to staff, and in many other ways. When volunteers are used, they should be included in and managed as a part of the organization's structure. This does not necessarily mean that they will be included on an organization chart. It does mean, however, that the roles that they will play and how they will be managed should be discussed and clearly defined.

The management of volunteers can be, at times, a difficult balancing act. On the one hand, the nonprofit will want to ensure that volunteers understand and stay within the boundaries of their roles. On the other hand, volunteers are not getting paid, and upsetting them can “cost” the organization in terms of the willingness of people to serve in this role in the future. Having a written description of the role each volunteer will play can be a useful tool in this process. These role descriptions do not need to be as detailed as those of full-time staff, but they do need to clearly define what the volunteer in that position should and should not be doing. The staff person to whom volunteers report (that is, the person who will be in a very real sense serving as their supervisor) should take the time to review these expectations, ask for any feedback, and answer any questions. It should also be clear to each volunteer who the staff person is that he or she should primarily be working with or for (that is, who he or she basically reports to).

Clearly Defining Board and Staff Roles

As described earlier in this chapter, the lack of clarity about board and staff roles can create specific problems or challenges for a nonprofit. These include board members' expertise being underutilized because they aren't sure what they should and should not be involved in; board members becoming or wanting to become too involved in the organization's day-to-day operations; and staff and board members being frustrated with each other because each is not delivering what the other believes they should be.

It is important that staff and board roles be clearly defined (in writing) and that these role definitions be revisited frequently. Some nonprofits include information about board responsibilities in their bylaws. Others do this less formally. Review of staff and board roles should be included as a part of the annual strategic planning process. In addition, the orientation of new board members should include a specific review of roles and responsibilities.

One tool that can be used to clarify board and staff roles is key result area–based role descriptions (described in Chapter 7). To illustrate the use of this tool, Table 11.5 presents the mission and key result areas for the board and leadership team of one nonprofit.