Funders Urged Not to Return to “Normal”

Funders should not return to "normal"

A month ago, in Philanthropy Thinkers On Not Returning to “Normal” (August 4, 2020), we wrote about the nonprofit sector “…anxiously await[ing] the time it can return to ‘normal.” 

But the pre-pandemic “normal” was imperfect at best. COVID-19 has suddenly and sharply reminded us of the weaknesses in our healthcare and economic systems; they have largely collapsed under the strain and the crisis is nowhere near over in the United States.  And the deep inequalities and structural deficiencies in our society have come into painfully crisp focus.

Now, “many philanthropy thought leaders increasingly urge against going back to how things were before COVID-19 turned the world on its head.” As commentator Arundhati Roy points out in The Pandemic is a Portal (April 3, 2020), Financial Times, “nothing could be worse than a return to normality. Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next….” 

As the pandemic lingers, “organizations and individuals across the spectrum – nonprofits, foundations, citizens, governments, families – must “grapple with what “normal” means now and in the future.” 

We concluded our August 4th post with the promise that we would return again to this important discussion. We’ll begin here with advice from experts on how, in the coming weeks and months, philanthropic funders should pivot away from the pre-pandemic status quo. 

          Funders Should Discard The Status Quo 

Among the nonprofit sector’s thought leaders speaking out on the urgency of taking bold action is David Morse, a former top communications official at Atlantic Philanthropies, Pew Charitable Trusts, and the Robert Wood John Foundation. 

In Philanthropy, Take the Lead in Building a Better Normal (May 4, 2020), Mr. Morse acknowledges the question we all hear so often these days: “When can we get back to normal?”  But he cautions that “…the more crucial questions, and not just for philanthropy, are: Should we get back to normal? Is business as usual good enough?…” He responds with a clear “no.” Getting back to normal is “nowhere near good enough” because “… the old normal wasn’t so great” and it would be a “huge undertaking” in any event.

The right path is to create a “better normal.”  That will be “monumental. But it’s doable. Maybe.” And he echoes other commentators who hearken back to Rahm Emanuel’s advice during the 2008-9 economic meltdown: “Never let a good crisis go to waste.” 

“What might foundations and philanthropists do to help create the better normal?” David Morse asks rhetorically. “First, simply what they’re now doing to provide support to their grantees who desperately need it, just more of it and quicker. And just do it; it’s a waste of time, space, and money to crow about it.”

To a significant degree, funders have stepped up to the plate with generosity and flexibility.  See, for example, our March 26th blog post, Some Good News: Funders Are Stepping Up.

Second, Mr. Morse urges funders to “embrace what is an all-too-alien concept in philanthropy: real partnership.” He points out that ‘[g]rant makers talk about partnership but rarely engage in it. Multitudinous announcements by foundations tell the story of what they are doing individually, but not much about what grant makers are doing together.” For a recent example of collaboration, see our post from July 22, 2020: Foundations Launch Huge Bond Program.  Take a look, as well, at Philanthropy, Meet Our Matrix Moment: Which Pill Will You Choose? (April 2, 2020) Dana Kawaoka-Chen, The Nonprofit Quarterly.

Of course, the task is too large for private philanthropy alone. “What we need to follow the pandemic is a Grand Bargain on steroids,” advises David Morse, “and this time foundations can and should pull together business and government to help emerge from the pandemic with a fairer America that works for the many, not just the few.”

       Funders: “This is The Rainy Day”

The Nonprofit Quarterly’s editor-in-chief, Ruth McCambridge, is a big fan of Vu Le, popular blogger (Nonprofit AF.com) and seasoned nonprofit executive who has just begun a much-needed break to write and reflect.

Early in the pandemic, Ms. McCambridge flagged Mr. Le as a particularly valuable voice in these challenging times. See Heads Up! Says Vu Le: Foundations, Nonprofits, and Our Response to COVID-19 (March 10, 2020) The Nonprofit Quarterly. She referred specifically to Vu Le’s March 8th blog post: A few things for nonprofits and foundations to consider in light of the Coronavirus

There, he reminds philanthropy funders that “nonprofits are having to do extra work in response to this virus, on top of all their regular responsibilities, and with the risk of funding being jeopardized due to canceled events and programs.” So he urges them to be “thoughtful and generous”; to “… reassure grantees that you got our backs, by relaxing your expectations on outcomes and timelines, providing rapid response funding, and not withdrawing your sponsorships and grants for postponed or canceled events and programs.”  

