Young People's Reproductive Health Programmes That Make a ...

ACHIEVING EXCELLENCE IN YOUR NGOFrameworks, Assessment Instruments and Intervention ToolsI COMPElmer Herradura LighidJay SatiaInternational Council on Management of Population Programmes

Achieving Excellence in Your NGOFrameworks, Assessment Instruments and Intervention ToolsPublished byInternational Council on Management of Population Programmes534 Jalan Lima, Taman Ampang Utama, 68000 AmpangSelangor, MalaysiaISBN 978-983-3017-06-9Copyright (c) 2009 by ICOMPPrinted in MalaysiaOctober 2009

I COMPINTERNATIONAL COUNCILON MANAGEMENT OFPOPULATION PROGRAMMESThe International Council on Management of Population Programmes (ICOMP), aunique international non-government organization (NGO), is dedicated to improvingprogram management. Established by developing country population programmanagers and management institutions in 1973, it serves the growing needs of bothpublic sector and NGO managers on quality and depth of management improvementefforts.Its membership, comprising of heads of country and NGO population programs, anddirectors of management-related institutions from Asia, Africa and Latin America, isgoverned by a duly elected Executive Committee. The Secretariat is based in Malaysiaand networks with government programs, leading NGOs, and national institutionsin undertaking projects.Over the years, ICOMP has assisted in sensitizing top managers, trained middle-leveland youth managers, created a network of management-related institutes, promotedwomen’s programs and disseminated state-of-art knowledge and experiences in thefield of population program management.ICOMP promotes South-South cooperation through sharing of experiences andlearning together, assists in institutional capacity development, accelerates diffusionand upscaling of innovations’ and networks’ use of professional management resources.Its priorities and program areas are derived by assessing needs and interest of programmanagers and donor agencies as well as its organizational capability to maintainexcellence. Skills and institutional development have traditionally been ICOMP’s majoractivities. While continuing to assist programs in preparing managers to perform theirroles effectively, it strives to develop centers of excellence in population programmanagement including HIV and AIDS.ICOMP’s core competencies are on the following areas: (a) Leadership andManagement Development; (b) Catalyzing Innovative Programs; (c) StrengtheningCivil Society in the following key areas: (a) HIV and AIDS and Reproductive HealthPrograms, (b) Adolescent Reproductive Health; and (c) Women Empowerment.

CONTENTSPart A. FrameworksChapter 1Civil Society Organizations and Social Development 3-14Chapter 2Organizational Effectiveness: Are You Making a Difference? 15-29Chapter 3Sustainability: Do You Have What It Takes to Last? 30-40Chapter 4Governance That Works 41-57Chapter 5The Quest For Excellence 58-70Part B. Assessment InstrumentsAssessment Instrument 1Organizational Effectiveness Pre-Assessment Instrument 73-74Assessment Instrument 2Sustainability Assessment Instrument 75-83Assessment Instrument 3Governance Assessment Instrument 84-102Assessment Instrument 4Excellence Attribute Assessment Instrument 103-104Assessment Instrument 5Excellence Practices Assessment Instrument 105-115

Part C. Intervention ToolsIntervention Tool 1Revisiting/Creating a Shared Vision 119-131Intervention Tool 2Developing or Validating Strategies 132-154Intervention Tool 3Implementation of Strategy: The Balanced Scorecard Approach 155-165Intervention Tool 4Identification of Critical Role and Organizational Competencies 166-170Intervention Tool 5Resource Mobilization 171-186Intervention Tool 6Business Planning: A Simplified Approach for Non-Government 187-207OrganizationsIntervention Tool 7Creating Enduring Impact 208-213Intervention Tool 8Making Governance Work 214-238Intervention Tool 9Governance Best Practices 239-244Intervention Tool 10Building a Brand for Your Organization 245-248Intervention Tool 11Leveraging Intellectual Capital 249-256Bibliography

ACKNOWLEDGMENTA book that comprises assessment instruments and intervention tools is not possiblewithout the participation of many partner NGOs who took part in testing and utilizingthese instruments and tools, and gave their valuable feedback. We are grateful fortheir support. We hope that their contribution would help many more NGOs maketheir journey towards excellence through this book. We dedicate this book to them.Financial support was provided by The David and Lucile Packard Foundation and theFord Foundation for our work with their grantees to increase organizationaleffectiveness, enhance sustainability and improve governance - all building blocks forexcellence. The support from the World Bank Development Grant Facility’s Populationand Reproductive Health Capacity Building Program supported our work in developingand utilizing frameworks and tools to improve governance of NGOs in the Bolivia,Philippines and Ethiopia. We would like to express our appreciation for their steadfastgenerosity over the years.Our colleague, Ms. Ooi Chye Pei, contributed to the development of framework,assessment instruments and intervention tools on governance. Although her namedoes not appear as a collaborating author, her contributions are nonetheless important.We thank her immensely for her hard work.Our thanks are due to several persons who helped in editorial and publication efforts:Ms. Maggie Van der Meer edited the manuscripts and improved our presentationsignificantly; and Ms.Mary Frances who coordinated the publication process.We are thankful to the International Council on Management of PopulationProgrammes (ICOMP) which provided us the opportunity to do the work which ledto this book and for publishing it.Finally, we would like to express our gratitude to our respective families who cheerfullysacrificed quality time that we took away to complete this work.Elmer Herradura LighidJay Satia

Civil Society Organizations and Social Development 1PART AFRAMEWORKS

Civil Society Organizations and Social Development 3CHAPTER 1Civil Society Organizations andSocial Development“There is growing recognition that engagement with civil society organizations (CSOs) iscritical to national ownership, accountability, good governance, decentralization, anddemocratization of development co-operation.”~United Nations Development Programme (UNDP)At the turn of the century, the global community galvanized an unprecedentedinitiative to meet the needs of the poor with the launching of the MillenniumDevelopment Goals (MDGs). Despite being touted as overly ambitious, the goals—which range from halting the spread of HIV and AIDS and halving global extremepoverty to ensuring universal primary education by 2015—are attainable, accordingto the UN Secretary General, only if “we break with business as usual.” This calls foraccelerated and sustained action; commitment to increased resources for developmentprograms; and collaboration among the government, private sector, and civil society.Gearing up for a Balanced SocietyThe resources, competence, and influence required to achieve the MDGs are so largescale in nature that no single sector possesses them all. It is critical that each sector’sdistinctive strengths and contributions are brought together to ensure success. Butthe synergy of these sectors—government, civil society, and the private sector—doesnot happen in all instances. This can be explained by several factors. In two extremescenarios, all the sectors are either too weak and consumed by their own survival ortoo strong and tend to work in silos. In both cases, the need to work with others is notfelt. An additional problem arises when a society is dominated by a single sector,resulting in the distortion of relationships among different sectors.

4ACHIEVING EXCELLENCE in Your NGOThere could be other factors asidefrom those identified above, butwhatever the case may be, it isimportant that interrelationshipsamong these sectors are establishedto combine their forces forsustained social development.This perspective is built aroundthe framework that a society’seffective functioning rests on thetripartite interplay of thegovernment, civil society, and theFigure 1.1. Vision of a Balanced SocietyGovernmentprivate sector. It argues that for society to thrive, each sector needs to harness andcomplement the others so that all sectors are drawing from each other’s strengths(Figure 1.1). The state/government can provide political capital by ensuring compliancewith the law by the power and authority vested in it. Civil society can offer socialcapital by articulating the community’s needs and through social mobilization andcollaboration. The private sector can contribute economic capital by encouraging abalance of economic forces, leading to efficiency maximization and consequent wealthcreation (Figure 1.2). With the different sectors’ effective working relationships comesa combination of political stability, equity, and economic growth, assuring a balancedsociety. Maintaining society’s optimum equilibrium, however, requires all sectors toenhance their capacity individually and as a whole, to consistently meet the needs ofthe times.Figure 1.2. Distinctive Contribution of Three SectorsBalancedSocietyCivilSocietyPrivateSocietyState/GovernmentSeeks compliance forstability anddevelopment withstate power andauthorityCivil SocietyPromotescollaboration andpartnership forgenerating equity byarticulatingcommunity needs andsocial aspirationsMarket/Private SectorEncouragescompetition forachieving growth bymaximizing wealththrough marketefficiency

Civil Society Organizations and Social Development 5The Need for Capacity DevelopmentThe UNDP defines civil society as the space between family, market, and state. Civilsociety consists of nonprofit organizations and special interest groups, either formalor informal, working to improve the lives of their constituents. The World Bank usesthe term to refer to the wide array of non-governmental and not-for-profit organizationsthat have a presence in public life, expressing the interests and values of their membersor others based on ethical, cultural, political, scientific, religious, or philanthropicconsiderations. In this book, the term civil society organizations (CSOs) refers to awide array of organizations: community groups, non-governmental organizations(NGOs), labor unions, indigenous groups, charitable organizations, faith-basedorganizations, professional associations, and foundations.CSOs have become important actors in carrying out development programs tocomplement government action, especially in regions where government presence isweak. Their influence in shaping global public policy is increasingly exemplified bysuccessful advocacy campaigns around such issues as reproductive health, gender, landmines, debt cancellation, and environmental protection.Despite the dramatic expansion in size, scope, and capacity of civil society around theglobe over the past decade, its systems and processes are not yet as developed as thegovernment’s and private sector’s. It is constantly in flux, with many of its modes ofwork borrowed or adapted in part or in whole from other sectors. Its sometimesnebulous nature leads to some unsettling questions. Are CSOs performing the roles ofthe government? Do they serve as contractors to governments or donors, providingsocial services where the private sector could be more efficient and effective? ShouldCSOs spawn businesses to enhance their sustainability?Apparently, as civil society evolves, so do its roles and, consequently, the demands andexpectations for its involvement in different spheres of development. Hence, for thesector to fully contribute to social development, especially in achieving the MDGs, itslevel of capacity needs to be raised dramatically. This can be done as a sector ingeneral, by improving performance of individual CSOs, or a combination of both.Although a strong civil society sector in a particular setting creates an enablingenvironment for its components to flourish, the sector is only as strong as itscomponents are. It goes without saying, then, that civil society can only be robust ifits individual members are capable and contribute to the sector’s strength. Thechallenge, however, lies in the questions of where, with whom, and how to start thisprocess. This is where a strategic approach to capacity development that will generatethe best outcomes and offer optimum returns is required.Among the components of civil society, NGOs are perhaps the most popular andinfluential, owing to their sheer number; the movements they have created; and their

6ACHIEVING EXCELLENCE in Your NGOability to work across different ideological, spiritual, and cultural lines. In fact, inmany societies NGOs serve as fulcrums for linkages and collaborations among differentcivil society groups that on their own are weak or whose contributions are ratherlimited by their individual circumstances.Given the potential of NGOs to be a catalytic force in enhancing the sector’s overallperformance, it is but logical to start any capacity development for the sector throughthem. By doing so, it is expected that the effects will ripple out to other types ofCSOs and the sector as a whole.What is Excellence and Why Does it Matter?Among CSOs’ components, NGOs are always at the forefront, facing formidablechallenges. Under increasing competition for declining donor support and constantcalls for accountability and results, NGOs must show that they are trustworthy,responsible, and able to generate distinctive impact. It is no longer enough for NGOsto be “good enough,” with noble intentions; they are required to demonstrate excellencein their work, indicated by superior performance and sustained results.A definition of excellence in the context of NGOs does not yet exist. In commonparlance, being excellent is defined as surpassing others in some good quality; of greatvirtue; or of great worth (Chambers 20 th Century Dictionary, 1983). It is often referredto as “exceeding expectations.” It is also associated with competition or performanceassessment. For instance, an organization is considered excellent if the performanceof some of its specific functions exceeds those of other organizations in the field overa period of time. Sustained superior performance is thus the hallmark of excellence.Why must an organization pursue excellence? Being excellent carries not only its ownpsychological reward but also a “recognition” that will enable and empower anorganization to pursue its mission more effectively.The quest for excellence gained prominence in early 1980’s with the hugely popularbook by Tom Peters and Robert Waterman entitled In Search for Excellence (1982).Based on their research, the authors found that excellence embodies eight themes, asfollows:1. A Bias for Action: Active decision making—“getting on with it.”2. Close to the Customer: Learning from the people served by the business.3. Autonomy and Entrepreneurship: Fostering innovation and nurturing“champions.”4. Productivity Through People: Treating rank and file employees as a source ofquality.

➝Civil Society Organizations and Social Development 75. Hands-on, Value-driven: Following a management philosophy that guideseveryday practice—management showing its commitment.6. Stick to the Knitting: Staying with the business that you know.7. Simple Form, Lean Staff: Having minimal headquarters staff like some of thebest companies.8. Simultaneous Loose/Tight Properties: Adhering to autonomy in shop flooractivities plus centralized values.A few years later, however, several organizations previously classified by the authors as“excellent” slid off their list. This prompted Peters and Nancy Austin to conductadditional research, which resulted in the publication of A Passion for Excellence: TheLeadership Difference (1989). The book presents a paradigm that argues that excellentcompanies need to constantly innovate as they interact with their stakeholders(customers, employees, shareholders, government, and society as a whole). Constantinnovation is seen as what separates excellent organizations from the rest. Calling thisinnovation the “leadership difference,” they elaborate that ensuring constant innovationrequires a strategy that focuses on quality, with a purpose driven by values. Moreimportantly, organizations need to continuously learn, with everyone empowered asleaders (Figure 1.3).Figure 1.3. A Passion for Excellence: The Leadership DifferencePeopleConstant Innovation➝➝StakeholdersStrategy: Focus on qualityA learning organizationEveryone is a leaderDriven by valuesSomething to believe inPeters and Austin, 1989In 2002, Peters traced the evolution of excellence themes from the early 1960s to theearly 2000s. His analysis was anchored by seven themes ranging from organizationalfocus or bias to organizational dynamics and strategy evolution (Table 1.1). In hisbook entitled Re-imagine! Business Excellence in a Disruptive Age (2004), Peters concludesthat excellence requires continuous reinventing and restructuring, building talent andintellectual capital, and outsourcing and network management.

8ACHIEVING EXCELLENCE in Your NGOTable 1.1. Evolution of Excellence ThemesThemes 1962 1982 2002Bias Planning Action RestructuringThe customer Research Close to One withOrganization Conglomeration Autonomy and Outsourcing andand management entrepreneurship network managementEmployees Interchangeable Productivity through As talentOperations By the book Hands on; value Intellectual capitaldrivenStrategy By the rule Stick to knitting What is your knitting?Control Headquarters Simple form; lean Friction-freeknows best staffFunctioning Policy manual Simultaneous loose/ ReinventtightIt has been repeatedly emphasized in management literature that excellence requiresspecial attention to people. Jack Welch (Winning, 2005) says that every person in theworld wants a voice and dignity and every person deserves them. Steven Covey (The8 th Habit, 2006) argues for the need to look at the whole person: physical, emotional,psychological/intellectual, and spiritual. Peter Drucker (Management Challenges forthe 21 st Century, 2001) suggests that knowledge workers rather than blue collar workershave become cirtical for the success of organizations, and they require special attentionto ensure their productivity, while Gary Hamel and C.K. Prahalad (Competing for theFuture, 1996) argue that in order to lead, organizations need to create their own futureswith people at the helm, envision new markets, and reinvent themselves. Jim Collinsin his book, From Good to Great (2001), posits that building greatness to last requiresdisciplined people, thought, and action, which will deliver superior performance, makea distinctive impact, and achieve lasting endurance. Drawing from his research on“great” companies, he offers the following practices organizations aiming for excellenceneed to take into account:1. Disciplined People• Level 5 Leadership: Foster a paradoxical blend of personal humility andprofessional will.• First who then what: Get the right people in the right seats.2. Disciplined Thought• Confront the brutal facts: Retain faith that you will prevail in the end regardlessof the difficulties, and at the same time confront the most brutal facts of yourcurrent reality, whatever they might be.

Civil Society Organizations and Social Development 9• The Hedgehog Concept: Aim for your business to be at the intersection ofwhat you are passionate about, what you can be the best at, and what drivesyour economic engine.3. Disciplined Action• Entrepreneurial Ethics: Combine discipline with an ethic of entrepreneurship.• The Flywheel: Accumulate, overall, effort applied in a consistent direction.Excellence is not for the faint of heart, Tom Peters and Nancy Austin (A Passion forExcellence: The Leadership Difference,1989) advised. Achieving excellence does nothappen in an instant nor by chance. The search for excellence, therefore, is a journey,not a destination. It is a journey that an NGO has to undertake over a period of timeusing carefully thought out strategies.Excellence Building BlocksDo we need a journey to excellence? How and where do we start? These are thequestions that the International Council on Management of Population Programmes(ICOMP) took into account when it began its work to help about 20 NGOs inIndonesia and the Philippines achieve excellence in the early 2000s. Insights from theexperience are distilled in ICOMP’s NGO Excellence Framework (Figure 1.4), whichargues that excellent NGOs possess the following attributes:1. Distinctive Impact: Has the NGO made a difference in the lives of stakeholders?Has it affected change in the community? Is it a mission-critical organization inthe sector where it works?2. Lasting Endurance: Has the NGO demonstrated institutional strength to standthe test of time? Has it made enduring impact among stakeholders?3. A Symbol of Trust: Has the NGO been recognized for its governance and ethicalpractices? Is it credible and respected? Has it attracted financial and in-kindsupport? Has it given the sector a good name?4. Standing Out From the Rest: Is the NGO recognized for innovation andpromising practices? Is it viewed as a leader in the sector? Does it have brandname recognition?5. Influential: Does the NGO have the ability to influence policy decisions andpractices? Has it changed mind-sets and established new trends?In order to possess the above attributes, NGOs need to improve on their practices.Based on ICOMP’s experience and review of literature on excellence, it seems clearthat excellent organizations demonstrate a certain set of practices. Together, these

10ACHIEVING EXCELLENCE in Your NGOpractices serve as indicators of whether anorganization possesses what it takes to becomeexcellent. ICOMP adapted these practiceswithin the context of NGOs and classifiedthem into seven, as shown in Box 1.1. As anNGO undertakes the necessary interventionsto achieve excellence, it needs to continuouslyassess its progress by examining the degree towhich it embodies these practices.Box 1.1 Excellence Practices• Exemplary Leadership andManagement• Learning Organization• Sound Resource Management• Active Engagement ofStakeholders• Brand Building• Relentless Pursuit of Vision,Mission, and Goals (VMG)• Effective GovernanceHow can NGOs improve on their practices?The framework suggests that NGOs need toundertake actions in three areas, namelyorganizational effectiveness (OE),sustainability, and governance. These areas are explained in more detail below.1. Organizational Effectiveness: An organization must first ensure that itsinstitutional fundamentals are in place—fundamentals such as vision, mission,and goals and the strategies to realize them. It must ask difficult questions. Is theorganization able to achieve its vision and justify its mission? Is it making adifference in society? As the journey to excellence begins with organizationaleffectiveness, NGO’s are given the needed trust and credibility within thecommunity it seeks to serve and the stakeholders it works with or influences.2. Sustainability: To achieve the organizational mission, effectiveness is not enough.The NGO needs to sustain itself until it has realized its vision and mission. Whilethey are considered crucial to an NGO’s survival, financial resources alone are notenough to achieve sustainability. NGOs need to take into consideration otherequally important dimensions such as organizational viability, programeffectiveness, and enduring impact.3. Governance: Effective governance does not only protect an NGO from internaland external threats but also assists in its journey towards excellence. Governanceinvolves an appropriate role for the board and systems to ensure performance, aswell as integrity and accountability. Since governance does not often emerge asthe first concern of most NGOs, it is important to make a deliberate effort toensure its effectiveness.

