Scenario Planning - A Tool For Managing the Future In Uncertain Times
Posted: Thursday, April 16, 2009
by Kathy Keeley
The Keeley Group
Scenario Planning: Nonprofit Planning Tool
Overview
Nonprofit organizations are facing rapid and challenging change over the next couple of years. Funders at all levels are cutting back and fundraising is expected to become increasingly more difficult. One method to plan for this type of change and an uncertain future is scenario planning.
Nonprofit organizations for years have generated "what if" budgets using a best case worst case type projections for fundraising. Scenario planning takes this exercise a step further by reviewing the external environment and determining how an organization might need to respond to critical changes.
Organizations facing program cuts, service increased demands and funding limitations are undertaking scenario planning as a way to organize board, staff and volunteers into deciding on alternative futures. It makes many managers feel empowered to know that they can actively plan for the organization's future without waiting for the next level of bad news.
Think of scenario planning as the "new" strategic plan for organizations experiencing rapid and significant change. We live in times that call for significant change and reorganization for nonprofit organizations. Funding from government, corporations and foundations has been dramatically impacted by the economic crisis. Doing business as usual or trying to ignore what is happening will get many organizations into trouble. One way to manage the change and stay one step a head of the funding turmoil is to prepare scenario plans.
Much like strategic planning, having a clear plan with strategies, tactics and financial projections gives us important tools to manage change. We are certainly living in a time now where scenario planning has become as important tool for nonprofit organizations wishing to chart their course for the future.
Description of the Process
Scenario planning starts by dividing our knowledge into two broad domains: (1) things we believe we know something about and (2) elements we consider uncertain or unknowable. It moves through a process of defining "what if" options and a critical option for what is most likely to occur. Financial projections are an important step with both program based budgets and cash flow projections completed. The final product is an action plan describing the critical scenario, objectives, and budget implications.
Scenario planning can be done with a team or small group of individuals. It can be done by the entire staff or with a few outside volunteers or advisors. The underlying basis of scenario planning is the assumption of change coming in the near future. Groups often hire an external consultant to facilitate their discussions since change can cause reactions from panic and fear to spunk and opportunity.
Scenario planning can be done in a day or it can be done over the course of three to six weeks depending on the process that you design. The process can involve the board, management team and the staff or it can be a very small group composed of volunteers that know the organization very well. In some cases the Executive Director of the organization may conduct scenario planning and present the final results to the board of directors.
The process can vary but the end result must be an action plan for each scenario with the following:
o Environmental scan
o Scenario options
o Financial projections
o Action plan describing how the scenario would be implemented
For more information on scenario planning for nonprofit organizations, check out www.nonprofitworksheets.com or write kathy@thekeeleygroup.com.
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