 In the next few weeks, Mr. Le churned out more tour-de-force blog posts, amplifying his frequent pre-pandemic truth-telling including – but not limited to – how “tone deaf funding practices” are now, more than ever, “… not just annoying but actually endangering people’s lives, such as funders requiring anything to be signed or mailed.” See, particularly:

On April 9, 2020, Vu Le was the featured guest on Tiny Spark, a podcast by Amy Costello and Frederica Boswell. They write about it in COVID-19 Crisis “Requires Us All to Be Bolder” (April 9, 2020) The Nonprofit Quarterly, and include a link to the 25-minute session. They praise Mr. Le’s efforts in talking about “… why the COVID-19 crisis is requiring nonprofit leaders to push philanthropy in ways it never has before.” Ms. Costello and Ms. Boswell also mention #CrappyFundingPractices, a recent Twitter hashtag that Mr. Le created to shine light on “some of the most egregious examples.” (To acknowledge innovative funding reforms, there’s also his #AwesomeFundingPractices.) 

Part of the effectiveness of Vu Le’s musings on his blog and elsewhere is that he “says the quiet part out loud”; that is, in the good way of stating the obvious and telling truth to power. See, for instance:

       Conclusion

It’s the right time to re-imagine our future; to “rethink the doomsday machine we have built for ourselves,”  according to Arundhati Roy. “We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.

Philanthropy must take a good look at itself, including how it is – and should be – responding to this unprecedented crisis and to the challenges ahead.

Diverting Restricted Funds During a Crisis

Nonprofits Using Emergency Funds

The COVID-19 pandemic has wreaked havoc on the finances of a broad swath of the nonprofit sector. For many organizations, some or most of their usual sources of revenue has stopped abruptly – and certainly – unexpectedly. With varying degrees of success, they are scrambling to find temporary revenue replacement including, where possible, pivoting to virtual activities. 

Some groups are lucky enough to have money set aside in one or more “restricted” funds. Many wonder now if part or all of this set-aside money may be accessed and redirected to pay for general operating expenses or other necessities, or to fund short-term or possibly more permanent replacement programs or activities. 

       The Spectrum of Restricted Funds

The answer is: It depends.  

This issue may turn on whether you’re applying the correct terminology under the circumstances. First, what you’re calling “endowed” funds or an “endowment” may not be a true endowment. Second, what you’re calling “restricted” funds may not be legally tied up in such a way that the restrictions or conditions can’t be removed in-house by a simple vote of the board of directors.  

View this issue as if there’s an imaginary graph in front of you.  At one end of the spectrum are funds that truly and firmly are in the endowment category – not always impossible to release but you may have to jump through significant hoops and possibly legal proceedings. 

At mid-point on the spectrum is the situation in which money comes into your organization for a designated purpose or use or otherwise with conditions. If the source is a still-living donor, it may be relatively easy to ask for, and receive, permission, for a different use. The COVID-19 crisis is so demonstrably deep and widespread that the normal showing of dire need and extraordinary circumstances to vary the terms of a gift or grant is likely unnecessary. If the money is from a government or foundation grant, approval for a change may be much more available than at any other time in recent memory. Since the initial days when the pandemic swept across the United States, these funders have stepped up to the plate with significant generosity and a corresponding relaxation of rules, conditions, and compliance terms.  

At the far end of this imaginary graph are funds that appear to be “restricted,” but a closer look may reveal that this is money that has been designated solely by the board of directors for a capital campaign or for a particular program or activity. In-house restrictions like this may ordinarily be lifted by a simple vote of a majority of the directors.  

       Endowments

The first area of confusion is with so-called “endowments” or “endowed” funds. In philanthropic circles, that term is often loosely or imprecisely used. A “true” endowment is generally “held for a particular duration” (for instance, for a set term of years or “in perpetuity”) and “may be drawn upon for application towards the organization’s mission generally or for other specific restricted purposes.” 

While an organization may have funds that are “restricted,” that does not “necessarily mean that the funds are an endowment fund.” 

For some endowments, there may be a specific process outlined in the written gift instrument for releasing or modifying restrictions including by the consent of the donor. Generally, in the absence of donor approval or a specified procedure to follow, the charitable organization must look to whatever current version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA) applies. That law will spell out how to go about getting permission to invade the endowment. Often, there are special, more lenient procedures, for certain smaller or older endowment funds. 

Bear in mind, though, that where an endowment restricts funds “to a particular use,” it must be used solely for that purpose. That includes funds drawn from an endowment pursuant to consent or other specified permission in extraordinary circumstances. “Thus, the ability to invade an endowment may not necessarily solve the strain caused by the current crisis.

       Donor-Restricted Funds

At the mid-point on that imaginary spectrum is the donor-restricted fund. Money is often described as “restricted” whenever it’s set aside for a particular purpose; awarding scholarships, for instance.  

But whether that money can be applied to or for a purpose other than the designated one  turns on whether the fund is subject to a “true restriction.” That would be the case when an unrelated donor or other third party has given the money for that express purpose or subject to a condition.