Civil Society Organizations and Social Development 11Figure 1.4. ICOMP’s NGO Excellence FrameworkPractices• Exemplary Leadership andManagement• Learning Organization• Sound Resource Management• Active Engagement ofStakeholders• Brand Building• Relentless Pursuit of VMG• Effective GovernanceAttributes• Distinctive Impact• Lasting Endurance• Standing Out• Influential• Symbol of TrustOrganizationalEffectiveness• OrganizationalCompetencies• Role Competencies• LeadershipDevelopment• Systems andProcesses• Staff CapacitySustainability• OrganizationalViability• ProgramEffectiveness• Financial Security• Enduring ImpactGovernance• BoardDevelopment• Systems to EnsurePerformance• Mechanisms forIntegrity andAccountabilityWhile the above interventions overlap, ICOMP’s experience warranted a sequentialapproach to their implementation, beginning with organizational effectiveness andfollowed by sustainability and governance. The duration of an NGO’s journey towardsexcellence depends on its robustness, ability to adapt, and other factors that influenceits progress. But here’s what the IBM founder, Thomas Watson, advised: “If you wantto achieve excellence, you can get there today. As of this second, quit doing less-thanexcellentwork.”What is This Book About?This book is a result of ICOMP’s work with a large number of NGOs, primarily inthe Philippines and Indonesia, assisting them to move towards excellence. This workbegan in 2000 with support from The David and Lucile Packard Foundation to assistNGOs in the Philippines and Pakistan increase their organizational effectiveness.During this process, organizations became concerned with their sustainability. Thistriggered ICOMP to come up with a sustainability assessment tool, which it tested inBihar and Jharkhand states in India.

12ACHIEVING EXCELLENCE in Your NGOAppreciating the value of sustainability and the eventual closure of its office in thePhilippines, Ford Foundation extended support to ICOMP to help its grantees in thePhilippines enhance their sustainability. As the grantees wrestled with their respectivesustainability challenges, governance emerged as a critical issue. As a result, ICOMPlaunched its work on governance with support from World Bank’s Program on CapacityBuilding in Population and Reproductive Health NGOs. Spanning three continents,the project helped selected NGOs in Bolivia, Ethiopia, and the Philippines improvetheir governance systems and processes. Drawing from its work on organizationaleffectiveness, sustainability, and governance, ICOMP initiated its work on excellencewith support from The David and Lucile Packard Foundation and Ford Foundationin the mid-2000s.This book is a compendium of assessment frameworks, tools, instruments, andintervention tools developed and used by ICOMP over the years to assist several NGOsenhance organizational effectiveness; sustainability; governance; and, eventually,excellence. It is divided into three parts:1. Part A: Overview of concepts and frameworks and the process of applying theframework2. Part B: Assessment instruments needed in the utilization of frameworks introducedin Part A.3. Part C: Intervention tools that provide guidance to NGOs in the development oftheir action plans to enhance OE; sustainability; governance; and, eventually,excellence.Through this book, it is hoped that a larger number of NGOs will be guided in theirjourney towards excellence.The chief executive officer (CEO) of an organization will play a critical role in anyorganization’s journey to excellence. It is assumed that she/he has adequate familiaritywith the management of NGOs. Newly appointed CEOs who feel the need for arefresher on the basics of NGO management may refer to a wide range of availablebooks. Some of these are listed below:1. Managing the Non-profit Organization by Peter Drucker (HarperCollins Publishers,2006)2. Strategic Planning for Public and Nonprofit Organizations by John M. Bryson (Wiley,2004)3. Harvard Business Review on Nonprofits (HBS Press Book, 1991)4. Earthscan Reader On NGO Management by Michael Edwards and Alan Fowler(Earthscan, 2002)5. The Guru Guide by Joseph Boyett and Jimmie Boyett (Wiley, 1998)

Civil Society Organizations and Social Development 13How to Make the Most of this BookEach chapter in this book is built on the preceding chapter. Hence, it is important toread the book in a sequential manner. It can be used as a road map as your NGOmakes its progress towards excellence. Each chapter is structured so that NGOs areprovided with a conceptual background, a guiding framework, an assessment tool,and a guide for developing an action plan.The use of assessment tools relies on judgment. Experience shows that the applicationof these tools yields optimum results if utilized in the following manner:1. Assessment Processa. The quickest process is for the CEO to carry out the assessment. If theorganization does not yet have a participatory organizational culture then itmay be useful to follow this approach and later involve others. Its pitfall,however, is an inability to generate a wide range of perspectives.b. Another approach is for the CEO and a few key staff to jointly carry out theassessment. This takes more time but is more reliable as (i) it validates subjectivejudgments; and (ii) it provides an opportunity for senior staff to develop acommon understanding on the strengths and weaknesses of the organization.c. Some organizations have involved all their staff in the assessment. In thisapproach, every staff member completes the assessment, with findingsconsolidated to create an organization-wide profile. Triangulation is important,especially if wide variances are noted and some gray areas exist.2. Engagement of Independent Advice. Once the assessment is done, many NGOsengage the services of an independent and trusted adviser or a consultant to reviewthe findings and validate them through a discussion of what evidence was used toreach them. This process leads to an agreed-upon assessment.3. Development of Action Plan. An action plan is then developed to remedy theweaknesses that emerge from the assessment. Items where the score is low areanalyzed and priorities are established for intervention. The organization has theresponsibility to implement the action plan.Repeated use of the above cycle is expected to result in improved performance.Factors to Keep in MindICOMP’s experience shows that the following factors must be taken into considerationin an NGO’s quest to be excellent.1. Commitment. The organization should have a commitment to this journeytowards excellence. Often, organizations do not wish to spend time and effort on

14ACHIEVING EXCELLENCE in Your NGOthis journey when things are going well. They see the need for capacitydevelopment only when there are crises. While a crisis situation mobilizescommitment, it is not necessarily an opportune time to talk about excellence.However, it is possible to use the framework and carefully sequence interventionsto resolve the crisis before going ahead with the journey.2. Use of Framework. The framework is a tool and if used inappropriately cancause harm. For instance, it is important to keep results confidential.Understandably, many organizations do not like their stakeholders, particularlydonors, to know all their weaknesses. Therefore, assessment findings are not tobe used in making judgments but as aids in improving the organization.3. Sequencing Interventions. Assessments may identify many items that needattention. It is useful to prioritize areas needing attention and then organize theimplementation of interventions strategically.4. Setting of Clear Objectives. In planning for interventions, clear objectives shouldbe set in terms of how the situation will improve by implementing plannedinterventions.Two conditions that could compromise an NGO’s journey towards excellence havebeen identified: (a) prevalence of conflicts in the organization among CEO, staff,and/or board members and (b) poor governance. While the journey can unravelexisting conflicts, steps to resolve the conflicts should be undertaken first before thejourney can begin.

Organizational Effectiveness: Are You Making a Difference? 15CHAPTER 2Organizational Effectiveness:Are You Making a Difference?“Non-profit institutions tend not to give priority to performance and results. Yet performanceand results are far more important—and far more difficult to measure and control—in thenon-profit institution than in a business…. For each non-profit institution, the executivewho leads effectively must first answer the question: How is performance for this institutionto be defined?”~Peter DruckerPracticesAttributesOrganizationalEffectivenessSustainabilityGovernanceThe most basic question that any organization needs to ask itself is whether it iseffective. Being effective means being able to realize one’s vision and mission.An organization’s inability to assure its stakeholders of its effectiveness is tantamountto losing credibility.

16ACHIEVING EXCELLENCE in Your NGOIn recent years, the NGO sector hasexperienced trajectory growth globally.However, with this rapid expansion comeshigher expectations and closer scrutiny. Severalquestions come to the fore: Are NGOseffective? Are they able to make a difference?These are the questions that are inextricablylinked to donor support, legitimacy withconstituencies, trust of partners, and stafffeelings of accomplishment. Simply put, beforeany NGO talks about sustainability andgovernance, it needs to first ensure that it iseffective. Ensuring organizational effectiveness,therefore, is the first leg of an NGO’s journeytowards excellence.Box 2.1. Defining the Terms• Impact is a long-term result.• Outcomes are medium-termresults achieved at the end ofa certain initiative.• Outputs are the direct resultsof activities.• Activities are specific actions.• Inputs are the resources —physical, financial, andhuman—used to implementactivities.What is Effectiveness?In pursuit of its vision and guided by its mission, an organization’s fundamental role isto convert inputs to generate results (Figure 2.1). Oftentimes, confusion betweeninputs and outputs emerge. Jim Collins (Good to Great and the Social Sectors, 2005)had this to say about the issue: “the confusion between inputs and outputs stems fromone of the primary differences between business and social sectors. In business, moneyis both an input (a resource for achieving greatness) and an output (a measure ofgreatness). In the social sectors, money is only an input, and not a measure of greatness.”The process of conversion from inputs to outputs and all the way to create impact canbe evaluated in terms of the following:1. Effectiveness measures whether the desired outputs lead to desired outcomes; itis the ratio of outcomes to outputs. Sometimes activities themselves are the outputs,in which case effectiveness is the ratio of outcomes to activities.2. Efficiency in the use of inputs or resources is measured by the ratio of outputs toinputs, or activities to inputs, if activities themselves are the outputs.3. Empowerment is often considered a key for the success of an NGO and, therefore,should be one of the key outcomes desired in addition to changes in the socioeconomicand physical conditions of the people served. The empowering processcomprises increasing capacity of individuals and communities, building a levelplaying field, and overcoming power relationships that have disempowered people.4. Economy in achieving results is measured by the ratio of the economic benefitsof the outcomes to the economic costs of the inputs. The NGO’s activities wouldbe uneconomic if the economic costs of the inputs exceeded the economic benefitsof the outcomes.

Organizational Effectiveness: Are You Making a Difference? 175. Expansion is considered sometimes as a criterion of success because an NGOshould benefit a large group of people and is thus measured by the quantum ofoutputs that, along with effectiveness, will determine the quantum of outcomes.Figure 2.1. Conversion ProcessInputs Activities Outputs Outcomes ImpactVision/MissionOf all the above processes, effectiveness is the most important attribute of the conversionprocess. Efficiency or economy in the use of resources is meaningless unless theorganization is effective. An effective organization can seek efficiency by reengineeringits processes of conversion from inputs to activities or seeking more economical resourcesas inputs.Expansion can only follow once the organization is proved effective, efficient, andeconomical. As empowerment is a key outcome, an NGO should be effective inachieving this outcome.High empowerment and loweffectiveness require educatingintended beneficiaries andremoving barriers to effectiveness.Low empowerment and higheffectiveness, on the other hand,require increasing theparticipation of intendedbeneficiaries while preserving thenature of outputs.Unlike commercial enterprises,there are difficulties in definingthe outcomes of an NGO.Oftentimes, an NGO hasmultiple constituencies: donorswho provide resources, the peoplewho benefit, the employees, andother stakeholders such as thecommunity or local and nationalgovernment.Box 2.2. Results are the Greatest InspirationThirty-four years ago, Fazle Hasan Abed left alucrative career in a prestigious oil company todedicate himself entirely to the development ofBangladesh by founding BRAC (originallyBangladesh Rural Advancement Committee).Today, BRAC is perhaps one of the largestNGOs in the world. Mr. Abed has remainedfocused on the cause of empowering the poor.In response to the question “what do you do toremain committed,” he said “the success of ourefforts in rural Bangladesh also renews ourcommitment. So the greatest inspiration is fromour field visits rather than my work at the office.When I go to the field and see for myself theimprovements our programs are bringing, itgives me strength and motivation.”Source: The Visionary Leadership ProgramConsortium (www.icomp.org.my)

18ACHIEVING EXCELLENCE in Your NGOWhose viewpoint should be considered in defining outcomes? The NGO needs to becommitted to a goal: that of bringing about a fundamental change in the society andin human beings. Bringing about fundamental changes in society and in human beingsalmost always requires change in people: their behavior, circumstances, vision, hopes,and, above all, their empowerment in terms of competence and capacity. There needs tobe a consensus on the goal of the NGO and each of the constituency’s concerns shouldbe addressed by such a goal. Thus, while the short-term aspirations of each constituencymay differ, there should be consensus on common goals.Organizational Effectiveness FrameworkThere are different definitions of organizational effectiveness (OE). Many equate it withcapacity building while others relate it to human resource development. This book, however,adopts the US-based Grantmakers for Effective Organizations’ (GEO) definition, whichis, “the ability of an organization to fulfill its vision through a blend of sound management,strong governance and persistent rededication to achieving results” (Paul Connolly, 2001).This definition views effectiveness from the lenses of board functioning, alignment ofvision and strategies, management systems, core competencies, interrelationships amongpersonnel, and interactions with stakeholders and the external environment. In otherwords, OE must be viewed as a holistic, continual, and dynamic process rather than as adiscrete piecemeal exercise.Basically, OE is about generating results for social development. After all, NGOs exist tosatisfy the needs of their stakeholders. Blending together sound management, stronggovernance, and commitment is a big challenge that demands careful attention and energy.As Harvard Professor Michael Porter proposed, for results of any social development initiativeto have an impact, they must have a “social value added.”ICOMP’s Organizational Effectiveness Framework (Figure 2.2) allows organizations toalign their energies and resources to realize their mission and vision through carefullydeveloped strategies. The framework clearly shows the contribution of improvement inorganizational and role competencies to bettering organizational performance.The OE Framework is a tool designed to guide NGOs in the process of organizationaleffectiveness assessment and the development and implementation of interventions in acomprehensive manner. With a shared vision as the linchpin, the framework gives theorganization a clear view of the interplay among the crucial strategies, competencies,and critical relationships that drive organizational performance.The framework is different from other tools in that it helps organizations connecttheir mission and vision to strategies and required role competencies; allowsorganizations to develop interventions to strengthen management systems and enhancethe required staff competencies; and follows a process that is holistic, dynamic, andcontinual, using the vision as the guiding force. In the words of Peter Drucker

Organizational Effectiveness: Are You Making a Difference? 19(Managing for the Future: The 1990s and Beyond, 1992), “you need three things:opportunities, competence, and commitment. Every mission statement, believe me,has to reflect all three or it will fall down on what is its ultimate goal, its ultimatepurpose and final test.”Figure 2.2. ICOMP’s Organizational Effectiveness FrameworkLinking strategiesto visionShared VisionStrategy Validation• Is the strategy sociallyacceptable?• Is the strategy responsive tocommunity needs?• Is the strategy financially viable?Performance AssessmentHow do the strategies generateresults from the followingperspectives: (a) Financial andProgram; (b) Stakeholders;(c) Internal Process; and(d) Innovation and LearningWhich criticalroles need to beperformed well toimplement thestrategy?Indentification of NecessaryOrganizational and RoleCompetencies(Strategy formulation; programdevelopment; resource mobilization;project management; information,education and communication;service delivery; advocacy)How good arethese rolecompetencies?Development of OE InterventionsGovernance andLeadership• Vision• Mission• Strategies• Alignment• EmpowermentInstitutional Development• Structure• Systems• Planning• Budgeting• Human resources• Decision making• Monitoring• EvaluationStaff CompetencyDevelopment• Proposal writing• Participatoryplanning• Project management• Research methods• Technical updates

20ACHIEVING EXCELLENCE in Your NGOThe framework aims to answer the following questions:1. Does the organization have a clear and shared vision?2. Are organizational strategies socially acceptable, financially viable, and responsive?3. How does the organization perform from the following perspectives: financialand physical, stakeholders, internal processes, and innovation and learning?4. What role competencies are necessary for the organization to carry out its strategieseffectively?5. What interventions should the organization undertake to strengthen its rolecompetencies?To answer the above questions, the framework espouses five iterative steps that enablethe organization to gain a better understanding of its current realities and craftmeaningful steps towards strengthening the current situation. The steps correspondto the five questions the framework aims to answer.1. Re-visitation/Creation of Vision. This step aims to determine if the organizationhas a clear shared vision. The process may include asking the various members ofthe organization, including the board, about their vision for the organization anddetermining if there exists a consensus on the vision.2. Validation of Strategies. This step aimsto validate the strategies of theorganization and how they relate to theorganization’s overarching vision. Thevalidation process uses three validityparameters, namely: social acceptability,responsiveness to community needs, andfinancial viability.3. Assessment of OrganizationalPerformance. This step, which usesRobert S. Kaplan’s and David P. Norton’sBalanced Scorecard Approach (TheBalanced Scorecard, 1996), measures theorganization’s performance from thefollowing perspectives: financial andprogram, stakeholders, internal process,and innovation and learning. This processallows an organization to determine thepertinent knowledge, skills, and systemsneeded to strengthen its competencies toachieve sustainability and the greatersatisfaction of stakeholders.Box 2.3. Realigning Strategieswith VisionThe Pakistan Voluntary Healthand Nutrition Association(PAVHNA) is a reproductivehealth NGO in Pakistan. In2000, in partnership withICOMP, the organization revisitedits organizational mandates anddeveloped a new set of strategiesusing the balanced scorecardapproach. Through this approach,organizational core competencieswere harnessed while traditionalinterventions not aligned with thevision were discontinued, allowingthe organization to focus its energyand resources where they should.As a result, staff productivityincreased while programsgenerated more impact.

