* Of course, there will also be organizations that are profligate with their spending and should be judged accordingly—but simply looking at a single overhead number won’t tell you if that’s the case. Rather, this requires a more detailed examination of the reasonableness of expenditure, particularly on fundraising. See Phil Buchanan, “Getting the Facts Straight About the Nonprofit Sector,” HuffPost, September 23, 2013, www.huffpost.com/entry/getting-the-facts-straight_b_3976022/amp.
† For a vehement argument on the dangers of an undue focus on overhead, see Dan Pallotta, Uncharitable: How Restraints on Nonprofits Undermine Their Potential (Boston: Tufts University Press, 2010).
* A big challenge with control groups is that this kind of research can be very expensive. As an alternative, the Freedom Fund has in the past used participatory evaluations to try and “ground-truth” the results of our research—asking individual community members what they’ve seen and experienced to better understand the factors that led to a change in conditions. When we do this, we are always careful with our analysis, making sure not to overstate the role of our organization beyond what the data tells us.
CHAPTER 3
Strategy
Make Choices to Maximize Impact
[Strategy] is the alignment of potentially unlimited aspirations with necessarily limited capabilities.
—John Lewis Gaddis1
Wendy Kopp was a final-year undergraduate student at Princeton University, with a deep interest in education reform, when she came up with the bold idea that was to shape the rest of her professional career and shake up the education sector in the US and beyond. The problem she wanted to address was the desperate shortage of qualified teachers for the lowest-income communities throughout the country.* She outlined her proposed strategy in her senior thesis:
Why not get the country’s best minds to commit two years to teach in urban and rural public schools? It would change the lives of some of the nation’s most underserved students, and it would change the consciousness and direction of our nation’s future leaders.2
Of course, getting the “best minds” (i.e., graduates from some of the top universities) to commit to two years of teaching was easier said than done, given all the other options open to them. But this is where Wendy leaned into the purpose of her initiative. What she could offer to graduates that corporate recruiters couldn’t was a compelling cause. As she put it: “I had this sense that there were thousands of people out there—talented, driven people—who were not inspired by the opportunities they saw in front of them, who were searching for something they weren’t finding in terms of the opportunity to assume a significant responsibility that would make a real difference.”3
Wendy didn’t just rely on the power of her cause. She made the recruitment process for her new teacher corps—by now called Teach For America—highly selective, in order to make it more attractive to overachieving graduates. She went around to leading universities, such as Harvard, Yale, and Princeton, with the message, “If you’re really good, you might be able to join our cause. But first you have to submit to a rigorous screening and evaluation process. You should prepare yourself for rejection because it takes a special capability to succeed in these class-rooms.”4 And if they succeeded in getting selected, their reward was to work with students who have been badly served by the education sector in the past, in low-income communities, at the same entry-level pay as other new teachers in the state.
Of course, recruiting talented graduates was just one part of the challenge. The other was raising funding for an innovative and wholly untested educational start-up. Wendy and her small team worked around the clock, relentlessly pitching corporations and foundations for funding, selling them on the idea of transforming education for the most underserved in the country while giving a sense of purpose to high-performing graduates. It worked. By the end of its first year, Teach For America had recruited five hundred graduates for its inaugural cohort of teachers.
Over the next five years, Teach For America grew rapidly. It expanded its remit beyond its own teacher recruitment and placement efforts to reforming school programs and providing recruiting services on a contract basis to school districts. In fact, it grew so quickly that by its fifth year it found its ambitions were exceeding the funding it could mobilize. As a result, it had to make some painful course corrections. This included reducing its annual expenditure from $8 million to $5 million, achieved in part by letting go sixty experienced teachers who provided professional development to the newer teachers. It also closed down its contract recruiting services initiative and some other, non-core, projects. These were deeply painful cuts for a young and ambitious organization, but they ensured that Teach For America could remain focused on its core mission of getting young graduates to work with low-income students.5 This discipline set it up for long-term success.