The simplest way around the restriction may be to reach out to the (still-living) donor to ask for permission to vary the terms of the gift either in the short-term or permanently. 

If the donor doesn’t consent, or is not alive, or if there’s no specified procedure in a written gift instrument to alter the terms of the contribution, then the Uniform Prudent Management of Institutional Funds Act (UPMIFA) will generally outline a procedure to follow. The “UPMIFA is generally designed to provide a framework for the administration of restricted funds held by nonprofits to the extent that the gift instrument is either silent or vague on a particular issue.”

As with the individual donor situation, if the restriction is from a government or foundation grant, the remedy may be the same; that is, seeking permission to change the terms. “Whether or not it will be approved depends on a few factors: the individual funder, their thinking in this moment, and their relationship to your organization and its programs.” 

Early in the pandemic, and continuing through the present, a number of large foundations publicly pledged to “end business as usual and do what they can to support their nonprofit partners.”

       Board-Restricted Funds

At the far end of the spectrum is the fairly common scenario where a “restriction” is imposed only by the organization’s board of directors. Legally, this is different from a donor-imposed restriction or an endowment. This is not a “true” restriction. Just as the board can simply impose it by a vote at a regular meeting, the board can just as easily lift or modify the conditions by voting to change them. In contrast, a restriction imposed by your Board is not the same as a donor restriction, as the Board can simply modify the restriction. Thus, Board restricted funds, typically, are not treated as restricted and may be appropriated as determined by the Board.  [Continue with stuff from our question) 

Even if the money in question is in a fund designated for – say – a capital campaign, but it was the board of directors that labeled it as such, it’d not a “true” restriction.” The board has the power to “unrestrict” the funds and authorize its use for any other purposes. 

A fuzzier situation arises if a donor or other third party gives money to a specific fund that the board of directors has announced would be set aside for a designated purpose like capital improvements. In that case, the prudent path is to treat the money as if the donor had initiated or created the restriction on the funds. Of course, in that situation, the donor or third party can consent to lift the condition. 

       Conclusion

An important trend that started before the pandemic is “participatory grantmaking,” a practice recommended for funders to loosen their tight hold on the minutiae of how a grantee uses charitable funds. It’s a philosophy that recognizes that greater power-sharing and decision-making in the donor-donee relationship will be a positive step to creating a more inclusive and diverse philanthropic sector and will also contribute to greater progress in eradicating social problems.

Scenario Planning: Four Models for Nonprofits (Part Two)

“The COVID-19 crisis has created a moment of hyper-uncertainty for social sector organizations. No one knows how the future will unfold…” write the lead authors of an important new collaborative report just published on July 20, 2020. Nonprofit and foundation leaders “… find themselves swamped by having to make organization-defining choices during” this extraordinary period of disruption.

We explained in Part One of this multi-part series that the Monitor Institute, the social-change consultancy of Deloitte LLP, began a major research project in April 2020. The goal was to quickly develop a crisis-planning analytical framework for the nation’s nonprofits and foundations to navigate the unprecedented chaos right now and during the next 12-18 months. The first product is a 26-page report (“Report”) titled COVID-19 scenario planning for nonprofit and philanthropic organizations (July 2020). 

Michael Anft, writing for The Chronicle of Philanthropy, provides more background than the Report itself on how and why the Monitor Institute decided to undertake this important study. See New Report Offers 4 Scenarios for How Covid and the Economy’s Fall Will Reshape the Nonprofit World (July 20, 2020). 

This Report is not at all the end of the process; note the subheading of the Report: An Event or an Era? Resources for social sector decision-making in the context of COVID-19. In the coming months, the Monitor Institute will follow-up on “several different fronts” including “identifying potential ‘cascading aftershocks’ that the field may need to prepare for in the wake of the immediate effects of the pandemic” as well as “potential ‘reset opportunities’ that might allow funders and nonprofits to make new progress on critical [social-policy] issues. 

We’re discussing this important research in several successive blog posts because it includes so many critical “moving parts.” The team doesn’t even present the four scenario-planning models until page 11 of the 26-page document.

In Part Two, we’ll review what comes before the “meat and potatoes” section of COVID-19 scenario planning for nonprofit and philanthropic organizations (July 2020). First, the lead authors, Gabriel Kasper and Justin Marcoux, discuss how the “scenario-planning” approach used in this study is broader and somewhat different than what was commonly understood in the sector before the pandemic. “COVID-19 is a crisis unlike any we have faced,” they emphasize, and it “isn’t occurring in isolation….[It] will increasingly serve as a compounding backdrop for many other issues we face, ….” 