Organizational Effectiveness: Are You Making a Difference? 214. Identification of Necessary Organizational and Role Competencies.Organizational competencies are generic and basic competencies an organizationneeds to possess to function effectively. Among others, they include leadership,planning, organizing, implementing, monitoring, and evaluating. Rolecompetencies vary from organization to organization depending largely on itsprograms. Most common role competencies include advocacy, service delivery,and fundraisingThis step is closely entrenched with the preceding step as it identifies the criticalorganizational and role competencies the organization needs to strengthen in orderto implement its strategies effectively. Using a set of criteria, these competenciesare examined and eventually carefully selected for strengthening. The idea here isto ensure that each individual in the organization contributes to effectiveness.“The effective person focuses on contribution. He looks outward towards goals.The focus on contribution is the key to effectiveness,” Peter Drucker (The EssentialDrucker, 2001) suggested.5. Development of Interventions. This step determines the actions the organizationhas to undertake to strengthen the role competencies identified in the precedingstep.Experiences in the application of the tool resulted in the following:1. Changing Mind-sets—Strategic Thinking: Partner organizations were able to(a) revisit and align their missions, visions, goals, and strategies; (b) link programsand outputs and their contributions to organizational development; (c) adapt tothe environmental changes; (d) consider various perspectives encompassingprogram and financial, stakeholders, growth and innovation, and internal processesin decision making; and (e) appreciate the critical importance of the role ofgovernance.2. Taking Stock of the Organization: The OE framework encouraged NGOpartners to systematically and continuously examine their operations by askingthe fundamental question: “How is the organization making a difference insociety?” After all, as Peter Drucker (Managing the Non-Profit Organization:Practices and Principles, 1990) said, “the non-profit organization exists to bringabout a change in individuals and in society.”3. Board Development: Through the OE process, the importance of governanceand the role of the board emerged. They have learned that board members mustguide the organization’s progress towards its mission and vision, provide financialoversight, ensure adequate financial resources, act as ambassadors of theorganization, and ensure transparency and accountability.

22ACHIEVING EXCELLENCE in Your NGO4. Competency Enhancement: The staff members and the management of partnerNGOs were able to learn new skills and knowledge to enhance their competencies.The process included participating in training and seminars, exposure visits, andworking with consultants. Key areas of competence strengthened included: (a)leadership; (b) strategic planning; (c) marketing; (d) business planning; (e) clientanalysis; (f) proposal writing; (g) monitoring and evaluation; (h) documentation;(i) participatory research; and (j) participatory planning. As a result of newlyacquired knowledge and competencies, the staff members and the managementwere able to improve their effectiveness and efficiency.5. Systems Development: Through the OE process, partners were able to strengthenor establish systems necessary for their efficient and effective operations and growth.Applying the FrameworkWhile the framework was designed to bringabout more rigor in the organizationalassessment and learning process, its applicationlargely depends on the nuances or context towhich the organization is currently exposed.The framework enables managers, togetherwith their colleagues, to assess the OE needsof the organization and eventually developinterventions to improve OE. The processcould be carried out internally or with the helpof a consultant. The process is designed toincorporate a wide range of experience, tostimulate discussions, and to generateownership of results.Box 2.3. Things to Remember• Before beginning the OEprocess, the organization mustdemonstrate readiness.• View OE as a holistic,continuing, and dynamicprocess rather than a discrete,fragmented approach.• Always bear in mind that theOE process must be attunedto the contexts and nuancesof an organization.• Team and peer learning mustbe promoted.• The OE process mustencourage ongoingquestioning and learning.Preliminary Work: DeterminingOrganizational ReadinessBefore you start your OE process, it is veryimportant that your organization’s readiness isexamined first. Do not proceed unless the following conditions are established:1. Commitment and support from top leadership, especially the executive directorand board, throughout the entire process2. Commitment to gather and use relevant information for assessing current programsand evaluating how to meet current and future client needs3. Willingness to be inclusive and encourage broad participation, so that people feelownership and are energized in the process4. A board and staff that understand the purpose of the process, realize what it is andis not able to accomplish, and has consensus about desired outcomes

Organizational Effectiveness: Are You Making a Difference? 235. Good working relationship and no extremely serious conflicts among keyparticipantsEqually important is the understanding of some factors that may hinder the OEdiagnosis process. Be aware of potential pitfalls, as follows:1. The assumption by the top management that it can completely delegate the processto other staff or a consultant and not be actively involved.2. The board, senior managers, and executive director are so engrossed with currentproblems (such as financial crises or other extreme circumstances) that they haveneither the time nor the energy to look far enough ahead to plan for the future.3. The board or executive director is unwilling to involve line staff, managementstaff, or the board in the process.If any conditions for success above are missing or if pitfalls are likely, then the OEdiagnosis may not be appropriate at this time. In cases where the organization ishalfway through the process and realizes that it is not yet ready to undergo the diagnosis,the process should be thwarted at once. The organization may then reflect on andreassess how the process will proceed.Box 2.4. Engaging a ConsultantFor an organization with little or no experience in undertaking organizationaleffectiveness initiatives, an external consultant can enhance the process by providingthe following services:1. Facilitating retreats, meetings, and the diagnosis process as a whole: Theuse of a consultant to serve as a “conversation traffic cop” is one method ofensuring that good ideas do not get lost in the emotion of the process orpersonalities of the participants. A consultant can work with an organizationto minimize barriers that impact effectiveness, using her or his experiences as asource of tried and true processes.2. Training in OE diagnosis and processes: It is critical for everyone involvedin the OE process to be speaking the same language and using the same OEdiagnosis tools. External consultants can be that conduit of information flowand education.3. Providing an objective and different perspective in the process: As anoutsider to the organization, the consultant can ask questions and challengeexisting traditions, assumptions, and routines more objectively than staff andboard members.4. Offering process expertise: The consultant who has undertaken organizationaldiagnoses before can provide significant information and advice on tools andprocesses that can best accomplish your process and content goals.

24ACHIEVING EXCELLENCE in Your NGOPre-Assessment ExercisesExperiences with the application of the framework have elicited creativity, flexibility,and judgment on the part of the key participants. The process blends with and buildson the existing knowledge and initiatives of the organization. This means thatdepending on the judgment of the participants, the organization may undergo theentire process or apply only the key steps that the participants feel are most necessary.For example, if the participants feel that the organization has already a clear, sharedvision and valid strategies, they may not necessarily undergo Steps 1 and 2. Theprocess could then immediately start at Step 3. In some instances, organizations cango immediately to Step 5! As the process is iterative in nature, even if the organizationhas decided to begin at Step 3 and halfway through the process realizes that some ofthe strategies require validation, the organization can go back to Step 2 and examinethose strategies.Table 2.2 provides a list of conditions that will enable the organization to determineat which step to start the process of OE diagnosis.Table 2.1 Determinants of Starting Point for OE ProcessStepConditions1 Re-visitation of Vision and • Unclear about vision or absence of visionMission • Fairly unstable organization2 Validation of Strategies • Has a clear vision• Unsure about the validity of current strategies3 Performance Assessment • Has a clear vision• Valid strategies are in place• Requires understanding and analysis of currentperformance4 Identification of Necessary • Has a clear visionOrganizational and Role • Valid strategies are in placeCompetencies • Difficulty determining what role competencies arerequired to effectively implement strategies• Unsure of what role competencies needimprovement5 Development of Action Plan • Has a clear vision• Valid strategies are in place• Difficulty determining what role competencies arerequired to effectively implement strategies• Ready to develop role competencies that needimprovement

Organizational Effectiveness: Are You Making a Difference? 25For the organization to determine at whatstep it will begin the assessment process,it may need to undergo a pre-assessmentexercise first. Pre-assessment is a guidedprocess that can be undertaken with thehelp of an external or internal facilitator(Part B: Assessment Instrument 1: OE Pre-Assessment Instrument). The processinvolves a facilitated discussion where thestaff quickly assesses the organization’ssituation vis-à-vis a set of questionspertaining to vision, strategies,organizational performance, and key rolecompetencies. The exercise need not becomprehensive and complicated.By looking at the different pre-assessmentquestions, the organization will be able todetermine their areas of strength and areasthat require improvement. The processof determining where to begin could bestraightforward or complex depending onorganizational context. The idea for thisexercise is for the organization to create acommon understanding of its currentsituation and come to an agreement onthe step at which to start the assessmentprocess. The organization may start atStep 1 and go through all the steps or startat Step 5 if all the conditions outlined inTable 2.2 are met.Assessment ProcessDepending on which step you are at, thefollowing will guide you to develop anaction plan to enhance your OE.Step 1: Re-visitation/Creation of SharedVision. This step involves clarifying ordrafting the vision statement of anorganization. The inability of theorganization to state and communicate itsBox 2.5. Focusing On What MattersThe ABC Foundation has been servingthe reproductive health needs of younggirls and women for 20 years in thePhilippines. The organization hasundertaken a plethora of interventions,many of which were not related to itsmission. The board chair justified thefoundation’s actions, saying that theseinterventions were “dictated” bydonors. When the organizationunderwent an OE process in 2000, twokey issues emerged. First, stakeholders,especially grassroots volunteers, wereconfused about the interventions ofthe organization. For instance, it wasundertaking environmental programswhen it was mandated to pursue girls’and women’s reproductive well-being.Second, many of the organization’sstaff were not only confused butbeginning to show burnout as theyshuttled from one position to another.As a result, although quantity-wisethe organization had implementedseveral programs, the review showedthat these programs did not reallycontribute to the achievement of goals.In the ensuing strategy formulationprocess, the organization reaffirmedits vision and mission and carefullyselected strategies that were deemedto contribute only to its vision andmission. “We learned to decline orrenegotiate with donors on the typesof projects we implement. If theydo not align with our strategies,we’d rather not pursue them. Now,we are not only focused, we are alsomore fulfilled,” shared the executivedirector.

26ACHIEVING EXCELLENCE in Your NGOvision clearly stifles its effectiveness. Why? Because it leaves the organizationdirectionless. As result it may waste time doing a lot of things without accomplishinganything. Vision is a guiding image of success often expressed in terms of impact. Itanswers the question: “What will success look like?” Hence, it enables the organization’smembers to stretch their expectations, aspirations, and performance. An effectivevision should be compelling and should inspire and motivate people to achieve ittogether. A vision statement should convey both an external and internal vision of theorganization. The external vision describes how the society could be changed oncethe organization’s internal vision is achieved (Part C: Intervention Tool 1: Re-visiting/Creating a Shared Vision).Step 2: Validation of Strategies. This step aims to validate the existing strategies ofthe organization and how they relate to the organization’s overarching vision. Thevalidation process uses three validity parameters: social acceptability, responsiveness tocommunity needs, and financial viability.Strategy validation is a systematic process through which an organization examines,reflects, and evaluates how its current strategies could well achieve its vision. Theprocess guides organizations to continually look at how strategies fit with their visionand vice versa. It sharpens organizational focus so that all organizational resources areoptimally utilized in service of the organization’s vision. It also determines how clearthe strategies are in the minds of people throughout the organization. Unless thestrategies are clear to those who actually implement them, the process of developingstrategies will be nothing more than an academic exercise with little or no benefit tothe organization. This could mean determining whether to develop new strategies orcontinuously pursue, refocus, drop, or revise an existing strategy (Part C: InterventionTool 2: Developing or Validating Strategies). The process has the following characteristics:1. It involves reexamination of priorities. It looks at how the organization can bestrespond to and be proactive about the dynamic and sometimes chaoticenvironment. NGOs have many options in the face of changing client needs andfunding scenarios, competing demands, and other factors. Validating theorganization’s strategy would, therefore, require an organization to recognize thesechoices and commit to one set of responses instead of another.2. It raises questions that help organizations examine past experiences, test oldassumptions, gather and incorporate new information about the present, andanticipate the environment in which the organization will be operating in thefuture.3. It builds commitment. Involving key players within the organization in the processof validation allows disagreements to be engaged constructively and supports bettercommunication and coordination. It allows a broad consensus to be built, resultingin enhanced accountability throughout the organization.

Organizational Effectiveness: Are You Making a Difference? 27Step 3: Performance Assessment. Adapting the Balanced Scorecard Approach to theNGO context, this step involves measuring the organization’s performance from thefollowing perspectives: financial and program, stakeholders, internal process, andinnovation and learning. The process allows an organization to determine the pertinentknowledge, skills, and systems needed to strengthen its competencies to achieve theorganizational vision and serve the greater satisfaction of stakeholders.The Balanced Scorecard Approach is a revolutionary management performance tooldesigned to measure organizational performance in a comprehensive way. It providesan organization with a fast but comprehensive view of its performance vis-à-vis itsoverarching vision. It makes strategy a continuous process owned not just by topmanagement but by everyone in the organization. It is a product of ten years oflearning and research into more than 200 companies that have used the tool (Part C:Intervention Tool 3: Strategy Implementation: Balanced Scorecard Approach). Theorganizational performance assessment step looks at the following questions:1. How does the organization perform vis-à-vis its stated goals? (Financial andProgram Perspective)2. How do stakeholders see the organization? (Stakeholders Perspective)3. How do the organization’s internal processes, dynamics, decisions, and actionssatisfy its stakeholders? (Internal Process Perspective)4. How can the organization continue to improve and create more value forstakeholders? (Innovation and Learning Perspective)Step 4: Identification of Necessary Organizational and Role Competencies.Carrying out this step means assessing the role competencies of the organization todetermine how well they perform and which role competencies require improvementto carry out organizational strategies effectively. This is undertaken with the assumptionthat the organization knows very well its performance and reasons for such performance.Looking at performance gaps, the organization can then identify to which competencythe performance gap is linked (Part C: Intervention Tool 4: Identification of CriticalOrganizational and Role Competencies). This step involves the following processes:1. Classification of Performance Gaps by Role Competency. The participantsmay first list the role competencies of the organization and indicate the performancegaps under each role competency. This process answers the question: To whichcompetencies can performance gaps be attributed?2. Evaluation of Role Competencies. Each competency is rated based on its overallperformance using the high, medium, low scale. This process answers the question:How does each competency perform overall?3. Identification of Reasons for Role Competency Performance. After assessingthe performance of each role competency, reasons for overall performance mustbe identified. This process answers the question: What are the reasons for the rolecompetency performance? The framework argues that the performance of rolecompetencies is influenced by organizational competencies.

28ACHIEVING EXCELLENCE in Your NGOLet us look at the case of Reproductive Health Coalition (RHC). Considered areputable and leading reproductive health organization in the Philippines, RHCoperates several clinics in Manila, Philippines. In early 2000, the organizationconducted a review of its clinic operations and found out that many of its clinics werehaving difficulty recovering their costs. At first glance, the source of the issue waspointed out as direct clinic service, which is a role competency. Yet, a further analysispointed out that the roots of the problem were the lack of a monitoring and evaluationsystem, low staff motivation, and the absence of a capacity development system, all ofwhich are organizational competencies. Figure 2.3 illustrates the relationship betweenthe organizational and role competencies of RHC and how they influenced theorganization’s performance.Figure 2.3. Developing Interventions: An ExampleLow Cost RecoveryPerformanceLow Number of ClientsPerformance GapUnsatisfactory ClinicPerformanceRole CompetencyPerformanceLack of Monitoringand EvaluationLack of StaffMotivationInadequate StaffTrainingManagement Systems Management Process LeadershipOrganizationalCompetencyPerformanceStep 5: Development of Action Plan. Competence is a mix of leadership, managementsystems, and management processes. As shown in Step 4, organizational competencieshave a direct bearing on how well the role competencies are performed. Hence, thisstep takes a closer look at how organizational competencies are addressed and whatinterventions can be developed to strengthen role competencies. Basically, this stepanswers the question: What interventions should the organization undertake to strengthenits role competencies? Table 2.3 can be used as a sample matrix to help you improveyour role competencies by taking the following steps:1. Identify reasons for role competency performance.2. Develop interventions that are needed to improve the role competency.3. Prioritize the interventions using agreed-upon criteria such as urgency, feasibility,and impact. You can develop your own set of criteria as you see fit.