Some thirty years later, Teach For America has approximately 64,000 alumni. Of those, 1,300 are currently principals, assistant principals, and deans, and more than 14,800 are teachers. Its alumni have taught millions of students in the US. Its recruitment focus and corps makeup have evolved to become more representative of the students its serves—now half of its corps members identify as people of color, half come from a low-income background, and one-third are first-generation college graduates.6 Statewide studies of the relative effectiveness of teacher education programs consistently place Teach For America at or near the top in terms of participants’ effects on student academic outcomes.7
Its impact is not limited to the US. Teach For America–affiliated organizations have now been set up in sixty-one countries, ranging from Peru to Pakistan, dramatically increasing the reach of the organization’s purpose and mission. But at its heart remains Wendy’s original idea—to persuade top graduates to devote two years of their life to serving students in the lowest-income communities.*
I started this chapter with Teach For America’s origin story because I’ve always found it to be an inspiring example of strategy in action. Strategy for a nonprofit is the set of decisions and trade-offs it needs to make to achieve the greatest impact.† In this case, Wendy identified a clearly defined problem and found an innovative way to mobilize the necessary resources by leaning into the intrinsic motivation of a powerful cause. Her great insight was to turn the challenge of recruiting top talent on its head—by challenging bright graduates to prove they had what it takes to make a difference to the lives of those who could most benefit from top-quality education. Relentless execution and a willingness to make tough choices when the organization began drifting off mission have all contributed to the outsized impact Teach For America has had on the education sector.
WHAT IS STRATEGY?
Every nonprofit has a strategy. It may be written or unwritten. A strategy provides a conceptual framework for the most effective allocation of your organization’s resources (people, money, and time). A good strategy enables you to make the best decisions for your organization in the circumstances you face, to achieve the greatest impact. A bad strategy may be the decision to continue spending money to implement existing programs, despite evidence showing they are having little impact.
So, what does strategy look like when done well? There is no universal template, but I’ll set out a few key concepts and approaches that I think are of value, based on my firsthand experience with a number of strategic planning processes. My hope is that these will help guide you as you decide on the approach that best works for your organization.
The objective should always be to end up with a clear plan or framework that guides your organization’s work and that you can revise as circumstances require. So how to do that?
The starting place is to embark on a thoughtful strategic planning process. Good planning is key, and an essential first step in designing a strategy. In fact, to my mind, the planning process is often more valuable than any written strategic plan that results.
The next step is to ensure you have a powerful mission in place, or develop one as part of the planning process. As discussed in chapter one, that means being clear about your organization’s purpose and how you intend to achieve it.
You should have an idea of the impact you hope to achieve in the next few years—your impact goals—as this provides a way of assessing your progress and gives your organization something to aim for. In a start-up, these goals may be based more on guesswork than evidence, but you should still have some idea of what you hope to achieve. Once your organization is more established, you should aim to have more specific targets for your impact within a clear time frame—usually three to five years, though sometimes longer. In setting these targets, you will remain guided by your mission, as they will help you gauge whether you are on track to deliver on that mission.
You need a clear understanding of the path to achieve your mission and impact goals. This means analyzing how your organization’s activities (and its programs in particular) will translate into impact, directly or indirectly, and defining the key assumptions you are making in the process. This analysis is usually called your “theory of change.”*
As you are deciding what you will set out to do, you also have to decide what you won’t do. That means making choices! This can be challenging, particularly if it means closing underperforming programs or reallocating resources.
Once all of this is clear, you can set out your strategy as a written plan or framework, bearing in mind that even the most thoughtful plan will likely need to change and adapt over time.
We’ll look at each of these steps in turn, but first I’ll share some of the initial strategic decisions I had to make when the Freedom Fund launched.
CASE STUDY
Making Early Strategic Choices at the Freedom Fund
The importance of making choices and trade-offs was starkly brought home to me in my first couple of months as CEO of the Freedom Fund. This was because I had to make a number of important decisions very early on, which I knew would have lasting implications for the organization—even though we were still very much in a setup phase. Bear in mind that, at this stage, we had a team of three. We were yet to find our own offices and were camping out in the building of a friendly think tank. We were still sorting out some of the basics, such as our charitable registration and payroll and insurance. But our board had made clear that it expected us to achieve significant impact in our first five years—on the lives of hundreds of thousands of highly vulnerable people— even while knowing that a long lead time was required to properly set up anti-slavery programs and build the partnerships and trust needed to make lasting changes.