Second, they explore a necessary step in “[c]reating stories about the future….at a time when so much is uncertain.”  They discuss five “prudent assumptions”; that is, “baseline realities that organizations will need to come to terms with….” 

Third, they present “five critical uncertainties that … have the potential to tip the future of the social sector in one direction or another….” 

     Scenario Planning: Pandemic Version

Previously, in Part One, we explained the tug-of-war between proponents of the traditional “strategic planning” model of crisis planning and others who insisted that the standard model just cannot work in our current extraordinary circumstances. The Monitor Institute’s team firmly concurred with the latter analysis.

What is “scenario planning”? It’s not “about what will happen. ”It’s a way to approach the future by acknowledging that “even in the best of times, we can’t accurately anticipate what will come ahead.” It’s a process to “…imagine plausible pictures of the future and rehearse how their organizations might respond.” It’s a “structured process” designed to help leaders “stretch their thinking, challenge their traditional assumptions, and drive better strategic decision-making.” 

Pre-pandemic scenario planning in our sector was different; typically, they were “contingency planning exercises focused on best-, medium-, and worst-case revenue projections.”  While this aspect of crisis planning remains critical, it isn’t sufficient because the “current disruption is far more than just financial” and it’s evolving at a terrifying – indeed emotionally crippling” – speed. 

The main goal of the research team has been to present a framework to meet the immediate “challenge” of “helping organizations move from thought to action in the midst of great uncertainty.” This is the “scaffolding” the lead authors refer to in the Report’s Introduction that may help sector leaders take the first step – action – even in the midst of this scary chaos.

     Scenario Planning “Prudent Assumptions”

“For nonprofits that have managed to weather the initial storm, continued survival and effectiveness will depend on the ability to adapt strategies and operating models to new post-COVID realities, whatever they may look like. And many philanthropic funders, having decided on an initial emergency response, are struggling to figure out what to do next.”

Ordinarily, in a scenario-planning exercise, the participants will consider and acknowledge, upfront, the uncertainties ahead: “the key things we don’t know and how they might interact to produce very different futures.” But this is no ordinary crisis or disaster.  The research team determined that in a time like now “… when so much is uncertain,” it’s a good idea to pivot first “to focus on what we do have a grasp on—what Deloitte futurist Eamonn Kelly calls ‘Prudent Assumptions.’” Mr. Kelly defines this term as “… baseline realities that organizations will need to come to terms with—and hold onto—in order to begin moving forward in the midst of great uncertainty.”

The five “realities” selected are: 

  • The pandemic will intersect with and compound other ongoing trends
  • The need for nonprofit services will dwarf available capacity and resources
  • A significant number of nonprofits will be forced to consolidate or close their doors
  • Impact from the crisis will fall disproportionately on communities of color and other marginalized populations
  • Differences in outbreak rates and reopening strategies will cause varying levels of crises and need across geographies and time

If some of these “realities” might have been educated conjecture back in March at the beginning of the period that COVID-19 began sweeping across the United States, it’s clear to anyone watching the news or reading the headlines that each and every one of these five “prudent realities” has already proved accurate.

     Scenario Planning “Critical Uncertainties”

Only after coming to terms with each of the five “prudent assumptions” – (including perhaps the most wrenching in terms of direct impact on the philanthropic sector; that is, lots of organizations will close up or merge) – can scenario planners deal with confronting the many, daunting, uncertainties in the weeks and months ahead. 

“[T]hese critical uncertainties [are] the building blocks for creating scenarios. Think of them as a continuum of possible outcomes (normally visualized as an axis), and by labeling both ends of the axis, we should be able to imagine both end points being plausible.”

Monitor’s research team narrowed this list down to “at least five critical uncertainties that [may] tip the future of the social sector in one direction or another. Note the caveat; at least these five items will contribute to the confusion of our near future. There may be more than these five:

  • The length and severity of the pandemic
  • The length and severity of the economic downturn
  • The government’s response and the strength of the public social safety net
  • The impact of technology on operating models
  • The level of social cooperation across communities

Within each of these five “critical uncertainties,” there are additional layers of what we don’t know because each is (a) “volatile” and (b) has the potential for an “unusually high impact on how the future may unfold.” 

There’s another huge “elephant in the room” that this research team deliberately omitted as one of the uncertainties: that is, the November 2020 election. They know it’s a controversial decision, but the bottom line is there are too many possible outcomes (considering all of the federal, state, and local races, and how big a role governments at all levels are involved in the COVID-19 response). They wanted to avoid falling in the trap of oversimplifying it. 

     Conclusion

In the “Crisis Planning” section of our micro-site dealing with COVID-19 issues, we emphasize that “[a] key question for each organization is how to plan – if, indeed, planning is even possible in the face of massive and unprecedented uncertainty.”