Organizational Effectiveness: Are You Making a Difference? 29Table 2.3. Sample Organizational Competencies and Interventions MatrixReasons for RoleCompetencyPerformanceInterventionsCriteria (High, Medium, Low)Urgency Feasibility ImpactLack of monitoringand evaluationReview monitoring andevaluation systemDevelop a computerizeddatabaseHighHighHighHighLack of staffmotivationInadequate stafftrainingEnhance organizationalincentives and career High High HighadvancementDevelop a comprehensivetraining program for all High Highstaff.Integration and Implementation ImplicationsFrom its twenty-five years of making grants to improve the organizational effectivenessof NGOs, The David and Lucile Packard Foundation (http://www.packard.org) offersvaluable lessons in undertaking OE; among them are the following:1. Organizational Readiness: At the outset of any capacity development process, itis important that the organization is ready for the process, as demonstrated by itscommitment, capability, and openness to answer difficult questions and to change.2. Dedicate Time and Energy: Almost everybody underestimates the time and effortrequired to make substantive change. Patience, resilience, and fortitude shouldbe our watchwords.3. Good Fit with Consultant is Key: Consultants play an important role infacilitating change and providing objective perspectives to an organization. It is,therefore, important to spend time to identify a consultant who would be a goodfit with the organization’s culture, values, and learning style.4. Consider an Organizational Assessment: An assessment process allows theorganization not only to clearly understand its current situation, needs, andrequirements for the OE process but, more importantly, to involve differentstakeholders, especially the board.5. Strategy Clarity Comes First: For OE projects to succeed, the organization needsto first come up with clear strategies, as well as identify target audiences.

30ACHIEVING EXCELLENCE in Your NGOCHAPTER 3Sustainability:Do You HaveWhat It Takes to Last?“It is not the strongest species that survives, nor the most intelligent, but the ones mostresponsive to change.”~ Charles DarwinPracticesAttributesOrganizationalEffectivenessSustainabilityGovernanceEnhancing organizational effectiveness is just the beginning of an NGO’s journeytowards excellence. As it achieves its objectives and generates results, the nextquestion that looms is, “how long will these results last?” Sustainability has become acritical concern among NGOs in recent years as they struggle with funds and grapplewith issues pertaining to impact and governance.

Sustainability: Do You Have What It Takes to Last? 31What is Sustainability?The Webster Dictionary defines “sustain” as the ability “to keep going, maintain orprolong.” For NGOs, this means that sustainability requires the organization tocontinue, maintain, or prolong its institutional structure and production of benefitsfor its intended client population vis-à-vis demographic changes, fluctuation in thesource and level of funding, and consumer demands. Sustainability is the ability ofthe organization to maintain its interventions for the fulfillment of its mission andsecuring of its vision. Therefore, being sustainable means having a certain level ofindependence to make plans for the future and fulfill those plans despite changes inthe outside environment and to develop diversified financial support so that theorganization’s existence is not threatened by the loss of a single funding source (JapaneseOrganization for International Cooperation in Family Planning, March 1992).Despite the interest sustainability has generated in recent years, it remains abstract.Most still equate it to financial security. This is only partially true. While financialresources are critical for survival, these alone do not make an organization sustainable.Framework for NGOSustainabilityICOMP’s experiencedemonstrates that anNGO’s sustainability isinfluenced by organizationalviability (institutionalstrength), financial continuity(revenue security), programeffectiveness (social valueadded programs), andenduring impact (persistentsocietal benefits). Thedimensions are intrinsicallyinterrelated so that thecondition of one affects theothers. Box 3.1 illustratesan example whereby anNGO focused its attentionon resource mobilizationand neglected other aspectsof the organization such assystems and processes,resulting in poororganizational performanceBox 3.1. Broader Understanding of Sustainability“We used to believe that for our organization tosurvive, we should have adequate funds all the time,and all the rest will follow,” declared the executivedirector (ED) of Jakarta Development Organization(not its real name). The organization learned its errorthe hard way. It was so consumed with resourcemobilization that it neglected other aspects of theorganization such as its systems, processes, andcapacity development of staff. “We ended up havingso much money but our staff members were notadequately equipped to manage programs resultingin inefficiency and, worse, lack of impact” the EDshared. The communities complained about theorganization’s lack of sensitivity to their needs andmany of them complained to donors. “We realizedthat indeed, money is important for our sustainabilitybut it is not the only factor that we should focus on.We needed to ensure that our programs respond tothe needs of our communities, our staff arecompetent, and our systems are in place to carry outday to day operations efficiently,” she further related.The organization has since reconfigured its practices.

➝32ACHIEVING EXCELLENCE in Your NGOand impact. Below are the definitions of the four dimensions of organizationalsustainability:1. Organizational Viability: The ability of the organization to fulfill its mission andvision to maintain its organizational strength (World Bank, 1991). It involves theefficacy of the organization’s systems, strategic thinking, governance, managementability, and relationships with the external environment.2. Financial Continuity: The ability of the organization to continuously generatestable revenues and diversify its resource base to either prolong, maintain, or expandits core programs and activities. It involves the ability of the organization tomanage the organization’s resources to meet organizational goals and objectives aseffectively and efficiently as possible (Management Sciences for Health, http://erc.msh.org).3. Program Effectiveness: The ability of a program to provide quality services to itsclients, expand its scope of services and client base, increase or maintain demandfor services, and generate income from the program through local fundingmechanisms while decreasing its dependence on funds derived from externaldonors.4. Enduring Impact: The ability of the organization to empower its target clientsand engage them so they feel they are a part of the organization (ManagementScience for Health, http://erc.msh.org; World Bank, 1991). It also involves theability of the organization to generate added value, create a social base, fulfill theorganization’s mission according to its values, and establish legitimacy with itsstakeholders (www.neest.org).ICOMP has identified a number of variables for each of the above dimensions toform the Framework for NGO Sustainability (Figure 3.1).Figure 3.1. Framework for NGO SustainabilityOrganizationalViabilityFinancialSecurity➝ Sustainability➝ProgramEffectiveness➝EnduringImpact

Sustainability: Do You Have What It Takes to Last? 33The framework shows that NGOs need to be aware of key sustainability dimensionsso that they can optimally and strategically invest their resources and energy to achievetheir vision and realize their mission. It is not meant to be applied in a linear manneras it recognizes the complexity of organizational processes and dynamics. It is not atool to predict sustainability outcomes; rather, it provides a way to categorize differentelements into broad dimensions in order to better understand the variables thatinfluence sustainability.Partners who have utilized the framework achieved the following results:1. Increased Understanding of Sustainability. Partner NGOs came to realize thatachieving sustainability involves various factors such as integrity, leadership andmanagement, systems, grassrootsrelations, credibility with donors, andeffective services, among others. Withthis new understanding, they learnedhow to view sustainability from aholistic perspective using thesustainability dimensions as a guide.2. Improved Governance. Most NGOsreported significant improvements intheir boards. Approaches to boarddevelopment varied. Some activelyengaged their boards in goal-basedmeetings and occasional capacitydevelopmentactivities. Othersdismantled existing boards and creatednew ones through a lengthy process ofselection, orientation, and teambuildingactivities. These boards arenow deeply involved in providingstrategic guidance to the leadership,mobilizing resources, and ensuringaccountability and transparency.3. Sound Processes and Systems. PartnerNGOs enhanced their systems andprocesses through actions that includedinstalling staff benefit packages,codifying and standardizing existingprocedures, and setting-up monitoringand evaluation systems. All these werecritical to increasing organizationalefficiency and productivity.Box 3.2. Diversification of RevenuesFor almost 20 years, Zone One TondoOrganization (ZOTO) relied onsupport from one donor. In early2001, the donor decided to stop itsoperations in the Philippines.Troubled by the pending “disaster,”ZOTO worked with ICOMP tocome up with a sustainability plan.Aside from enhancing itsorganizational competency, theorganization developed a businessmodel that allowed it to identify anoptimum blend of sources of income.They learned to approach a mix ofinternational and local donors,engage in fee-based programs usingsocialized schemes, and “sell” theirconsulting skills to other NGOs. Ina year’s time, the organizationgenerated adequate financialresources to ensure its survival foryears to come. It now operates microfinanceinstitutions, cooperatives, andseveral clinics. More importantly, itscommunities are better served.Source: The Journey TowardsSustainability(Elmer H. Lighid, 2007)

➝➝➝➝➝34ACHIEVING EXCELLENCE in Your NGO4. Increased Organizational Productivity. Notable changes were seen in theperformance level of staff members as NGOs enhanced their staff competenciesand built leaders at different levels of the organization.5. Better Financial Health. Most NGOs reduced their dependency risk and stabilizedtheir financial situation as they increased the number of donors, which included thecultivation of local donors. Some started developing earned income strategies whenthey established fee-based training programs, while others experimented with generatingrevenues from fee-based services. Still others introduced cost recovery mechanisms intheir existing programs, which are now generating substantial revenues.6. Leveraging Impact. A community-based NGO adopted the communityfoundation model—a model that encourages the community’s ownership of theirown development with the organization as a channel—resulting in the creationof a community-shared vision and fund support from philanthropists andstakeholders for community and economic development.Applying the FrameworkThe framework was used to assist about 35 NGOs in the Philippines and Indonesiawho have experienced profound changes in their mind-sets and the way they operate.As shown in Figure 3.2, the process involves seven iterative and non-linear steps:1. Strategic assessment2. Analysis of assessment results3. Prioritization of sustainability issues4. Development of action plan5. Implementation of sustainability interventions6. Regular monitoring7. Independent evaluationFigure 3.2. Process for Applying the FrameworkAnalysis ofAssessment ResultsImplementation➝➝StrategicAssessment➝Prioritization ofIssues➝Development ofAction PlanMonitoring➝Evaluation

Sustainability: Do You Have What It Takes to Last? 35Step 1: Strategic Assessment. Depending on the decision of the organization, theassessment process may involve the board, key staff members, and volunteers. Usingan assessment tool, the participants examine the organization based on differentelements categorized under the four sustainability dimensions (Part B: AssessmentInstrument 2: Sustainability Assessment Tool). The assessment tool contains 175statements against which the participants rate the organization using a scale of 1 to 4,with 4 as the highest.Step 2: Analysis of Assessment Results. The results are analyzed by averaging thescores. The organization plots the sustainability profile of the organization using adiagram with four intersection axes representing the four dimensions. Progressingoutward, the four circles represent the rating scales of 1 through 4, with the innermostcircle representing a score of 1 and the outermost representing the score of 4. Theaverage ratings for each dimension are plotted on their respective axes. Once all scoresare plotted, a diamond-like figure representing the sustainability profile of theorganization emerges. In Figure 3.3 below, the sustainability profile of an NGO fromAsia is the smaller diamond as contrasted against the outer diamond, which representsperfect scores in all dimensions. The space between the perfect profile and the NGO’sprofile indicates the gaps that the NGO needs to address to enhance its sustainabilityin different dimensions.Figure 3.3. Sample Sustainability ProfileOrganizational Viability3.35➝ABCFoundationSustainabilityProfileEnduringImpact3.263.25FinancialContinuity3.00Program Effectiveness➝IdealSustainabilityProfile

36ACHIEVING EXCELLENCE in Your NGOThe assessment scores are analyzed by probing into the underlying factors that influencethe scores in the different dimensions. The scores are validated by cross-referencingthe different elements of the four dimensions, examining key documents, andconducting key informant interviews and/or roundtables.Step 3: Prioritization of Issues. Based on the analysis of assessment results, theorganization lists all the sustainability issues it has identified. Some NGOs have aslittle as one issue while others have as many as ten. Due to constraints in time andresources, most NGOs do not address all their sustainability concerns at the sametime. Hence, they have to prioritize these issues carefully using a set of criteria. Mostpartners use the following prioritization criteria: urgency, importance, and resourceavailability.Step 4: Development of Action Plan. Once the sustainability issues have beenprioritized, the organization meets again as a group to develop strategies to addressthese prioritized issues. Strategies to achieve sustainability vary from quick fixes, suchas reviewing personnel policies, to long-term interventions, such as developing andimplementing business plans. These strategies are operationalized by identifying vitalactivities and resources needed using key indicators and timelines. The followingintervention tools are useful in the development of an action plan: (a) Part C:Intervention Tool 5: Resource Mobilization, (b) Part C: Intervention Tool 6: BusinessPlanning, and (c) Part C: Intervention Tool 7: Creating an Enduring Impact.Below is a list of some strategies developed by ICOMP’s partners:Table 3.1. Broad Sustainability Strategies of PartnersSustainabilityInterventionsDevelopment ofRevenue ModelEngagement in Fee-Based ActivitiesDescriptionDeveloped a program-based business planDeveloped an organization-wide business plan outlining how incomegeneratingprograms could cross-subsidize other non-earning programssuch as advocacyDeveloped a feasibility study to support a proposed business planDeveloped an operational model for program strategiesConverted its five program strategies into three-year business plans. Businessplans were eventually converted into project proposals.Offered international fee-based trainingSet up three community-based clinics and three community-based botica(pharmacies); restructured fee-scale for daycare centersEngaged in events management, packaging of NGO promotionalmaterials, and fee-based courses

Sustainability: Do You Have What It Takes to Last? 37SustainabilityInterventionsLearning fromEffective BusinessModelsStrategic PlanningCompetencyDevelopmentGovernanceEnhancementSystems and ProcessEnhancement andDevelopmentPromotingOrganizationalServices andProgramsDescriptionOffered fee-based courses on media and advocacySold much-improved handmade cards and herbal soapsEngaged in a small-scale variety of business venturesAdapted Grameen-bank model in micro-financeReceived exposure to multi-stakeholder program initiativesReceived mentoring on how to set up clinics and community-based pharmaciesLearned from effective solid waste management systemRevisited and revised vision, mission, and goalsAssessed organizational accomplishments; redefined vision, mission, andgoals; and set long-term targetsAssessed organizational health; validated vision, mission, and goals; anddeveloped more focused programsDeveloped a five-year strategic plan reflecting the ten program areas ofits fourteen communitiesDeveloped a business plan, proposal writing, and resource mobilizationthrough workshopsDeveloped a business plan through coachingFostered team building, improved staff utilizationReceived micro-enterprise management trainingDeveloped feasibility studyReconstituted the board; developed a governance manualAssessed and reviewed board rolesClarified board’s role in direction settingEngaged board in planning and decision makingDeveloped monitoring and evaluation system; improved micro-enterprisemanagement systemRefined organizational management system and policiesRevised organizational management system incorporating policies onconsulting and core fund buildingDeveloped a human resource management system to refine job performance,merit-based promotion, and remuneration and retirement benefitsDeveloped and maintained a website; revised brochures and flyers toshowcase artistic products and newly-developed servicesSet up a website to advocate for the cause of the deaf globally; revisedbrochure to market the products of the deaf

38ACHIEVING EXCELLENCE in Your NGOSustainabilityInterventionsStakeholderEducationCampaignDescriptionEnhanced website to refine educational information about theorganization’s wide array of servicesDeveloped a brochure and presentation materialsPresented organization’s programs in different foraCommunicated with potential donors locally and globally through emailsand letters to seek support for the deaf; granted interviews and wrotepieces on deaf issues, which were published in leading newspapersStep 5: Implementation. Depending on their sustainability strategies, NGOsimplement a mix of activities over a period of time. The organization may need toseek consultants to provide them with technical support in undertaking many of theactivities outlined in the action plan, such as facilitating workshops, analyzing themarket situation, and providing training to key staff members.Step 6: Monitoring. In the course of strategy implementation, activities are regularlymonitored to prevent possible deviation and to determine whether the strategies areapt or not. In many cases, strategies evolve and are modified to adjust to the changingand emerging needs of the organization. The progress of the organization requiresrigorous documentation to measure changes.Step 7: Evaluation. Occasionally, using action plan milestones, the progress of theorganization is evaluated. The process of regular evaluation is done by revisiting thesustainability profile and undergoing a quick assessment utilizing the same questionsfrom the assessment and tracking the changes made. As such, continuous improvementscan be made to ensure that the NGO’s sustainability profile is improved.Lessons from the FieldSeveral lessons can be gleaned from experience in utilizing the framework. First,achieving sustainability does not happen overnight, nor by accident. ICOMP’s experienceshows that becoming a sustainable organization is not only a long-term process, itrequires systematic planning, execution, monitoring, and evaluation. As a first step,the organization must take stock of itself and examine its sustainability concerns.Second, once the organization has a clear understanding of its sustainability situation,it must develop effective strategies. NGOs participating in the ICOMP assessmentsbrainstormed with key staff, community leaders, and clients to come up with strategies.Topping it all off was ICOMP’s guidance. Third, strategies should be operationalizedinto a set of aligned activities. In ICOMP’s experience, participating NGOs developedwork plans that mapped out a clear timetable, expected outputs, and responsible persons.The work plan is key to tracking the progress of strategies. Fourth, tracking the progress

Sustainability: Do You Have What It Takes to Last? 39Box 3.3. Tapping the Board’sPotentialsLike a typical NGO in Indonesia,Yayasan Keluarga (not its realname) has a board organized forregistration purposes only. Whileparticipating in a workshop onsustainability in 2004, Dr. Adi,Yayasan’s executive director, foundout that boards in other countriesare actually the most credibleresource generators for NGOs. Atthe time, the organization wasexperiencing difficulty generatingresources from donors. Dr. Adimet with the board and sharedwith them what he had learned.A board development processensued. A few months later, theboard actively mobilized resourcesby meeting with donors and theircontacts in the business world.The board generated enoughresources for several programs ofthe organization. The board nowtakes the lead in ensuring thesustainability of the organization.of each intervention should be religiouslyconducted. Participating NGOs were requiredby ICOMP to regularly monitor their activities.ICOMP’s regular visits to participating NGOsprovided an opportunity to examine the initialresults and prevent any deviations. Fifth, whileactivities are carefully planned, they should notbe treated as cast in stone. Many participatingNGOs changed some of their strategies as theyimplemented their activities. Changes weremade to adapt to contextual trends andenvironmental changes, which bear onorganizational operations.A second lesson is that introducing a complexconcept such as sustainability requires an effectivechange to the management approach. At theoutset, participating NGOs found out thatgenerating support from staff members andclients was as complicated as the concept ofsustainability itself. For one, the meaning ofsustainability differs from person to person.For some, it is about financial security; forothers, it is about continuing services andbenefits. Second, many stakeholders areworried that sustainability will subvert theirmission. And third, because of its abstractnature, sustainability seems to beoverwhelming and unnerving. ParticipatingNGOs, however, adopted a variety of creativeand effective approaches to push for the sustainability agenda. First, the executivedirector (ED) of the NGOs led the process of creating a shared understanding ofsustainability. Participating NGOs used ICOMP’s NGO Sustainability Frameworkto define their sustainability issues. Second, once a shared understanding ofsustainability had been created, the ED painted scenarios of the organization’s futureif sustainability was addressed or not addressed. Third, the ED rallied support fromkey people. For most NGOs, these are either program officers, members of themanagement committee, or members of the board. Fourth, key stakeholders wereengaged in the assessment process, the crafting of strategies, and the implementationof interventions. Fifth, key people were prepared through capacity building to takeon new roles and/or responsibilities. Key staff members were sent to trainings andworkshops to develop their competencies and prepare them with the necessary skillsto achieve sustainability—skills such as proposal writing, business planning, and small-

40ACHIEVING EXCELLENCE in Your NGOscale enterprise. Sixth, small, tangible successes were shared and celebrated by theorganization to demonstrate how the process worked, encourage participants tocontinue their work, and convince any doubters of its usefulness.A third lesson emerged, namely that engaging technical support is useful if properlymanaged. Participating NGOs recognized the critical role external technical assistancehas to play in guiding them to become sustainable. First, external support providesNGOs with objective analysis and offers different options for interventions. Second,it provides fresh ideas, additional perspectives, and new ways of thinking, which arenot normally readily available. Third, it “puts pressure” on NGOs who are normallyoblivious to timetables and urgent actions if interventions are done internally.Participating NGOs identified a few characteristics of an effective external support.First, it must be built on a partnership where NGOs allow themselves to be objectivelyexamined and where capacity builders provide expert and confidential advice andsupport. Second, the communication between the NGOs and the capacity buildersmust be frequent enough to ensure that follow-ups are made and progress is properlytracked and assessed. Third, if interventions require some time to generate results, itis important to examine initial results every step of the way to motivate partners tomove forward to attain bigger results.