The board’s directive meant we had to start quickly making some big decisions on how we would operate, even though I knew we didn’t have all the information I would have liked at that stage. We had to work out how to get operational quickly, while we were still staffing up. We had to balance the urgency to launch programs, with the risks inherent in running programs in countries with a high burden of slavery. Despite everything that still needed to be done in the short term, we already needed to be looking forward four or five years to envision how we would like the organization to be placed then if everything came together as planned. And we had to ensure we had the ability to quickly change course if it became apparent that we had got any of the big calls wrong.
Given all of that, in consultation with my small team and our board members, we decided:
Instead of concentrating all our initial programs in India, home to the highest number of people in slavery, we would spread the programs between South Asia, Southeast Asia, and Africa to provide greater diversity in geography and types of exploitation to be addressed. This also ensured that we did not have all our programmatic “eggs” in one country’s “basket.” While we recognized that we could achieve considerable impact by focusing all our resources on a single country with a particularly high burden of slavery, we believed that starting with a more diverse set of programs and countries would be of broader use to the anti-slavery field, appeal to a greater range of potential funders, and reduce the risks inherent in being limited to a single country.*
Instead of implementing the initial programs ourselves, taking the time to recruit and build our program team from scratch, we engaged (and paid) a trusted partner organization with on-the-ground expertise and teams already in place to implement them according to our directions. This would allow us to get programs up and running much more rapidly (which was essential if we were to meet ambitious impact goals). This also gave us the time to build up our own team while still maintaining ownership of program design and research.
We spent precious funding reserves on high-quality research from the start, instead of waiting until we had raised dedicated funding for research. For example, we commissioned baseline surveys as soon as our programs launched so that in a few years’ time we would be well placed to measure the change to which our programs had contributed. This was a significant up-front investment for returns that would only eventuate in a few years, but, given that the Freedom Fund’s mission included addressing the deficit of credible research, we decided it was one worth prioritizing.
In hindsight, these turned out to be the right decisions to best position the organization to achieve high impact in the years ahead. We got a number of programs up and running in our first eighteen months, much earlier than if we had first waited to build our own teams. When we embarked on a more formal strategic planning process three years later, we doubled down on geographic diversity and investment in research, but we also decided that the time was right to bring implementation of our programs in-house as we now had the team in place to do that well and a strong desire to have more control over our programs.
PLANNING IS OFTEN MORE IMPORTANT THAN THE PLAN ITSELF
The planning process is where you consider a range of scenarios and responses and start making choices. It’s where you align your organization’s big aspirations with its necessarily limited capabilities. As such, it can be invaluable. Former US president Dwight D. Eisenhower put it this way: “Plans are worthless, but planning is everything.”8 In other words, the environments we operate in are full of uncertainty and unknowns— or, as former US world heavyweight boxer Mike Tyson put it, “Everybody has a plan until they get punched in the mouth.” That being the case, a detailed written plan based on a single scenario will likely prove inadequate to guide decisions over any period of time. But if you’re willing to commit the time and energy, the process of coming up with your plan can be highly insightful and informative for your future strategy.
Picture a nonprofit working on mental health and loneliness in March 2020, largely dependent on fundraising from individual and corporate donors. Now imagine this organization had recently finalized a detailed five-year strategic plan running from January 2020 to December 2024, projecting a steady expansion of income and services based on its progress over the last five years and assuming a stable economic environment. Three months into the strategy, an unexpected and unprecedented global pandemic leads to the closure of workplaces and schools around the world. This in turn fuels an explosion in demand for this nonprofit’s services, at the same time driving a significant drop in income as donors retreat in the face of great economic uncertainty. The strategy would go out the window.*