That’s where this Report can be so valuable: providing “scaffolding” to the sector during this time when the leaders “… may find themselves alternately paralyzed or swamped by a crushing number of choices….” 

 

The ADA & Nonprofits: A Primer

Recently, there’s been lots of chatter in the media about the Americans with Disabilities Act (ADA). That’s because, on July 26, 2020, the nation celebrated the 30th anniversary of this landmark federal civil-rights legislation. Congress enacted the ADA in 1990 to “ensure that people with disabilities have the same rights and access to opportunities as people without disabilities.” 

It’s been a very big deal for the (at least) 61 million adults in the United States who live with a disability. And that was before the COVID-19 pandemic which may add many more people to the ranks of the “disabled.”

 The ADA is just one of a large and confusing pot of alphabet-soup-nicknamed federal laws. Many Americans have only a vague and fuzzy awareness of the ADA as a law that somehow helps disabled people. Otherwise, they don’t know much about what the law does, exactly whom it protects, who has to comply with it, and what happens if they don’t.  

Nonprofits may wonder if the Americans with Disabilities Act has anything to do with them. The answer is yes: At least parts of the law apply to some nonprofit organizations and activities. 

What we’ll do here is present the basics – a primer as it were – on the ADA and nonprofits. It’s not a simple law, and there are other federal, state, and local laws and rules – (also with acronyms that may ring a bell for many Americans) – that protect disabled and other people who have been marginalized, forgotten, or not treated fairly in the past. 

       What Does the ADA Do? 

The Americans with Disabilities Act gives “protections against discrimination of people with disabilities in employment, education, health care, recreation, transportation, and housing.”

There are several sections of the law:  “The ADA prohibits discrimination on the basis of disability in employment, State and local government, public accommodations, commercial facilities, transportation, and telecommunications….”  

The key parts of the law affecting the nonprofit sector are those dealing with employment and public accommodations. 

First, Title I of the ADA requires “employers – including religious entities – with 15 or more employees to provide qualified individuals with disabilities an equal opportunity to benefit from the full range of employment-related opportunities available to others. For example, it prohibits discrimination in recruitment, hiring, promotions, training, pay, social activities, and other privileges of employment.”  The ADA also “restricts questions that can be asked about an applicant’s disability before a job offer is made, and it requires that employers make reasonable accommodation to the known physical or mental limitations of otherwise qualified individuals with disabilities, unless it results in undue hardship.” 

Second, in How the Americans with Disabilities Act Affects Small Nonprofits (April 1, 2020), MissionBox Global Networks offers helpful examples of when nonprofits of any size may be covered by the “public accommodations” part (Title III) of the ADA, “which bans discrimination by people who own, operate, lease to or rent from places of public accommodation.” This list includes, but is not limited to:

    • Social service center establishments, such as child care centers, homeless shelters and food banks
    • Certain offices and service establishments, such as providers of legal services, hospitals and health care providers
    • Exhibition or entertainment venues, such as theaters and concert halls
    • Establishments that serve food or drinks, such as restaurants, shelters and food kitchens
    • Public gathering places, such as auditoriums and lecture halls
    • Sales establishments, such as clothing stores and grocery stores
    • Public display or collection establishments, such as museums
    • Places of exercise and recreation, such as gyms
    • Private schools, ranging from nursery school through postgraduate school

Certain houses of worship and other religious organization, though, are exempt from these ADA rules. 

       Who is Protected Under the ADA?

This law specifies that a covered beneficiary of this law must have a “physical  or mental limitation that substantially impairs a major life activity, such as seeing, hearing, walking, breathing, doing manual tasks, standing, lifting, working or thinking.” In 2009, Congress amended the Americans with Disabilities Act to add more diseases (including epilepsy, diabetes, multiple sclerosis, major depression and bipolar disorder) under the umbrella of ADA protection.

Simply put, the “legal definition of “disability” is broad – and growing.” The Equal Employment Opportunity Commission (EEOC) – the federal agency in charge of administering and enforcing the ADA – has been repeatedly asked in the past few months whether COVID-19 is a “disability” under the Americans with Disabilities Act. It has “so far resisted the invitation to answer that question,” but that could change. In the medical community, a “consensus is emerging … that COVID-19 is taking a severe toll on its victims physically and mentally and that these effects are lasting much longer than expected.” 

Note that ADA protections extend not only to employees and direct beneficiaries of a nonprofit’s services but also to others including volunteers and the general public. 

       What Happens if Covered Nonprofits Don’t Comply

The federal Equal Employment Opportunities Commission (EEOC) enforces workplace anti-discrimination laws, including but not limited to the Americans with Disabilities Act (ADA). There are stiff penalties and lots of trouble for noncompliance. See EEOC publications including this one with information about compliance and sanctions. The agency with jurisdiction over the public accommodations parts of the law is the Justice Department.  See Americans With Disabilities Act: Title III Highlights (April 26, 2016). 