Governance That Works 41CHAPTER 4Governance That Works“Effective governance by the board of a nonprofit organization is a rare and unnatural act.Only the most uncommon of nonprofit boards functions as it should by harnessing thecollective efforts of accomplished individuals to advance the mission and long-term welfare.A board’s contribution is meant to be strategic, the joint product of talented people broughttogether to apply their knowledge and experience to the major challenges facing theinstitution.”~ Harvard Business Review (September–October 1996)PracticesAttributesOrganizationalEffectivenessSustainabilityGovernanceGovernance is the system by which organizations are guided, directed, andcontrolled at a strategic level. An NGO’s governance fundamentally affects itsmanagement structure, how its objectives are achieved, how its impact is measured,and how it communicates with and is accountable to its stakeholders.

42ACHIEVING EXCELLENCE in Your NGOBasically, governance allows an organization to:1. Set its direction as manifested by its vision, mission, objectives, and strategic plan;2. Monitor contextual trends and assist NGOs to make strategic adjustments or, ifnecessary, revisit their organizational vision and mission;3. Secure resources necessary to achieve goals;4. Ensure integrity, efficiency, accountability, and transparency;5. Balance needs for shared vision, inspired motivation, and professional excellencein all its activities; and6. Exercise leadership without walls—build collaborative linkages with private forprofits,the government sector, professional associations, the media, and relevantstakeholders.The above roles and their importance vary depending on the stage of maturity of theNGO and the stability of the environment where it operates. The board, for instance,may need to be more hands on during the NGO’s formative stages and assume a moreadvisory role once the organization is more stable. It could be proactive in times ofcrisis and more responsive at other times. An effective board can significantly advancean institution’s mission and long-term welfare. More often, however, the role of theboard is narrowly equated to governance. While the board is perhaps the most crucialaspect of governance, governance also encompasses two other dimensions, namely agovernance system to ensure optimum performance and a mechanism for integrity andaccountability, including the legal and normative frameworks under which an NGOoperates.Why Governance Does Matter?There is growing evidence demonstrating the correlation between good governancepractices and effective organizational performance. For instance, a 2001 report of theInstitute on Governance says that among other qualities, high performanceorganizations are more likely to have a high degree of board involvement in strategicplanning and in setting the organization’s mission, a high degree of key stakeholderagreement on mission and values, clear lines of accountability, a flexible response toenvironmental changes, and perceived legitimacy and credibility (www.iog.ca).There are several reasons why NGOs need to ensure that an effective governancesystem is in place. One, there are growing expectations from the NGO sector.Governments have realized that they alone cannot achieve development goals andneed to build partnerships with NGOs. Consequently, NGOs are involved in severalspheres of development work from providing services, training, and technical assistanceand building networks to undertaking research and advocacy. As their roles evolveand expand and as the socio-economic and political contexts change, NGOs arecompelled to bring about necessary changes in their norms, behaviors, and expectationsby empowering individuals, communities, and society. Effective governance allows

Governance That Works 43NGOs to continually reinvent theirstrategies consistent with the normativevalues of social development andjustice.Two, stakeholders (communities,clients, governments, and donors,among others) increasingly demandeffectiveness and impact while at thesame time expecting higher levels oftransparency and financialaccountability. As communitiesbecome more empowered, they alsopush to be included in decision-makingprocesses on issues that affect them.This puts the onus on NGOs to bemore inclusive and share moreinformation about their work with thepublic. Recent surveys in developedcountries generally show that peoplehave greater faith in civil societyorganizations, including NGOs, to dowhat is right, as compared to thegovernment and the private for-profitsector. While this is an encouragingaffirmation of NGOs’ importance insocial development, such faith is fragile.A few well-documented instances offraud or ineffectiveness of NGOs couldeasily shake this confidence.Three, the sector is changing fast. Notonly are thousands of new NGOsjoining the sector annually, but also theBox 4.1. Adapting With the TimesThe Quality Foundation (not its realname) is a 21-year old religiousfoundation in the Philippines. It startedto promote Christian education in the1980s and eventually evolved its programsto general development in the 1990s. Theboard of the organization has traditionallybeen composed of nuns and priests.During a board retreat in mid 2000s, oneof the younger board members raised theissue of board diversity, citing the lack ofsecular thinking and fresh ideas as limitingto the organization’s programeffectiveness. After a series ofconsultations with stakeholders and areview of other NGOs’ practices, theorganization reconfigured its policies toinclude lay people on its board and expandits programs to cover a wide range of issuesincluding population, reproductivehealth, and HIV and AIDS. Theorganization did not only attract morefunding but, more importantly, was ableto address the expressed and felt needs ofits stakeholders. “Adapting to thechanging environment is very importantfor us, if we want to maintain ourrelevance and truly realize our mission inserving the poorest of the poor,” sharedthe organization’s board chair.more established ones are undergoing generational change in favor of more professionalmodes of operation. With professionalization comes the challenge of staff membersbecoming more demanding of inclusion and participation in all spheres of decisionmaking. Finally, in the midst of shrinking development funds, NGOs are faced withthe issue of financial sustainability.These trends force organizations to rethink their policies, systems, and procedures.As these develop, there is an increasing dependency on boards. Boards work on theirown time, are unpaid, and are the core of the voluntary sector, accepting responsibility

44ACHIEVING EXCELLENCE in Your NGOand personal financial liability for ensuring that their NGO is well governed andmeeting the demands made by changes in legislation, statutory requirements,government initiatives, the public, and users. This brings with it not only a greatresponsibility, but also an assumption that board members possess the required skillsand abilities, both technical and social, to fulfill the governance needs of today’schanging NGO.Governance FrameworkICOMP’s governance framework, as represented in Figure 4.1, illustrates the threekey dimensions of governance: (1) the board; (2) a mechanism for integrity andaccountability; and (3) a system for ensuring performance. Governance is the ultimateresponsibility of the board, while management is the joint effort of the executive director(ED) and staff. Two things can happen if the roles and functions of the board are notclearly defined. One, the board could become excessively active in management andinhibit the effectiveness of the organization or, two, the board could be overly distantto the point that it no longer knows how to carry out its tasks and thus could beperceived as less committed to the organization. For an organization to be effective,there should be no ambiguity in direction. Effective governance creates a vision andmission and makes sure that they are expressed and advanced in the organization’swork (Bader, 2001). Stakeholders’ participation in the development of strategicobjectives is essential for sustainability and credibility. The governance of an NGO isaffected by the legal and normative frameworks in the country where the NGO operates.Hence, the board must ensure that the organization is operated according to the lawsand within the framework of its mission.Figure 4.1. Governance FrameworkThe BoardMechanism forIntegrity andAccountabilitySystems forEnsuringPerformance

Governance That Works 45The BoardIdeally, the board should be small enough to deliberate and make decisions efficiently,but large enough to include a range of needed skills and backgrounds (Bader andSmall, 2002). The size of the board depends on the organization’s structure and needs.There is no single formula to determine the size of a board. The board needs to workas a whole. However, if the size of the board is too large for frequent and regularmeetings, the governing task maybe delegated to an executive committee.The selection criteria for board members may be defined after taking into considerationdiversification of ethnicity, gender, economic status, culture, disabilities, age, skills,and expertise. The evolving needs of the NGO and the gaps in board member skillsmay also be taken into account in the selection process. Apart from these, their beliefin the organizational vision, mission, and values are also critical. The board membersmay need to be recruited in a staggered manner to prevent a board with all newmembers and no continuity.The term limit for the board needs to be specified in the constitution. Board memberswith outstanding performance who have fulfilled their terms can serve on an advisoryboard, giving advice without voting rights. The organization thus benefits from theinput of new blood, yet retains the wisdom and knowledge of a seasoned board member.It is not always helpful to give boards such negative labels as “Bored Board” and“Rubber-stamping Board.” It may happen that the board wants to help, butunfortunately its members are not equipped with the necessary skills. Boarddevelopment is essential and has appeared on top of the list of action plans of manyNGOs. Effective board development should be planned, designed, developed,resourced, and implemented on the basis of any gaps identified through regular andobjective assessment or mapping of members’ skills and expertise.The ED and the board are the key players in the organization at a strategic level. Thesimplest way to describe the distinction between the two is that the board governs andthe ED manages, or the board makes policy and the ED executes it. However, sometimesthe relationship between the two can become strained due to differing prioritiesconcerning organizational objectives. This tension may be caused by lack of coordinationbetween the board and the ED resulting from not being able to meet regularly andcommunicate candidly.Obviously, the board cannot govern the organization without the input of the EDand other staff. While the ED needs to tap the wisdom of the board to manage theorganization, the board requires the knowledge of the ED to govern. The boardshould support and advise the ED. In fact, an ED and board that demonstrateexcellence in governance will include as their partners the staff leaders, and togetherthey will act as the stewards of the mission of the organization (Bader, 1991).

46ACHIEVING EXCELLENCE in Your NGOAlthough the board governs by dealing primarily with the ED, sometimes a dialoguewith other staff can give the board greater insights into the NGO’s operations. However,it is suggested that such meetings (formal or informal) should be held with theknowledge of the ED (Harvard Business Review, March–April 1995). Bypassing theED may jeopardize existing relationships.The board may also ensure that there are mechanisms for maintaining goodrelationships with volunteers and also policies on improving the professionalism ofthe volunteers. A pool of professional volunteers is a valuable asset and key to thesustainability of the organization.Board members can be invited as resource persons in workshops attended by staff andvolunteers. In this way, the staff members get to know the board members better andbenefit from their professional expertise.In addition, orientation on the functions and roles of the board can be provided to thestaff (and volunteers) to gain their better support and also to improve board/staffrelations.Often, too much bureaucracy results in too much time taken to make decisionsconcerning budgets, objectives, and other organizational issues. The quality of decisionswill definitely depend on the process through which the decisions are made. Thisincludes effective meeting management, consensus building, and conflict resolution.Agendas should be developed by the ED in consultation with the meeting chair anddistributed together with supporting documents to all parties concerned for advancereading. Minutes of the meeting should be approved and signed by the chair or all theattendants and kept properly in a safe place. Minutes of the meetings are importantdocuments for reference if any legal disputes happen and as documentation of thehistory of the organization. The constitution and procedures should also be readilyavailable for the board whenever any contingent issues arise. The chair plays animportant role in managing the meeting effectively. His or her main responsibilitiesinclude facilitating discussions and encouraging the participation of all attendants.Good meeting processes and management eventually result in good organizationsbecause of the quality of the decisions made.Governance System for Ensuring PerformanceThe vision, mission, and strategies serve as the destination the organization is headingtowards and the roadmap for how to get there. It provides a sense of direction andjustifies the existence of the organization.Given the scarcity of resources, organizational sustainability is a major concern ofNGOs because lack of continuation of interventions means the needs of thebeneficiaries are unfulfilled. The board must incorporate sustainability in the strategic

Governance That Works 47plans of the organization. As discussed in theprevious chapter, sustainability should not benarrowly equated with financial continuity.This is because it is possible for an organizationto have sufficient funds for a period of timeand still not be able to sustain itself beyondthat period, especially if its governance is poor;or that organization may just crumble themoment the leader leaves or dies. Sustainabilityencompasses different aspects: Organizationalviability, financial security, programeffectiveness, and enduring impact.The ED is ultimately responsible to the boardfor implementing its policies, plans, andstrategic directions. The responsibilities andthe tasks of the ED, and the board’sexpectations, must be clearly stated during therecruitment process. The board and the EDare partners. They are accountable to eachother and to pursue mutual goals, with theintention of making the organization performbetter. The leadership styles of the ED andthe board members should also be compatible.Incompatible leadership styles may generateconflicts that can be very detrimental to theorganization.Box 4.2. Misaligned Values andExpectationsWhen the board chair of YouthDevelopment Foundation (not itsreal name) resigned from his post,the entire organization wasshaken, giving way to questionsabout governance processes. Itturned out that the chair wasdiscontent with the organization’sprograms. Being a devoutCatholic, he was shocked that theorganization was distributingcondoms. Apparently, there wasno alignment between the boardchair’s values and expectations andthat of the foundation. Theexperience provided theorganization an opportunity toensure that all board members areoriented on its programs, withvalues and expectations laid outclearly at the outset.Organizational culture affects the effectiveness of governance in an organization. Toimprove governance, the governing body has to create an enabling environment, i.e.,a learning organization that encourages continuous improvement, team building, andstaff participation in decision making. NGOs also need to be open to change.Leadership enables the creation of shared vision and values, which are vital for a learningorganization because they provide focus and energy.Also, even with properly documented and regularly reviewed organizational policiesand procedures in place, the control system can still be ineffective if it does not spellout rules for every possible event. Therefore, the board should ensure that theorganization has an ethics document and that it is made known to everyone associatedwith the organization. This ethics policy, also known as an organization’s values,enables people to determine what to do when there is no one there to provide directionor when a new situation arises for which there is no precedent. It also assists indeveloping an accountable organization and gaining public trust (Lakey, 2000).

48ACHIEVING EXCELLENCE in Your NGOAs mentioned above, effective meetings result in quality decision making. Equallyimportant is the follow-up on what happens after the meeting and the results of thedecisions made.For the betterment of the organization, monitoring and evaluations should be part ofthe organizational culture. As a governing body, the board should set up a mechanismfor monitoring and evaluating achievement of the objectives. It is the responsibilityof the board to set out the parameters of organizational performance assessment andmake sure it is done (Ginsler, 2000).The board should establish an annual performance plan for itself and the ED andmonitor and evaluate it annually. The evaluation or review should identify bothaccomplishments and areas for future growth. The board’s feedback to the ED shouldbe in the form of constructive criticism and coaching. The governance of NGOsshould hinge on performance.Mechanisms for Integrity and AccountabilityAn effective governing body will consciously try to minimize wrongdoing at all costsand work hard to avoid it altogether by establishing a control system in the organization.The likelihood of wrongdoing by board members and staff can be reduced by theadoption and proper enforcement of sound policies. A good practice for the board isto consciously remind itself of the bylaws and lessons learned from the past to avoidrepeating errors or violations of rules.Written procedures and instructions on a variety of sensitive administrative subjects(grievance procedures, sexual misconduct, gender issues, etc.) can reduce wrongdoingand strengthen the defense if legal action is taken. The key to any risk-preventionprogram is to follow through with the implementation of the policies and proceduresthat reduce the risk of liability. Also, the board should be aware of the regulatorybodies and keep up-to-date with the rules and regulations pertaining to NGOgovernance in the country.There is a conflict about how accountable NGOs should actually be and to whomthey should be accountable. A board’s ultimate accountability is to the owner of theorganization, but who really has ownership of an NGO? This is a fairly straightforwardquestion for for-profits, where the owners of the organization are the shareholders.However, who owns a nonprofit? This is a tricky question. In some countries in Asia,NGOs argue that that the board members or founding members are the owners of anonprofit organization, while in other countries, especially in the West, the ownersare deemed to be the public.

