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3 Reasons To Use The Balanced Scorecard (BSC) For Nonprofit Organizations
Is your nonprofit being “non-strategic”? There may be a framework that can help.
It goes without saying that for profit and nonprofit organizations are very different. That aside, there’s one thing that both types of organizations need to succeed—a well-executed strategy. Without a well-thought-out, organized plan of action and common goals to work toward, both for profit and nonprofit businesses would be in disarray.
Maybe you’re at a point right now where your nonprofit is in need of a new strategic framework. Or maybe you’re just looking to improve an already-successful strategy. Either way, I’d like to introduce you to a tool that can help: the Balanced Scorecard.
An Overview Of The Balanced Scorecard (BSC)
The Balanced Scorecard (BSC) was created in 1992 by Drs. Robert S. Kaplan and David P. Norton. It was considered a revolutionary new method for handling strategy management at the time, and is still one of the top 10 most-used strategy tools. Creating a BSC allows organizations to center their strategy around four perspectives: customer/constituent, internal processes, financial, and learning/growth. These distinct categories help organizations to:
- Organize their team around their organizational goals in a clear, concise way.
- Focus your vision on the areas of your organization that are important.
- Execute and track the successes of your strategies in a meaningful way.
Scorecarding began as a framework primarily for use in the private sector, but you’ll now see the Balanced Scorecard in nonprofits, government organizations, healthcare organizations, and a number of other mission driven and nonprofit associations.
Balanced Scorecard For Nonprofit: Challenges & Solutions
You may have already checked out the Balanced Scorecard as a possible organizational framework and then dismissed it because it didn’t seem like something you could implement. I’d like to help change your mind on that. Nonprofits are up against many challenges, but the Balanced Scorecard can address (and even help solve) many of those problems.
1. Challenge: Defining “success.”
Solution: Nonprofits are mission-centric—in other words, they are focused entirely on achieving the purpose that they’ve set out to work on, and put their effort into that instead of focusing on the company’s bottom line. Because of this, “success” is measured much differently. Despite being created with for profit enterprises in mind, the Balanced Scorecard can accommodate for these differences quite nicely. For example, an organization like the Cancer Society can define its success not as “curing cancer”, but as “reducing the deaths caused by cancer”. This allows them to focus less on research and more on early detection and other prevention techniques.
2. Challenge: Fundraising.
Solution: Nonprofits are focused solely on meeting their organizational goals and mission, rather than pleasing shareholders or beating financial expectations. That being said, the organization can’t be successful without fundraising. The Balanced Scorecard allows for organizations to better identify goals, missions, and key performance indicators (KPIs). Having this clearly-defined mission and strategy is attractive to serious donors.
3. Challenge: Getting the word out.
Solution: Trying to get people to understand, appreciate, and support the cause of your nonprofit is a battle. By having a Balanced Scorecard, you can better map out what you’re trying to accomplish and how you’re going to do it through initiatives. Likely, these initiatives will include marketing campaigns to attract the right type of people to your cause.
Sample Strategy Maps For Nonprofit Organizations
Despite being created with for profit organizations in mind, the Balanced Scorecard has become a beloved strategic framework for nonprofits. We’ve seen how helpful it can be, and we’d like to help you get started with scorecarding today. In the white paper below, we’ve created sample scorecards with examples to illustrate specifically how nonprofit groups use the Balanced Scorecard.
Downloading this white paper will give you access to the following:
- Five sample Balanced Scorecard strategy maps, from a microfinance organization to a homeless shelter.
- How nonprofit organizations worldwide are experiencing success with strategy mapping.
- Why you should create a strategy map, and important conclusions you can draw about scorecarding.
Download it now, and get started on updating your strategic plan today.