       Conclusion

It’s important to check state and local laws. Many jurisdictions around the nation have laws and rules similar to that of the federal Americans with Disabilities Act, but for employers with fewer than 15 employees. Also, there may be critical differences in how “disability” is defined.” For example, California’s law similar to the ADA is “more stringent” than the federal counterpart. 

 

 

Scenario Planning: Four Models for Nonprofits (Part Three)

New Normal for Nonprofits

It was the middle of March 2020 when life in the United States suddenly changed in the blink of an eye from “normal” to something decidedly different and unmistakably “not normal.” 

The multi-faceted upheaval affected every individual and every sector of American life. The philanthropy community was hit particularly hard. Not only were the nation’s nonprofits victims of this catastrophic disruption but the general public turned to them – as in past disasters and crises – for emergency aid and services. 

Nonprofit clients of Deloitte LLP looked to the accounting giant for advice and assistance in meeting the unexpected challenges from COVID-19.  By late April, Deloitte had decided to fund its social-change consultancy, the Monitor Institute, to use this input from its own client base and as well as from others to devise the most effective planning framework and tools for nonprofits and foundations in the throes of this rapidly unfolding – and evolving – crisis.  

On July 20, 2020, Deloitte published a 26-page report titled COVID-19 scenario planning for nonprofit and philanthropic organizations (July 2020). The main section of this study doesn’t begin until page eleven; it’s there where the lead authors present “four provocative pictures of what the future could look like depending on the severity of the crisis and whether we come together as a nation—or come apart.”

In Parts One and Two of our multi-part series on this important research, we covered the material in the initial sections which – while not the main focus – present important preliminary explanations and concepts. These include: (a) the specialized scenario-planning method adopted by the research team; (b) the five “prudent assumptions” (difficult new realities) that scenario planners must accept; and (c) the five “critical uncertainties” that nonprofit leaders must understand before beginning effective crisis planning in these challenging times.  

      Scenario-Planning: The Four Models

The key part of the Monitor Institute’s report is the presentation of the selected four possible “scenarios” for the nonprofit sector in the United States in the days, weeks, and months ahead. “The goal was to quickly develop a crisis-planning analytical framework for the nation’s nonprofits and foundations to navigate the unprecedented chaos right now and during the next 12-18 months.” 

There’s no magic in the number of scenarios that a planner or group of planners must define and establish as the ground rules for any scenario-planning exercise. “Organizations could face a society in which people cooperate as they rebuild or one marked by cascading death rates, a collapsed economy, and social chaos.” The resilient ones, according to Gabriel Kasper, the Monitor Institute’s managing director and co-author of this report, “are those that have a broader array of options and are prepared to shift depending on how the future plays out.” 

Here, the Monitor research team chose four possibilities:

  • 1: Return to “normal”
  • 2: Social fabric unraveled 
  • 3: A nation on the brink
  • 4: Rising from the ashes

Visually, they are first presented in a key graph on page 11.  The research team “explored two critical uncertainties” they “believe will most significantly shape demands on the social sector over the next 12-18 months: the severity of the crisis—a combination of both health and economic variables (which, although not perfectly intertwined, are likely to be closely correlated)—and the level of social cooperation.”

The graph places each of the four selected scenarios across a spectrum of crisscrossing horizontal (“severity of crisis”) and vertical (“level of social cooperation”) “axes of uncertainty.”

These scenarios run counterclockwise on the graph: Number 1 is in the upper-left quadrant, representing a relatively lower amount of crisis along with a higher amount of social cooperation. Curiously – (or perhaps not) – scenario number 4 is in the upper-right quadrant; that is, the juncture of high crisis impact combined with relatively high social cooperation. 

It’s scenario number 3 – “a nation on the brink” that earns the spot in the lower-right quadrant showing the worst end of each axis: highest crisis and lowest social cooperation. The Monitor Institute research team hypothesized that when things get bad enough by the end of 2021, we’ll finally start pulling together as a nation to create a new and better social compact. (That hypothesis, though, is truly a worst-case situation where Americans don’t start pulling together meaningfully for another eighteen months. We can hope – and perhaps propose a fifth “scenario” – where we collectively wise up well ahead of that date.)

“Scenarios aren’t about what will happen,” the lead authors emphasize, instead, “they’re provocative pictures of what could happen, designed to provide a new perspective and context to help guide present-day decisions.”   

For each of the four selected scenarios, the research team devotes two full pages in the report with detailed descriptions and analyses of what they imagine could happen.