Governance That Works 49In some countries, for political reasons, there are questions and doubts regarding theintentions and operations of NGOs and also suspicion about the money invested inthe projects. It is also common to find that donors and the NGO each have differentopinions about what the problems are. An NGO with better governance willdemonstrate a certain level of transparency by disclosing information such as the board’sdecisions, financial status, etc. to key stakeholders. This can be done through anorganization newsletter, annual report, annual assembly meeting, or informalgatherings. The NGO will also encourage various stakeholders, particularly thecommunity it serves, to participate in the strategic planning process, project design,implementation, monitoring, and evaluation. Participatory needs analysis ofcommunities that NGOs serve is also essential. Constant and transparentcommunication will clear the doubts and eliminate unrealistic expectations of thestakeholders. This results in a better organizational image and higher level of trust inthe organization. For the well-being of the organization, the board should establishconflict of interest policies. The policies should include language on the obligation ofeach board member to disclose all material facts and relationships and refrain fromvoting on any matter when there is a conflict of interest.As ambassadors of the organization, board members should be visible to the public.In considering the sensitivity of certain development issues such as reproductive healthor gender, it is important that the board itself has complete faith in and shares thevision, mission, and values of the organization. Only then can the board communicateand promote them to the public and advocate for the organization with fullcommitment. Ultimately an NGO is accountable to its stakeholders—the communitiesit serves, staff and volunteers, donors, and government—through its board.The board also needs to know what the organization does, who the key stakeholdersare, and what their needs are and must find out what really matters to the organization.Through communication, the board can also bring information back to the organizationthat may be relevant to its current and future actions (Lakey, 2000).There need to be different mechanisms for establishing and maintaining goodrelationships with various stakeholders, including the community, beneficiaries, localand national government units, donors, peer NGOs, and even private organizations.The board can also make use of its personal contacts or influence to build partnershipsand networks with other organizations to access more resources and increase the impactof its programs.The board is expected to ask tough questions and be analytical and constructivelycritical. Board members may need to be trained to perform program and financialaudits. Financial integrity is more than making sure the financial statements are incompliance with accounting standards; it also involves making sure the financial goalis aligned with the organizational mission. Faced with rising costs, intense competition

➝➝50ACHIEVING EXCELLENCE in Your NGOfor grants, and increased rivalry from for-profit companies entering the social sector,many nonprofits are turning to the commercial arena to leverage or replace theirtraditional sources of funding. However, becoming more business-like can lead tooperational and cultural challenges and even undercut an organization’s social mission.In order to explore the new possibilities of commercialization and to avoid its dangers,nonprofit leaders need to craft their strategies carefully. It is important to note thatcommercial operations should not drive out philanthropic initiatives (Dees, 1999).Enhancing GovernanceIn order to improve governance, one needs to understand several factors that impingeon the governance of NGOs. Besides the growing pressure for improving governance,it is believed that an NGO’s governance is shaped by the regulatory disciplinedetermined by the external context and the self-discipline determined by the internalcontext. The nature and extent of change in external and internal contexts would bemediated by the facilitating factors for change, as depicted in Figure 4.2 and explainedfurther below.Figure 4.2. Framework to Improve GovernanceForces forchange➝Facilitatingfactors for change➝ImprovedgovernanceExternal andinternal contextsExternal ContextLaws, government rules, and regulations pertaining to NGOs will have an impact onthe governance of these organizations. The role of the board, the number of boardmembers, the need for annual audited accounts, and equal opportunities may begoverned for NGOs by law or government rules. This can have either a positive or anegative impact on the governance of NGOs.The socio-political circumstances prevailing in individual countries affect thefunctioning of NGOs. In countries where the status of women is low or where thereare rigid caste or class systems, NGOs tend to be less participatory or open in governanceissues for fear of retribution from the authorities they may disagree with. Whereeconomies are poor and corruption is high, the integrity of NGOs may not be on thepublic agenda.

Governance That Works 51The funding situation for NGOs may also have an impact on governance. Wherefunding is scarce and competition is fierce, NGOs can be disproportionately influencedby donors, thus losing their governance integrity.Internal ContextNGOs may feel threatened by demands forthem to have better governance. They mayperceive this as being dangerous in terms ofstaff or the community becoming too uppityand demanding. NGOs may wonder howdemocratic they can be before becomingimmobilized because consensus cannot bereached and decisions cannot be made.NGOs have to struggle with an ongoing debateas to whom they represent and on what basisor grounds. NGOs work for the disadvantaged,but does this give them the right to representthe views of the poor at conferences andmeetings or in publications? This is an essentialissue of governance and accountability.Furthermore, many first generation NGOleaders are charismatic individuals who heavilyinfluence the organization. These “founding”board members often find it difficult todelegate and let go of their power and authority.This is due to their passion and deep devotionto the organization and not necessarily becausethey are despotic. However, this inability tohand over the reins to the next generationcreates difficulties in governance and needs tobe addressed.Box 4.3. Founder’s SyndromeIndonesia Development Center(not its real name) is a Jakarta-basedNGO mandated to address HIVand AIDS. Since it started, about18 years ago, the organization’sboard members remain the same.This is not unique to theorganization as many NGOs acrossAsia face what is called “founder’ssyndrome.” Founding membersbecome “board members for life,”sometimes, treating it like a familyenterprise. As a result, no newblood comes in, limiting theorganization’s growth and, in somecases, engendering nepotism andcorruption, with conflicts ofinterest becoming a commonphenomenon. Under heavycriticisms from its donors andpartners, the IndonesiaDevelopment Center was finallyforced to change its governancepractices by “retiring” many of itsboard members and recruiting newones in 2003.Therefore, NGOs need to be learning organizations and open to change. Withoutthis attitude or approach they cannot improve their governance and become moreethical and effective.Demands For ChangeDemand for change may come from the pressures for demonstrated effectiveness,increased impact, higher levels of transparency, and accountability—pressures thatcome from key stakeholders including donors, the government, the community, and

52ACHIEVING EXCELLENCE in Your NGOthe organization itself (board, staff, and volunteers). Also, in some countries there arenetworks of NGOs. These networks or membership organizations have a code ofconduct, which members must sign. This may include issues of governance, equalopportunities, etc. Self-monitoring or evaluation of its members may be a prerequisitefor membership in such a network.Facilitating Factors For ChangeIt is important to note that for good governance to exist, NGOs must be aware of andsensitive to gender, sexual orientation, ethnic background, age, and other issues. Butsensitivity alone is not adequate. Policies, rules, and regulations pertaining to staff,volunteers, and board members must take this into consideration. Programs mustalso recognize the needs of men and women and people of different ages andbackgrounds.Several factors are believed to facilitate the change to improve governance. Theseinclude the availability of improved models of governance practices, access to toolsand methodologies for better governance, financial and technical assistance to improvegovernance, and the presence of champion(s) for change in the organization.However, it is also recognized that while the need for good governance is universal,the ability to achieve it is constrained by local information, institutions, and the legalframework, among others. Therefore, making changes for the better in governance isnot easy. There has to be commitment from the board itself. As the ED and thesenior management are also key players, conflicts of interest may occur in the processof change (even among individual board members). Nevertheless, if the political willto improve exists, then hurdles to improved governance can be overcome.To conclude, improved governance can be brought about by advocacy for changes incontext, strengthening forces for change, and enhancing the facilitating factors. Clearlythe ability of NGOs to improve their governance will be enhanced if they haveknowledge of best governance practices, access to tools for assessing their quality ofgovernance, and technical and financial assistance to bring about the necessary changes.To cope with the changes, the NGO cannot be static. As the center of the governingbody, the board, especially, must change and evolve as the organization changes andgrows. Therefore, understanding the board’s life cycle will help to clarify the board’srole, purpose, and functions to improve the effectiveness of the organization.The Process of Enhancing GovernanceThe framework can be utilized to help NGOs enhance their governance using a fivestepprocess, illustrated in the following sections.

Governance That Works 53Step 1: Self-Assessment. This assessment allows the organization to examine itsgovernance system in two areas, namely, (1) importance: how it values differentgovernance practices; and (2) current situation: current level of governance effectiveness.The assessment tool to be used (Part B: Assessment Instrument 3: GovernanceAssessment Tool) is composed of statements that revolve around the three governancedimensions, which are further classified into 15 sub-components (see Table 4.1 forthe summary), describing the practices organizations may wish to establish. Using ascale of 1 to 5, with 5 as the highest, organizations can assess the quality of theirgovernance in two dimensions:1. Level of Importance: How important is each statement (on governance practices)to the respondent? Is it unimportant, of little importance, average, important, orvery important?2. Current vs. Desired Status: Given each statement as the desired/ideal governancepractice, how well is the organization currently performing in this area? Is itexcellent, quite well, average, not very well, or poorly?Table 4.1. Assessment ChecklistThe BoardGovernance System forEnsuring PerformanceMechanisms for Integrityand Accountability1. The board’s function 7. Direction Setting 12. Conformance to laws2. Structure and composition 8. Sustainability and regulations3. Board development 9. The ED’s function 13. Transparency and4. The board and the staff 10. Organizational culture/ accountability5. The board and the ED enabling environment 14. Public relations6. Board meeting 11. Organizational 15. Financial integritymanagementmonitoringThe self-assessment checklist is a questionnaire, which, when completed and analyzed,gives board members and EDs a quick impression of the quality of governance andkey governance areas for improvement. Suffice it to say, areas that need to be improvedare those ranked as of very high importance but scored very low in the current statusdimension. It is important to note that this instrument is not intended to provide adefinitive analysis of quality of governance, but to furnish a general indication of theboard members’ and ED’s perceptions of how effectively they are governing theorganization and which areas need to be improved.The checklist, when used before and after the interventions, can serve as the pre- andpost-tests. The results of analysis can help in developing action plans and assessingthe effectiveness of the interventions taken.Step 2: Summarize Assessment Scores. The average scores for each statement forboth the level of importance and current situation can be summarized using a matrix(Table 4.2). Below is a summary of an actual assessment score of an NGO.

54ACHIEVING EXCELLENCE in Your NGOTable 4.2. Gaps Between Importance and Current StatusGovernance Components Importance Current StatusThe Board1. The board’s function 4.67 2.172. Structure and composition 4.18 2.553. Board development 4.83 1.54. The board and the staff 4.57 2.435. The board and the ED 5 3.556. Board’s meeting management 4.67 2.93Average 4.65 2.52Governance System for Ensuring Performance7. Direction setting 1.87 4.138. Sustainability 3.13 3.29. ED’s function 5 310. Organizational culture 4.91 3.9111. Organizational monitoring 3.18 3.45Average 3.62 3.54Mechanisms for Integrity and Accountability12. Conformance to laws and regulations 3.33 1.813. Transparency and accountability 2.8 2.914. Public relations 3.92 2.7515. Financial integrity 3.64 2.27Average 3.42 2.43Overall Average 3.9 2.83Step 3: Analysis and Prioritization of Issues. The next step for the NGO is todetermine which areas it needs to improve on. Figure 4.3 can help the NGO analyzethe areas on which it needs to focus its attention and resources.

Governance That Works 55Figure 4.3. Analysis Matrix GuideLevel of ImportanceAboveAverageBelowAverageCurrent StatusAbove AverageBelow AverageAreas of Excellence: Leverage Prioritize: Focus resources hereGood Performance But NotNot A Cause for Concern:Important: Move resources from Ignore for the time beinghere to the upper right quadrantNow, using our example in Step 2, let us analyze the scores of the concerned NGO.Table 4.3 indicates that the overall average scores for importance and current statusare 3.9 and 2.83 respectively. If we plot the score of the three dimensions into theanalysis matrix, the profile in Figure 4.4 emerges. The profile shows that the boardrequires the most attention. Interestingly, none of the three dimensions could beconsidered as an area of excellence for the organization (meaning that it scores “aboveaverage” in both importance and current status).Figure 4.4. Overall Analysis MatrixLevel of Importance (3.9)AboveAverageBelowAverageCurrent Status (2.83)Above AverageBelow AverageThe Board (4.65, 2.52)Governance System for Ensuring Mechanisms for Integrity andPerformance (3.62, 3.54) Accountability (3.42, 2.43)Given the profile, it appears that the board needs to receive the most attention comparedto the governance system and the mechanisms for integrity and accountability. Theorganization is doing well (above average) in terms of having a governance system forensuring performance, but this dimension is considered of below average importance.Although the current status of the mechanisms for integrity and accountability israther low, it is of lesser importance than the board, at least for the time being.

56ACHIEVING EXCELLENCE in Your NGOFurther analysis can be made to determine which elements within “The Board”dimensions the organization may need to focus on. Using the same analysis matrix,the organization can plot the different elements under “The Board” to prioritize whichelements to focus its attention and resources on. This time, however, the averagescores of “The Board” will be used as threshold levels. Figure 4.5 is the profile for“The Board” dimension. The profile shows that two elements are areas of excellencefor the NGO, namely the board and the ED and the board’s meeting management,while three elements require most attention, namely the board’s function, boarddevelopment, and the board and the staff.Figure 4.5. Analysis Matrix for “The Board”Level of Importance (4.65)AboveAverageBelowAverageCurrent Status (2.52)Above AverageBelow Average• The board and the ED (5.0, 3.55) • The board’s function (4.67, 2.17)• Board’s meeting management • Board development (4.83, 1.50)(4.67, 2.93) • The board and the staff (4.57, 2.43)• Structure and composition(4.18, 2.55)Step 4: Development of Action Plan. Once the areas for improvement have beenidentified, the board, with the active involvement and support of the ED and thestaff, can begin developing an action plan to address the issues. The action planshould include the following:1. Task name2. Task description3. Duration4. Person responsible5. Resources6. Indicators for monitoring and evaluationA guide (Part C: Intervention Tool 8: Making Governance Work) is provided in thisbook to help you develop your action plan to enhance your governance. ICOMP hasalso mapped out best governance practices of corporate entities and NGOs from aroundthe world to serve as your checklist in developing your activities (Part C: InterventionTool 9: Governance Best Practices). Considering that the organization in our exampleabove is planning to improve its board, the organization may undertake the followinginterventions:

Governance That Works 571. Develop procedures for board development.2. Develop a manual for board orientation and orient the board members on theorganizational vision, mission, and activities.3. Orient the board on the vision and mission of the organization so that they canensure the strategies are in line with the vision and mission.4. Ensure resources are made available for board development.The continuous efforts of an organization to improve its quality of governance needsupport from the senior management and the board (MSH, 2003). The action planmay also include a series of interventions to educate the board on the importance ofquality of services and leading by example, for continuous learning.

58ACHIEVING EXCELLENCE in Your NGOCHAPTER 5The Quest For Excellence““Excellence can be obtained if you care more than others think is wise, risk more thanothers think is safe, dream more than others think is practical, and expect more than othersthink is possible.”~ AnonymousPracticesAttributesOrganizationalEffectivenessSustainabilityGovernanceWhile the NGO sector has continuously improved its practices as its roles haveevolved through the years, the discourse on NGO excellence has only started fairlyrecently, with limited documented studies. As Tom Peters’ and Robert Waterman’s bookon excellence was hitting the business world like a storm in the 1980s, there also appearedto be a sporadic global trend to improve NGOs’ practices, as manifested by the followinginitiatives in Australia, USA, Botswana, Ethiopia, India, Pakistan, and the Philippines:

The Quest For Excellence 591. Government- or Donor-Recognized Certification. This type of certification isnormally conducted by a third party or an external group. The Pakistan Centrefor Philanthropy’s certification scheme and the Philippine Council on NGOCertification (PCNC) are used by their respective governments to determine taxdoneestatus for NGOs that receive corporate giving. Likewise, in Australia, onlyNGOs certified by the Australian Council for International Development Codeof Conduct could apply for Australian government aid funds.2. Broad Codes of Conduct Scheme. This type of scheme normally leaves complianceto the signatory. In most cases, such as that of the World Alliance of NGOs(WANGO), the Red Cross Code of Conduct, the South African NGO Coalition’sCode of Ethics, and the Philippine NGO’s Code of Ethics, there are no structuresin place where a breach of the code can be reported or where noncompliance isdisciplined.3. Codes of Conduct with Mandatory Requirements. Some codes of conduct requiresignatories to submit annual reports and financial documents, which are used toassess them. Such codes are found in Canada, Lesotho, Republic of Macedonia,Ethiopia, and Botswana.The GroundswellBeyond regulatory mechanisms, the quest for NGO excellence is being promoted inthe USA through the Standards for Excellence Program, which began in Marylandand is now being replicated in different states. It provides a model for how the mostwell-managed and responsibly governed NGOs should operate. India’s CredibilityAlliance is also setting standards for NGOs by using a set of ranking classifications,namely the minimum norms, desirable norms, and good practice norms.ICOMP mapped out the different excellence dimensions of selected regulatory andstandards mechanisms and compared them with the dimensions it used for itsorganizational effectiveness, sustainability, and governance tools. Interestingly,ICOMP’s tools and these mechanisms share most dimensions (Table 5.1).Table 5.1. Common Dimensions between ICOMP Tools and Selected NGOMechanismsDimensions Maryland Pakistan India PCNC WANGO ICOMPVision, mission and goals(VMG)X X X X XProgram X X X X XAdministration X X

60ACHIEVING EXCELLENCE in Your NGODimensions Maryland Pakistan India PCNC WANGO ICOMPImplementation X X X XGovernance X X X X X XMonitoring and evaluation X XSustainability X XConflict of interest X X XHuman resources X X X XFinancial and legal X X X X X XOpenness, transparency,and accountabilityX X X XFundraising X X XKnowledge management X X XBrand building X XOf the different dimensions, two were not directly or completely covered by ICOMP’stools, namely brand building and knowledge management. However, these dimensionswere indirectly included under other dimensions, taking on a less central emphasis forcontextual reasons. For instance, brand building, as practiced by the other NGOs,refers to a deliberate and consistent effort to promote the organization and its workwith the long-term goal of creating name recall and establishing the NGO as a leaderin a particular field. ICOMP had partly covered brand building under the sustainabilitydimension’s attention to marketing. However, instead of approaching brand buildingon an organizational level, ICOMP approached it on a program level. Likewise,knowledge management formed part of the organizational effectiveness dimension’sattention to learning, but ICOMP took the angle of innovation, in contrast to theknowledge creation and sharing perspective of the other NGOs. As a result of thiscomparison, ICOMP has improved on its existing tools by introducing supplementarytools, namely the Brand Building Intervention Tool (Part C: Intervention Tool 10)and the Leveraging Intellectual Capital Intervention Tool (Part C: Intervention Tool11). With the integration of these two dimensions into ICOMP’s existing tools, theNGO Excellence Framework (Figure 5.1) emerged. As presented in Chapter 1, theframework illustrates five attributes of an excellent NGO.Excellence attributes are indicated by a set of practices which collectively contributeto the ability of an NGO to become excellent. For NGOs to improve their practices,they need to undertake interventions in organizational effectiveness, sustainability,and governance dimensions.

