More nonprofit organizations are reconsidering and repositioning their strategic planning to help sustain the continued success of their mission. A number of our clients and the industry at-large are taking several actions to accomplish this, including:

  1. changing how non-profits look at and plan for fundraising campaigns; 
  2. assessing the impact of mergers and acquisitions;
  3. dialing in on liquidity; and
  4. focusing on staffing and board succession planning.

We address these four topics in more detail, offering best practices and general considerations for how nonprofit organizations can use these strategies to help achieve success in their missions.


For many nonprofit organizations, fundraising is the lifeblood of their operations and can directly affect their ability to fulfill their missions. With this in mind, some nonprofits seem to be focusing on the psychology of donors, the different types of donors, and the willingness of donors to continue their charitable giving and support.

  • From a psychology standpoint, the interest is in why donors give and what they are expecting from the receiving organization.
  • From a composition standpoint, nonprofit organizations generally look at who is giving and tailor their donor relation strategies to appeal to the different audiences.
  • Finally, from a willingness standpoint, nonprofit organizations typically look at the willingness of donors to donate in light of the economy, legislative reform, and other factors.

Fundraising will always be the lifeblood of nonprofit organizations.

Understanding donor psychology, composition, and future willingness regarding charitable giving is essential to making sure that lifeblood continues to flow, in our opinion. We recommend continuing to focus on appealing to donors through value alignment, on measuring and reporting impact and outcomes, and planning for the coming tailwinds and headwinds to future charitable giving.

Mergers & Acquisitions

Today, many organizations are considering strategic moves to confirm the continued success of their mission. One trend we have observed in our own clients and in the industry at-large is the frequency of mergers and acquisitions, particularly in the higher education, religious institutions, associations, and health care segments. There are several important considerations for organizations looking to engage in these types of transactions.

Mergers and acquisitions are complicated transactions, and we suggest engaging the appropriate legal counsel, M&A consultants, and other related services early and often in the process.

Financial health, typically including both the balance sheet and income statement, is central to any merger or acquisition due diligence process. We would recommend paying extra attention to the retirement plan status of the target organization. 

Confirm there are no unexpected changes to the designation status of the new organization. The Internal Revenue Service (IRS) lists explicit rules for tax-exempt organizations and mergers, and require that the IRS must be informed of the action, typically by filing a final form 990, 990-EZ, or 990-N (for organizations other than foundations). Adding to this, it may be appropriate to ask for a private letter ruling on the tax consequences of the merger to confirm that the valuable tax-exempt status is not lost for the resulting entity. Loss of plan status can cause the need for immediate and significant contributions and/or related expenses to the affected retirement plans, causing the potential for significant hardship on the plan sponsors.

Synergy, overhead reduction, and cultural integration are all important to any merger or acquisition activity. Many organizations, especially more established, older ones, have a set way of doing business and may be hesitant to accept change. This could perhaps impede a successful merger or acquisition and prevent the resulting entity from capitalizing on the synergy and overhead reduction considerations. Not every organization and its employees will work seamlessly with another organization and its employees: determining in advance the cultural fit of the two organizations and having a plan in place to ease the transition may help to increase the likelihood of success in realizing synergistic and overhead cost reduction goals.

Sometimes donor restrictions can prevent mergers and acquisitions from happening smoothly. A common example of this is in higher education, where legacy donor gifts can often prevent colleges and universities from easily acquiring, or being acquired by, other institutions. Before considering a merger or acquisition, it is important to assess what impact the merger or acquisition may have on restricted gifts. Legal counsel should be consulted to determine what, if any, court, regulatory, or donor approvals may be necessary, as the rules differ from state to state. 

Donor restrictions can also come into play with regard to combining endowments and/or planned giving programs. For example, certain charitable giving vehicles can create liabilities that might not legally translate or transfer well into a new entity without donor permission. Similarly, combining endowments may create charter, investment policy, and other conflicts with regard to amalgamation under the new structure. Careful consideration should be given beforehand in handling donor outreach, especially around proactively planning and communicating how this would likely be managed under the new structure.

Dialing in on Liquidity

Broadly speaking, the founding purpose of most endowed or foundation assets is to support a spending or distribution policy. The success of an investment program is commonly defined as the investment program’s capability to support this spending or distribution policy while preserving purchasing power and allowing for the modest growth of real wealth. With that said, how the spending policy or distribution policy is developed and defined may have a significant impact on the investment program’s ability to generate the returns necessary to help support the above goal. Further, a spending or distribution policy can determine the appropriate amount of liquidity in an investment portfolio: too great of an allocation to cash could create performance drag on a portfolio, while too little of an allocation to cash could create “emergency” liquidity needs that can potentially force security sales at a loss in the event of a market downturn. We believe this discussion of spending and distribution policy should also include operating reserves, even if they are held separate from the longer-term investment portfolio.

Our experience working with nonprofit organizations has also shown that having a clearly defined spending rule can help instill discipline into the budgeting and financial management process from an oversight perspective.

Given its importance to budgeting, financial management, and portfolio management, we would recommend clearly defining a spending rule as part of a nonprofit organization’s investment policy statement (IPS).

Staffing and Board Succession Planning

Board composition is a crucial component of a successful nonprofit organization. The individuals who serve can enhance the charitable mission through their own efforts and contributions or severely deter progress, even diminish the reputation of the organization. In the early stages of a nonprofit, much care and study go into the selection of the initial members. This governing board is legally accountable for the actions of the nonprofit organization, so individuals who serve must be aware and willing to shoulder the responsibility. Their focus is to oversee compliance with regulations, maintaining and refining policies and procedures, and confirming the plans and programs of the organization’s mission are implemented and enhanced. At the same time, they are also responsible for conducting the three legal duties of duty of care, duty of loyalty, and duty of obedience.

Great care is taken in selecting the inaugural members of the board and this same level of due diligence must be applied when determining subsequent generations of the board. Realistically, board and leadership selection can be one of the most substantial decisions facing any nonprofit organization. The gravity of this responsibility becomes increasingly vital as the nonprofit advances so that staff, volunteers, and even donors have a sense of stability and continuity about the organization and its mission. Consequently, there may be numerous volunteers who, for whatever reason, desire a place on a firm’s board of directors, yet not every applicant may be ready or qualified to serve. 

Succession planning is a critical component of strategic planning and requires the same respect and diligence given to other areas of the enterprise management process. 

Whether it is planning for leadership (board members) or for staff and volunteers, together these individuals play an important role in determining the success of the nonprofit organization in reaching its intended goals and objectives.


Looking at the big picture, specifically how nonprofit organizations fit into the broader picture of community, country, and world, it is hard to point to a time with more changes (regulatory and otherwise), more concern for the future expected returns of the capital markets, and with more need for nonprofits to be successful in their missions. Strong enterprise management through strategic planning can help nonprofit organizations position themselves well in light of this environment. 

Strategic Planning: Best Practices in Nonprofit Enterprise Management