      Scenario-Planning Advice 

“Scenarios are stories about what the future may look like, created through a structured process, that aim to help organizations stretch their thinking, challenge their traditional assumptions, and drive better strategic decision-making.” 

As we emphasized in Part Two of this series: “The COVID-19 crisis has created a moment of hyper-uncertainty for social sector organizations. No one knows how the future will unfold….” Decision-makers will “‘… find themselves swamped by having to make organization-defining choices during’ this extraordinary period of disruption.”

Just before the authors plunge into the lengthy discussion on page 11 of the four selected scenarios, they offer advice on page 9 that acknowledges how nerve-wracking a COVID-19 scenario-planning exercise will likely be for nonprofit and foundation leaders. In this section titled “how to read (and now not to read) the scenarios,” the lead authors emphasize that the “…key challenge right now is on helping organizations move from thought to action in the midst of great uncertainty.” 

Among the “do’s” are: 

  • Do focus on why the scenario might happen and what it would mean for your organization in terms of keeping or tossing current strategies and tactics
  • Do consider “what it would feel like to live in each scenario”; imagine “new threats” as well as “new opportunities”
  • Do think about how your group would respond and “pivot as necessary”

Among the “don’t’s” are: 

  • Don’t pick one scenario you like best or think is most likely; that defeats the purpose of the exercise to “look across possible futures” and prepare to “pivot and quickly adapt as circumstances change.”
  • Don’t “focus too much” on specific details described in each scenario; “suspend disbelief” a bit and think about “the overall direction and conditions each future creates.”
  • Don’t overthink the “details of each axis” so you can’t fully live in the hypothetical circumstances.
  • Don’t expect specific answers for your group’s circumstances; during the exercise tweak the details of each scenario to fit “your place, your issues, or your organization.” 

      Conclusion

During scenario-planning sessions, “… decision-makers can begin to imagine multiple plausible pictures of the future and rehearse how their organizations might respond.” The lead authors offer us a bit of comfort, though, by reminding us that “… even in the best of times, we can’t accurately anticipate what will come ahead.” 

Scenario Planning: Four Models for Nonprofits (Part One)

Scenario planning for NPO's part 1

There’s an important new report that presents the philanthropy sector with an intriguing analytical framework for “scenario planning” now and in the coming 12-18 months.  

For the past several months, Deloitte LLP has funded a study by Gabriel Kasper and Justin Marcoux of the Monitor Institute, Deloitte’s social-change consultancy. Conducted in cooperation with leading nonprofit think tanks, these researchers interviewed a “diverse” group of sector leaders around the United States to learn “what these people on the ground in the midst of the unfolding crisis were seeing and experiencing and what they anticipate might be coming over the horizon.” The goal was to spark a “‘futures-thinking’ process” to assess “critical uncertainties” right now, pinpoint the new realities arising from the pandemic, and “explore possible future scenarios that may emerge….”  

Published on July 20, 2020, COVID-19 scenario planning for nonprofit and philanthropic organizations is 26 pages long, culminating in a detailed presentation of four possible models, each of which can – and should – be the basis of critical “scenario-planning” exercises for each nonprofit organization and philanthropy.  

“The idea is for organizations to live in all of the scenarios, and not just plan for one,” says Monitor’s Managing Director Gabriel Kasper.“Resilient organizations are the ones that have a broader array of options and are prepared to shift depending on how the future plays out.”

Fair warning, though: Even the best of the four models presented in the Report is troubling; the worst is dark, indeed. 

     Strategic vs. Scenario Planning

A key question for each organization is how to plan its immediate as well as medium- and long-term future – if, indeed, planning is even possible in the face of the massive uncertainty we now confront over four months into the COVID-19 pandemic.

When the emergency so rapidly swept over the United States back in March, there was no time to plan … even how to plan for this level of unprecedented chaos and disruption. Normalcy was shattered quickly. Not a single sector of American society was left untouched. The nonprofit community was hit especially hard because it not only entered crisis mode for itself but also many groups undertook – as usual during disasters and crises – the added burden of providing emergency aid and services to others.  

The Report authors note that “many organizations trying to navigate through this moment […have found …] themselves alternately paralyzed or swamped by a crushing number of choices, without much scaffolding to guide their decision-making.” 

In the “Crisis Planning” section of our firm’s special COVID-19 resources micro-site, we explained the early dilemma for nonprofits trying to consider both the near future and “their ultimate survivability.” 

Some experts urged nonprofits and foundations to follow a time-tested formula: to activate and update their usual strategic-planning processes. See, for example, Quickly Revise Your Nonprofit’s Strategic Plan With These 3 Steps (April 23, 2020) Jarrett Ransom, MBA, Bloomerang Blog [“Organizations use strategic planning to provide a structured process to define success for an organization, determine the operational and programmatic steps to get there, and align resources and staff to achieve the goal within a given time frame.”]