The Quest For Excellence 61Figure 5.1. ICOMP’s NGO Excellence FrameworkPractices• Exemplary leadership andmanagement• Learning organization• Sound resource management• Active engagement of stakeholders• Brand building• Relentless pursuit of vision, mission,and goals• Effective governanceAttributes• Distinctive impact• Lasting endurance• Standing out• Influential• Symbol of trustOrganizationalEffectiveness• Organizationalcompetencies• Role competencies• Leadershipdevelopment• Systems and processes• Staff capacitySustainability• Organizationalviability• Program effectiveness• Financial security• Enduring impactGovernance• Board development• Systems to ensureperformance• Mechanisms forintegrity andaccountabilityHaving reached this chapter means that you may have already made or begun to makechanges in these three areas and are ready to go through to the final stretch of yourjourney towards excellence. Below are the steps you will need to go through in thisfinal stage:1. Assessment of Excellence Attributes: The main question for this assessment is:Do we have what it takes to be excellent? Through this assessment, you will be ableto determine whether you already have some or all of the qualities of excellence.2. Identification of Gaps: By analyzing the results of the assessment in the firststep, you will be able to determine which excellence attributes you score well onand which need more attention. The question to be answered here is: What wentwrong?3. Strategic Interventions: Knowing which practices you need to improve, you willbe guided through the interventions to undertake under each specific focus (i.e.,organizational effectiveness, sustainability, and governance). The main questionto be answered here is: How do we get there?

62ACHIEVING EXCELLENCE in Your NGOKnowing Your Way: Steps to the Final StretchStep 1: Do We Have What It Takes?Using the Excellence Attribute Assessment Instrument (Part B: Assessment Instrument4), you can assess whether your organization is already on its way towards excellence.The assessment allows you to examine your organization’s current state vis-à-vis fifteenstatements revolving around five excellence attributes.Step 2: What Went Wrong?This process helps you analyze your assessment results and determine which gapsrequire attention.1. Analyze key results. This step asks you to look at the overall results of yourassessment. For example, an NGO from the Philippines, which we will call XYZFoundation, has an average score of 3.31, which is lower than the threshold scoreof 3.50. This threshold is based on the average scores of NGOs considered“excellent” in most of the dimensions. Using this threshold, it is clear that XYZFoundation is only considered “excellent” in one dimension, namely lastingendurance (3.67). The organization needs to direct more attention to the otherkey areas, especially distinctive impact (2.93).Table 5.2. XYZ Foundation Excellence Attribute Assessment ResultsADISTINCTIVE IMPACTKey Area Rating (1-4)1 Uniqueness of your organization’s contribution to society in general 3.002 Ability to make a critical difference in the lives of your constituency 3.003 Perceived as a mission-critical entity (i.e., if you cease to exist, there willbe a hole in the NGO sector that nobody else can fill in the short term)2.80Sub-average 2.93B LASTING ENDURANCE1 Institutional structure, processes and systems are deemed properly setup, effective, and stable4.002 Financially secure 3.503 Effectiveness of programs 3.50Sub-average 3.67

The Quest For Excellence 63CSTANDING OUTKey Area Rating (1-4)1 Recognized by stakeholders for your superior performance anduncompromising ethical practices2.802 Perceived as a leader in your field 4.003 Created a name-brand for yourself 3.50DINFLUENTIALSub-average 3.431 Ability to set trends in the sector 4.002 Ability to influence policy decision and action 2.803 Ability to change mind-set of the public and create demand forservicesESYMBOL OF TRUST2.80Sub-average 3.201 Ability to attract financial and in-kind support 3.002 Viewed as credible by various stakeholders 4.003 Respected within and outside the NGO sector and gives theNGO sector a good name 3.00Sub-average 3.33Overall Average 3.31Using the summary above, the assessment results can be analyzed by looking at thestrong and weak points of the organization using 3.50 as the cut-off score for anelement to be considered strong. The analysis, however, should go beyond averagescores to determine which particular areas the organization needs to work on.Using Table 5.3 as a template to classify the strong and weak points of XYZ Foundationshows a need for improvement in nine areas, with a special focus on distinctive impact,where all elements scored below the threshold. The organization could leverage its highscores in lasting endurance to further improve itself. For the time being, however, it mayneed to focus its energy and resources on the weak areas first.

64ACHIEVING EXCELLENCE in Your NGOAttributes Strong Points Weak PointsDISTINCTIVEIMPACTLASTINGENDURANCEInstitutional structure,processes, and systemsare deemed properly setup, effective, and stableFinancially secureEffectiveness of programsUniqueness of your organization’s contributionto society in generalAbility to make a critical difference in the livesof your constituencyPerceived as a mission-critical entity (i.e., if youcease to exist, there will be a hole in the NGOsector that nobody else can fill in the short term)STANDING Perceived as a leader in Recognized by stakeholders for your superiorOUT your field performance and uncompromising ethicalpracticesCreated a name-brand for yourselfINFLUENTIAL Ability to set trends in Ability to influence policy decision and actionthe sectorAbility to change mind-set of the public andcreate demand for servicesSYMBOL OF Viewed as credible by Ability to attract financial and in-kind supportTRUST various stakeholdersRespected within and outside the NGO sectorand gives the NGO sector a good name2. Why the Gaps? Now, you need to identify the reasons for your shortfall in eachof the weak elements. Using Table 5.4 as a template allows for an examination ofthe reasons for the low scores. The template works as follows:• Write all your weak points under column 1. This column represents the weakpoints of your organization in terms of excellence attributes.• Once you have filled out column 1, tick the applicable cell or cells that bestdescribe the reason or reasons for each shortfall. These cells represent theseven practices of excellent NGOs (shown in the framework), which areconsidered as indicators or predictors of excellence attributes. Below is thegap analysis for XYZ Foundation. It appears that the organization needs tolook at governance, resource management, active engagement of stakeholders,and learning organization practices to address its shortfalls.

The Quest For Excellence 65Table 5.4. Gap Analysis for XYZ FoundationWhy is the score below 3.50?OrganizationalSustainabilityEffectivenessExemplarySoundActiveleadership Learningengagement Brandandresourceorganization of buildingmanagementmanagementstakeholdersRelentlesspursuit ofvision,mission,and goalsGovernanceEffectivegovernanceWeak PointsA. Distinctive ImpactUniqueness of yourorganization’s contributionto society in generalXAbility to make a criticaldifference in the lives ofyour constituencyXPerceived as a missioncriticalentity (i.e., if youcease to exist, there will bea hole in the NGO sectorthat nobody else can fill inthe short term)XB. Standing OutRecognized by stakeholdersfor your superiorperformance anduncompromising ethicalpracticesCreated a name-brand foryourselfXXC. InfluentialAbility to influence policydecision and actionAbility to change mindsetof the public andcreate demand for servicesXXD. Symbol of TrustAbility to attract financialand in-kind supportXRespected within andoutside the NGO sectorand gives the NGOsector a good nameX

66ACHIEVING EXCELLENCE in Your NGO• If you are confident that you knowentirely the reason for each shortfall, youmay go directly to Step 3 to develop anaction plan. However, if you wish toclearly identify the reasons for specificshortfalls, you can undergo anExcellence Practice Assessment (Part BAssessment Instrument 5). Thisinstrument contains statements relatingto the seven excellence practices that youcan use to assess your organization’scurrent practices. You do not have toassess yourself against all the excellencepractices. Instead, you can choose onlythe practice/s where you fall short andwhere you are not particularly sure ofthe reasons why. For instance, Table 5.4broadly shows that the practice of beinga learning organization was a reason forXYZ Foundation’s shortfall when itcame to the uniqueness of itscontribution to society in general, underthe Distinctive Impact attribute, butthat the foundation was not sure of thespecific reason for this shortfall. UsingAssessment Instrument 5, thefoundation underwent an assessment onthe practice of being a learningorganization and found that the reasonfor its shortfall was that the organizationdid not make a conscious effort to learnabout cutting-edge practices. Thefoundation went on to assess itselfagainst all practices where it hadshortfalls and was able to nail down thespecific reasons for its shortfalls, asshown in Table 5.5.Step 3: How Do We Get There?After determining the reasons for yourshortfalls, the next step is for you to developa plan of action to improve the practiceswhere you have incurred shortfalls, usingBox 5.1. A Experiences in“Excellence Practices” AssessmentProcessEven when NGOs are considered“good” by their peers, their scores onthe excellence assessment may be farfrom the maximum of 4.Eight NGOs in the Philippines,generally regarded as good NGOswith engaged reproductive health(RH) programs, assessed themselvesusing the excellence tool, withfacilitation from the authors. Theiroverall average score was 2.85, withindividual scores ranging from 2.18to 3.54. Similarly, eleven highlyregarded NGOs in RH in the statesof Bihar and Jharkhand in Indiaobtained an average score of 3.18,with individual scores ranging from2.49 to 3.51.In both of the above cases, the majorareas of weakness were sustainability;resource mobilization andutilization; board roles,responsibilities, operations, andgovernance processes; andnetworking and public relations.The above shows that (a) there ishigh variability in excellenceassessment scores even though theNGOs may be recognized as “good”NGOs, and (b) there is a need foroverall strengthening of the sector.Thus, the journey towards excellencein the NGO sector as whole requiresactions to address weaknesses bothat individual and sector level.

The Quest For Excellence 67Table 5.5 as a template. These actions are merely remedial activities that are linked tothe three interventions, namely organizational effectiveness, sustainability, andgovernance. While these interventions collectively contribute to the improvement ofpractices, each of these interventions can also be linked to specific excellence practices,as follows:Organizational Effectiveness • Exemplary leadership and management• Learning organizationSustainability • Sound resource management• Active engagement of stakeholders• Brand buildingGovernance • Relentless pursuit of vision, mission, and goals• Effective governanceBox 5.2. Shifting GearsThe People’s Parliament (not its real name) is a leading NGO in Asia mandated topromote the development and implementation of sound public policies on socialdevelopment. When the organization underwent an excellence assessment in 2007,its score was 3.45. Upon deeper probing, it became clear that the aspect keepingthe organization from reaching excellence status was its lack of a long-termsustainable revenue source. At the time, due to its excellent performance, it wassupported by several donors and its programs had generated impact among itstarget clientele. After the assessment, the organization worked with ICOMP tocome up with a revenue model. Fully aligned with its vision and mission, therevenue model required the organization to change its strategies and eventually itsprograms. “It was a difficult decision for us, but in the end, our stakeholderswelcome the change as they believe it will bring them greater benefits in the longrun,” shared the executive director, Dato Muhamad Fazal.Knowing which intervention area to focus on will now help you develop strategies toimprove your excellence practices. You may wish to go back to the intervention toolsin the previous chapters to guide you in this process. You may also need to engageseveral internal and external stakeholders to develop your interventions.

68ACHIEVING EXCELLENCE in Your NGOTable 5.5. XYZ Foundation’s Excellence Plan of ActionWeak Points on Shortfall on Interventions (OrganizationalAttributes Practices Effectiveness, Sustainability, Governance)A. Distinctive ImpactUniqueness of your Limited knowledge on Map out XYZ’s and the sector’s bestpractices, organization’s cutting-edge practices practices determine their impact incontribution to (learning organization). society, and develop programs to addresssociety in generalany gaps(Organizational Effectiveness).Ability to make a Need to understand the Conduct stakeholder mapping, identifycritical difference in needs of the most needs of the most vulnerable, andthe lives of your vulnerable (active develop projects to address these needsconstituency engagement of (Sustainability).stakeholders).Perceived as a mission Need more support Sensitize the board on the need for-critical entity (i.e., from the board on innovations by presenting evidence basedif you cease to exist, innovative initiatives strategies (Governance).there will be a hole in (effective governance).the NGO sector thatnobody else can fillin the short term)B. Standing OutRecognized by Need to strategically Engage the services of a communicationsstakeholders for your communicate programs firm to develop a communicationsuperior performance and achievements strategy and build organizationaland uncompromising (brand building). capacity on brand building by setting upethical practicesa communications unit (Sustainability).Created a name-brand Lack of appropriate skills Include stakeholder engagement as partfor yourself in engaging stakeholders of brand building strategy aboveand communicating (Sustainability).impact (brand building).C. InfluentialAbility to influence Lack of advocacy skills Increase staff capacity on publicpolicy decision and (brand building). engagement and public policyactionformulation (Sustainability).Ability to change mind- Inadequate social Engage the services of a communicationsset of the public and marketing skills (brand firm to develop a communicationcreate demand for building). strategy and build organizationalservicescapacity on brand building by settingup a communications unit(Sustainability).

The Quest For Excellence 69Weak Points on Shortfall on Interventions (OrganizationalAttributes Practices Effectiveness, Sustainability, GovernanceD. Symbol of TrustAbility to attract Need to develop a Develop an organization-wide businessfinancial and in-kind comprehensive plan (Sustainability).supportbusiness plan (soundresource management).Respected within and Need to clarify and Revisit and reorient the board on conflictoutside the NGO sector strictly enforce conflict of interest policies (Governance).and gives the NGO of interest policysectora good name (effective governance).The implementation of your action plan requires staff and resources. Be sure to set afeasible timeframe. Monitoring and evaluation of your progress should be conductedregularly. The time required to implement the action plan will vary depending on theorganization’s commitment to achieving excellence. As Jim Collins (Good to Great,2001) puts it, “greatness is not a function of circumstance. Greatness, it turns out, islargely a matter of conscious choice and discipline.”Beyond ExcellenceHaving succeeded in its quest for excellence, the NGO will face higher expectationsfrom others, which will inadvertently expand its role as a contributor to the socialgood. It needs to be a role model for other NGOs. It needs to be willing to share itsexperiences and expertise in leveraging its intellectual capital. It also needs to participatein setting norms and standards for the NGO sector. These efforts should lead toenhancing the credibility of the NGO sector as whole.As discussed in Chapter 1, NGOs should create social capital by articulatingcommunities’ needs and social aspirations as well as promoting collaboration andpartnership to generate equity. According to Robert Putnam, social capital refers toconnections among individuals—social networks—and the norms of reciprocity andtrustworthiness that arise from them (Making Democracy Work: Civic Traditions inModern Italy, 1993). Research increasingly shows that social cohesion is critical forsocieties to prosper economically and for development to be sustainable (World Bank,1999). To build social capital, NGOs need to promote interaction between people,which enables them to build communities and social networks.NGOs also need to work with the corporate sector. Corporate social responsibilityhas now become a generally accepted norm within the corporate sector. However,NGOs have often viewed the corporate sector with suspicion and maintained a distantrelationship. Increasingly, however, a case can be made for collaboration between thecorporate and NGO sectors. When there are cases of conflict between the two sectors,

70ACHIEVING EXCELLENCE in Your NGOresolution should first be sought though indirect means, and should these fail, thendirect measures such as pressures through advocacy campaigns should be resorted to.NGOs often act as pressure groups in policymaking, program formulation, and programimplementation. An NGO recognized as excellent will need to take on this role. Therelationship between governments and NGOs has traditionally been complex. Often,strained relations, despite converging objectives, underscore differences between them.Nevertheless, they can cooperate with each other through (a) networking to shareexperiences and skills, (b) building alliances to pursue common goals and approachesto achieve them, and (c) partnering by pooling their resources and responsibilities inpursuit of a shared vision and common goals.Thus, an excellent NGO may be thrust into a leadership role, which may divert timeand attention as well as financial resources and energy from its central mission.Therefore, the above roles need to be carefully planned for and executed. For overallsocial development, the three sectors—government; civil society, including NGOs;and the private, commercial sector—need to play their roles, each building on itsdistinctive strengths. Ultimately, making a difference in society is what an NGO’spursuit of excellence is all about.

Organizational Effectiveness Pre-Assessment Instrument 71PART BASSESSMENT INSTRUMENTS

72ACHIEVING EXCELLENCE in Your NGO

Organizational Effectiveness Pre-Assessment Instrument 73ASSESSMENT INSTRUMENT 1Organizational EffectivenessPre-Assessment InstrumentFor an organization to determine at what stage it will begin the organizationaleffectiveness (OE) assessment process, it may need to undergo a pre-assessmentexercise first. OE Pre-assessment is a guided process that may be undertaken throughthe help of an external or internal facilitator. The process involves a facilitated discussionwhere the staff quickly assesses the organization’s situation in a number of differentcategories. The exercise need not be comprehensive and complicated. Below you willfind a guide for discussing the assessment categories, which include vision, strategies,organizational performance, and key role competencies.VISION1. The organization has a clear understanding of the basic social needs it exists to meet.2. There are agreed-upon shared values and beliefs that guide the organization and its members.3. There is consensus on the primary services the organization should provide.4. There is a clear and agreed-upon vision of what the organization is trying to accomplish andwhat it will take to make that vision happen.5. The organization’s current vision and mission statements are still valid in light of current realities.OVERALL ASSESSMENT:STRATEGIES1. There is agreement on overall major strategies that the organization will use to achieve its vision.2. Organizational strategies for addressing community needs are considered effective.3. The strategies of the organization are feasible programmatically and financially.4. Organizational strategies are acceptable to stakeholders.5. The organization has a strategic plan developed in a participatory manner.OVERALL ASSESSMENT:

74ACHIEVING EXCELLENCE in Your NGOORGANIZATIONAL PERFORMANCE1. The organization clearly understands its financial position.2. Program progress, results, accomplishments, and concerns are examined, analyzed, and usedin decision-making processes.3. The organization understands the concerns, needs, and expectations of its stakeholders.4. The organizational structure, policies, decision-making processes, and ines of communicationare clearly defined and understood by staff and management.5. There is a culture of innovation and learning in the organization.OVERALL ASSESSMENT:KEY ROLE COMPETENCIES1. The organization has clearly defined role competencies in:(a) Information, Education, Communication (IEC) development;(b) Resource mobilization;(c) Service delivery;(d) Advocacy; and(e) Training.2. The organization understands the state of its role competencies.3. The organization has a clear understanding of the link between its role competencies andstrategies.OVERALL ASSESSMENT:By addressing the assessment categories above, your organization will be able todetermine areas of strength and areas that require improvement. The process ofdetermining where to begin can be straightforward or complex depending onorganizational context.