See also Strategy during COVID: no time like the present to review, update your plan (April 14, 2020) Doug Schneider, Philanthropy Daily and Planning during COVID: creating a strategic plan, even now (April 16, 2020) Doug Schneider, Philanthropy Daily [“While reviewing your plan in light of the current crisis, you should turn this around: start with the proximate and work toward the higher-level landmark goals and strategies. What is coming up in the near term that you need to adjust or update?”] 

But there are three key problems with this approach using the “strategic planning” formula. First, many nonprofits have never engaged in any strategic planning exercises at all. Second, even groups that had strategic plans in place (including business-continuity procedures for emergencies) at the outset of the pandemic now understand these plans are seriously inadequate in light of the ongoing catastrophic circumstances. Third, according to some experts, strategic planning is a flawed model even in normal times.

Among the latter is Ted Bilich of Risk Alternatives. See Should Your Nonprofit Engage in Strategic Planning During Uncertain Times? No: Here’s 3 Steps to Take Instead (April 14, 2020). “Despite being widely touted and broadly used,” Mr. Bilich writes, “strategic planning has always had its critics.” He cites, for instance, The Strategic Plan is Dead. Long Live Strategy (January 10, 2013) by Dana O’Donovan & Noah Rimland Flower in the Stanford Social Innovation Review. They argue that “‘the trusted, traditional approach to strategic planning is based on assumptions that no longer hold,” and decry the “thick binder gathering dust on a shelf next to other thick binders from five and ten years past….” 

Mr. Bilich also points to Joan Garry’s article in The Chronicle of Philanthropy from October 2019. The title is self-explanatory: Strategic Planning Sucks the Life Out of Nonprofits

Kate Barr, the President and CEO of Propel Nonprofits also recommends tossing out that traditional approach. In Proactive, Not Perfect, Scenario Planning: A Short Guide for Our Times (May 5, 2020), she explains in The Nonprofit Quarterly that “…when your mind is swirling with what-ifs, it’s hard to know what questions to start with, let alone what actions to take. This is where scenario budget planning can be your friend. Whether the effects of the coronavirus pandemic have been immediate for your nonprofit or you’re bracing for what’s to come, you should be proactively preparing for the possible paths ahead….” 

She acknowledges that “…it’s very likely” that all of the scenarios that you and your team conjure up in your planning sessions “will be wrong because there are so many unknowns right now – but so is your old budget.” The goal of “scenario planning,” she adds, is not to predict the future. Instead, this approach “… give[s] you an ordered way of thinking and making decisions. It’s meant to help turn those ‘what if?’ questions into ‘what we will do if…’ plans.” 

      Scenario Planning: Four Models 

The Monitor Institute Report lands fully on the side of the “scenario-planning” proponents. The authors define it as “an approach to thinking about the future that is rooted in the recognition that even in the best of times, we can’t accurately anticipate what will come ahead. Instead decision-makers can begin to imagine multiple plausible pictures of the future and rehearse how their organizations might respond.” 

It’s a method and set of analytical tools best suited – [if any approach can be workable at all] – to this “moment of hyper-uncertainty for social sector organizations.” 

In the next post in this series, we’ll review the four models presented in the Report. In an initial chart, these four possibilities are visualized by a “plus-sign” spectrum including a horizontal line as well as a vertical line. 

The horizontal line represents the left to right – that is, “lower impact” to “higher impact” – spectrum of the query: “What is the continued severity of the crisis?” The authors define it as “…level of harm and dislocation experienced by the population as a result of the depth and duration of the health and economic impacts of the pandemic.”

The vertical line represents the top to bottom sliding answers to the query: “What is the level of social cooperation?” That’s defined as the “… relative willingness of society to work together across lines of difference towards common or collective goals.” 

The “best” scenario is shown in the upper left quadrant. It represents the lower end of the crisis-severity spectrum coupled with high levels of social cooperation. No one reading this post needs to check today’s headlines to know that we are not squarely in that best-case position at this moment in the United States.

     Conclusion

“No one knows what the future will hold,” explain the Report authors before moving on to reveal the four chosen models. We don’t know what the future will hold “…for the progression and spread of the virus, … for the economy, [or] even for the most basic aspects of how our country and communities will function in the weeks and months ahead.”

They add this cheery note as well: “With so many variables and wildcards in play” including the racial-justice protests, the November election, and the coming hurricane season – just to name a few – “it’s quite possible that COVID-19 won’t be the most important story of 2020.” 

One thing is clear, though, we will not – and should not – be returning to “normal.” See Philanthropy Thought Leaders On Not Returning to “Normal” (August 6, 2020).