Sustainability Assessment Instrument 75ASSESSMENT INSTRUMENT 2SustainabilityAssessment InstrumentAssess your organization against the statements in the table below using the following scales:high (4), moderate (3), low (2), or very low (1). For statements that require “yes” or “no” answers,an explanatory note is provided in parenthesis. A column for remarks is provided to allow you toexplain your answers, if necessary.Key Areas and Dimensions Performance RemarksI. ORGANIZATIONAL VIABILITYA. Vision, Mission, and Strategies1. The organization has a vision and mission(Yes=4; No=1; if yes, also answer 2–8)2. Clear articulation of vision and mission3. Degree by which the vision and mission areshared by the majority of the organization4. Degree to which the core expertise of theorganization is integrated into the vision andmission5. Constituency’s understanding of the vision andmission of the organization6. Stakeholders’ understanding of the vision andmission of the organization7. Degree to which a majority of the stakeholdersvalue the vision and mission of the organizationHigh=4; Moderate=3;Low=2; Very Low=1

76ACHIEVING EXCELLENCE in Your NGOKey Areas and Dimensions Performance Remarks8. Alignment of strategies and objectives to thevision and mission9. Availability of a strategic plan (Yes=4; No=1; ifyes, also answer 10–12)10. Quality of strategic plan11. The majority of the staff’s understanding of theessence of the strategic plan12. Proper utilization of the strategic planB. Leadership and Governance1. Stability of the executive leadership2. Level of technical expertise of the executive leadership3. Involvement of the board in developing thestrategies of the organization4. Clarity of the roles and responsibilities of the board5. The board’s effective performance of their rolesand responsibilities6. Provision of strategic guidance by the board to theorganization (i.e., resource mobilization, policyformulation, networking, etc.)7. Board members’ standing in the community8. Availability of potential leaders within theorganization (Yes=4; No=1; if yes, also answer 9)9. Efforts towards training potential leaders forsuccession10. Level of participation in decision-making process11. Existence of conflict among board members(Yes=1; No=4)12. Existence of conflict among staff members(Yes=1; No=4)13. Existence of conflict between board and staff(Yes=1; No=4)14. Level of the board’s understanding of the technicalconcepts of the organization’s programs15. Level of the board’s understanding of the issuesand concerns of the programs the organizationundertakes

Sustainability Assessment Instrument 77Key Areas and Dimensions Performance RemarksC. Social Development Plan Skills1. Promotion of services and programs to constituency2. Marketing of ideas to donors3. Level of skills in marketing and social developmentplanning4. Marketing and social development plan is available(Yes=4; No=1; If yes, also answer 5 and 6)5. Quality of social development and marketing plan6. Proper utilization of social development andmarketing plan7. Active conceptualization of new project ideas8. Willingness to apply new approaches9. Openness to the idea of generating earned income10. Regular development of project proposals11. Availability of project proposals in the pipeline(Yes=4; No=1)D. Systems and Processes1. Existence of standard policies, procedures, andmanuals (Yes=4; No=1; if yes, also answer 2 and 3)2. Compliance with the standard policies, procedures,and manuals3. Regular review and update of standard policies,procedures, and manuals4. Personnel’s understanding of the organizationalstructure5. Clarity of supervisory and reporting roles6. Proper documentation of supervisory records7. Openness of communication at the professional level8. Openness of communication at the personal level9. Adequacy of monitoring and evaluation oforganizational performance10. Degree to which reports and information areshared among board and key staff11. Proper utilization of reports and collectedinformation in decision-making processes12. Compensation and benefits systems are adequatelyin place

78ACHIEVING EXCELLENCE in Your NGOKey Areas and Dimensions Performance RemarksE. Human Resource Management1. Staff’s understanding of their roles andresponsibilities2. Overall level of technical knowledge of staff3. Regularity of staff performance appraisals4. Proper communication of performance appraisalresults to concerned staff members5. Adequacy of training provided to staff membersto enhance their competencies6. Recruitment of qualified personnel7. Recruitment of committed and motivatedpersonnel8. Degree to which the staff stay in their job positionsfor a reasonable length of time9. Appropriate staff skills to achieve vision andmission10. Appropriate number of staff to achieve vision andmission11. Contribution of staff training to vision and missionF. Organizational Maturity and Experience1. Ability to foresee opportunities and threats(policies, donor priorities, etc.)2. Adaptability to changes and trends in theenvironment3. Ability to change, drop, or revise strategies asappropriate4. Distillation of lessons from experience5. Ability to learn from promising practicesG. Organizational Culture1. Prevalence of trust at the professional level2. Prevalence of trust at the personal level3. Concern for client satisfaction4. Strong sense of organizational ownership5. Prevalence of teamwork6. Alignment among the majority of the staff ofpersonal and organizational values

Sustainability Assessment Instrument 79Key Areas and Dimensions Performance Remarks7. Prevalence of culture of innovation8. Desire to achieve excellence in all activities9. Level of staff moraleII. FINANCIAL CONTINUITYA. Financial and Accounting Practices1. Regular preparation of periodic financial report2. Regularity of external audits3. Regularity of internal audits4. Adequacy of cash flow monitoring5. Financial records and reports are adequatelysupported by valid documents6. Adherence of bookkeeping practices to standardprocedures7. Preparation of annual forecast8. Regular review of annual forecast9. Regular preparation of bank reconciliation10. Efficiency of cash management procedures fortimely disbursement of funds11. Involvement of the board in providing fiscaloversightB. Revenue Source and Stability1. Existence of core fund (Yes=4; No=1; if yes, alsoanswer 2)2. Ability of the core fund to support core programsof the organization for: 6 months or below (=1);between 6–12 months (=2); between 12–24months (=3); more than 24 months (=4)3. Establishment of cash reserves equivalent to atleast 25% of annual operating budget4. Involvement of the board in raising funds for theorganization5. Availability of a resource plan (Yes=4; No=1; ifyes, also answer 6)6. Viability of the resource plan7. Ability to save or generate a surplus

80ACHIEVING EXCELLENCE in Your NGOKey Areas and Dimensions Performance Remarks8. Availability of a revenue plan (Yes=4; No=1; ifyes, also answer 9)9. Viability of the revenue plan10. Ability to develop independent, diversified, anddependable sources of revenue11. Willingness of constituency to pay fororganization’s services12. Provision of financial support by constituency tothe organization13. Provision of financial support by stakeholders tothe organization14. Certainty that the current funding support willcontinue15. Ability to estimate the rate of expenditure and therate of revenue generation16. Has experienced a financial crisis in the past(Yes=1; No=4)17. Has person/s specifically responsible for resourcemobilization (Yes=4; No=1)C. Cost Efficiency and Effectiveness1. Consciousness of financial efficiency2. Level of competency of accountants andbookkeepers3. Proper allocation of resources4. Resource allocation reflects organizationalpriorities5. Practice of cost-cutting measures, if necessary6. Avoidance of wastage7. Personnel’s understanding of cost per client for itsservices or programs8. Adequacy of monitoring and evaluation offinancial efficiencyIII. PROGRAM EFFECTIVENESSA. Achievement of Objectives1. Level of achievement of program objectives2. Ability of program to provide social value to itsconstituency

Sustainability Assessment Instrument 81Key Areas and Dimensions Performance Remarks3. Ability of programs and services to address theunmet needs of the target constituency4. Comprehensiveness of programs and services5. Ability of programs and services to reach the targetnumber and types of constituencies6. Degree to which the services of the organizationmeet the expectations of the constituencyB. Program Management1. Competence of personnel in managing programs2. Efficient utilization of personnel time3. Proper utilization of program results in decisionmakingprocesses4. Autonomy of staff to make decisions at programlevel5. Existence of an exit strategy for all programs(Yes=4; No=1; if yes, also answer 6)6. Constituency’s understanding of the programs’exit strategies7. Congruence of program activities and objectives8. Regularity of program planning9. Adequacy of program monitoring and evaluation10. Utilization of results-based indicators to trackprogress of programs11. Development of workplans for programsC. Program Cost Recovery1. Ability to link program costs and program outputs2. Ability to recover overall program costs (fixed andvariable costs)3. Ability to recover program operating costs(variable costs)4. Level of support the program generates from theconstituency5. Level of support the program generates fromstakeholdersD. Growth and Innovation1. Degree to which programs utilize innovativeapproaches

82ACHIEVING EXCELLENCE in Your NGOKey Areas and Dimensions Performance Remarks2. Contribution of programs to the vision andmission of the organization3. Degree to which programs are considered to beestablishing promising practices4. Willingness to apply new approaches5. Ability to learn from project successes and failures6. Adaptation of programs to the changing needs ofthe constituency7. Knowledge of changes in the constituency’s size,composition, and distributionIV. ENDURING IMPACTA. Building of Constituency1. Proper classification of constituency2. Ability to serve the constituency well3. Expansion of constituency base, as required4. Legitimacy with constituency and stakeholders5. Personalized and customized relationship withconstituency6. Sense of accountability to constituency andstakeholders7. Level of trust developed with constituency andstakeholdersB. Empowerment of Constituency1. Respect and courtesy extended to constituency2. Provision of complete information and a widearray of choices to clients3. Referral of constituents to other service providers4. Provision of ongoing training and technicalsupport to community health volunteers5. Engagement of constituency in decision-makingprocesses6. Reporting back to clients and communities7. Ability of constituency to ensure the continuationof services on their own8. Transfer of necessary skills to constituency

Sustainability Assessment Instrument 83Key Areas and Dimensions Performance Remarks9. Degree to which constituency will continueto be knowledgeable about the new practicesintroduced by the programs of the organization10. Degree to which constituency is motivated tocontinue practicing new habits acquired throughthe organization’s programsC. Stakeholder Support1. Ability to network with other organizations2. Provision of education to donors on communityneeds3. Collaboration with other agencies to increase impact4. Willingness of constituency and stakeholders toprovide support to the organization5. Level of support generated from constituency6. Level of support generated from stakeholders7. Likelihood that influential individuals and groupswill support the program in the futureD. Client Satisfaction1. Provision of socially valuable services to the poor2. Provision of socially valuable services to those whocan afford to pay3. Understanding of constituency needs and how tomeet them4. Adaptability to the changing needs of theconstituency5. Existence of standards for quality of care (Yes=4;No=1; if yes, also answer 6)6. Regular update and review of standards for qualityof care7. Existence of a community feedback mechanism(Yes=4; No=1; if yes, also answer 8)8. Effectiveness of community feedback mechanismE. Demand Creation1. Development of demand among constituents2. Ability to sustain the demand-seeking behavior ofconstituency3. Credibility with constituents4. Influence on the behavior of constituents

84ACHIEVING EXCELLENCE in Your NGOASSESSMENT INSTRUMENT 3GovernanceAssessment InstrumentSection I: Self-Assessment on the Importance of GovernanceInstruction: Please rate each statement according to your perception of its levelof importance.1 – Unimportant2 – Of Little Importance3 – Moderately Important4 – Important5 – Very Important1. The Board’s Functions Level of Importance1.01 To make sure that there are clearly written roles andresponsibilities for the board, individual board members, chair, 1 2 3 4 5president, and other office bearers (if any)1.02 To ensure that the board understands and takes fullresponsibility for its role as governing body1.03 To ensure that every board member’s authority matches his/her responsibility1.04 To develop board policies that serve as a guideline for how theboard can best work together1.05 To ensure that each board member has updated board policiesor operation manuals1.06 To regularly review and update the articles of incorporation/bylaws on the functions and authority of the board1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 5

Governance Assessment Instrument 852. The Structure and Composition of the Board Level of Importance2.01 To regularly scan board members’ skills to fill the gaps in skillsthrough new members2.02 To make sure that updated job descriptions are used duringthe recruitment process2.03 To establish a nominating committee to define the selectioncriteria for board members1 2 3 4 51 2 3 4 51 2 3 4 52.04 To take into consideration the diversities of ethnicity, gender,economic status, culture, disabilities, age, skills, and expertise 1 2 3 4 5during the nominating process2.05 To set a limit on the number of consecutive terms for boardmembers1 2 3 4 52.06 To make sure that the board and committee structures aresimple and straightforward enough to allow the board to 1 2 3 4 5communicate, avoid redundancy, and make timely decisions2.07 To make sure the composition of the board reflects thestrategic areas of the organization1 2 3 4 52.08 To ensure that new board members are recruited not only fortheir expertise and connections but also for their belief in the 1 2 3 4 5the organizational mission2.09 To make sure that (new or existing) board members’ personalvalues are aligned with organizational values1 2 3 4 52.10 To make sure that there is at least one member of the boardwho has technical competence in the programs the 1 2 3 4 5organization undertakes2.11 To ensure that board members are elected in a staggeredmanner to prevent a board with all new members and no 1 2 3 4 5continuity3. Board Development Level of Importance3.01 To ensure that new board members are oriented in theorganization’s functioning (including the organization’shistory, mission, bylaws, policies, practices, and programs); 1 2 3 4 5expectations of him/her (governance roles and responsibilities);and conflicts of interest3.02 To make sure that there are ongoing training opportunitiesand resources for board members in areas such as teambuilding, communication skills, fundraising, and public 1 2 3 4 5relations so that they are equipped with the necessary skills toto carry out their duties3.03 To make sure that board orientations are of the highest qualityand are mission-revealing experiences1 2 3 4 5

86ACHIEVING EXCELLENCE in Your NGO3. Board Development Level of Importance3.04 To educate the board on the concepts of programs theorganization undertakes1 2 3 4 53.05 To regularly update the board with development trends, i.e.,what’s happening in the sectors the organization is involved 1 2 3 4 5in, locally and internationally3.06 To have a mechanism to identify the training needs (type oftraining, preferred training method, timing and duration, etc.) 1 2 3 4 5of the board4. The Board and Staff Relationship Level of Importance4.01 To make sure that board members are accessible to staff(volunteer and paid) in a structured way1 2 3 4 54.02 To have staff representatives on board committees 1 2 3 4 54.03 To gain feedback from the staff on board decisions 1 2 3 4 54.04 To establish a grievance procedure where staff can approachthe board about concerns if they can prove they have tried to 1 2 3 4 5work with the executive director (ED) to resolve the issues4.05 To ensure that there is consistent staff support for the board,its committees, and its other activities4.06 To build teamwork, communication, and expertise amongboard and staff4.07 To develop clear policies and establish an adequate system thatcaptures the concerns of staff and the ED4.08 To ensure that staff contributions to the organization arerecognized by the board1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 55. The Board and ED Relationship Level of Importance5.01 To ensure that there are clear lines of accountability andresponsibility between the board and the ED5.02 To make sure that opportunities are provided to the ED forenhancing his/her leadership effectiveness5.03 To ensure that the ED cooperates with the board in thegovernance of the organization1 2 3 4 51 2 3 4 51 2 3 4 55.04 To define areas of leadership effectiveness for the ED 1 2 3 4 55.05 (The board) To make sure that the ED is clear about theboard’s expectations1 2 3 4 55.06 (The board) To understand what the ED needs from the board 1 2 3 4 55.07 To ensure mutual support and respect between the board andthe ED1 2 3 4 5

Governance Assessment Instrument 875. The Board and ED Relationship Level of Importance5.08 (The board) To prevent founder’s syndrome in theorganization. This syndrome occurs when, rather than workingtoward its overall mission, the organization operates primarilyaccording to the personality of a prominent person in theorganization, for example, the founder, board chair/president,chief executive, etc.5.09 To ensure that the board and the ED exercise leadershipthrough continuous self-improvement, i.e., that theyperiodically reflect on their functioning and seek toimplement necessary improvements5.10 To make sure that the board and the ED share a commonvision1 2 3 4 51 2 3 4 51 2 3 4 55.11 To make sure that there is unity of command and reporting,i.e., the ED receives orders from the board and reports to 1 2 3 4 5them as a whole6. Board Meeting Management Level of Importance6.01 To evaluate productivity of meetings at least occasionally 1 2 3 4 56.02 To ensure that the board meets regularly 1 2 3 4 56.03 To ensure that board meetings are well-attended 1 2 3 4 56.04 (The chair) To develop an agenda in consultation with the ED 1 2 3 4 56.05 To circulate the meeting agenda and background documentsin advance (to provide sufficient time for reading)1 2 3 4 56.06 To make sure that the board focuses on strategic issues ratherthan trivial, administrative tasks in the meeting1 2 3 4 56.07 To ensure that the discussions at meetings are participatory 1 2 3 4 56.08 To apply a consensus or near consensus decision-makingapproach, rather than a majority rule approach1 2 3 4 56.09 To develop an annual meeting calendar or board’s annualwork plan1 2 3 4 56.10 To maintain a policy for conflicts of interest 1 2 3 4 56.11 To make sure that the board’s decisions are being respected, i.e.,the board speaks in one voice after the decision has been made1 2 3 4 56.12 To encourage conflict resolution rather than prevention 1 2 3 4 56.13 To make sure that everybody is given a chance to voice theiropinions1 2 3 4 56.14 To ensure that there are policies and procedures for handlingurgent matters between regularly scheduled meetings1 2 3 4 56.15 To make sure that all the minutes of meetings are recordedand kept in a safe place1 2 3 4 5

88ACHIEVING EXCELLENCE in Your NGO7. Direction Setting Level of Importance7.01 To ensure that the organizational vision and missionarticulate the organization’s main focus1 2 3 4 57.02 To establish clear goals, strategies, objectives, and timelines;at least to make sure there is careful planning of the next 12 1 2 3 4 5months7.03 To devise strategies in such a way that they match with theenvironment and the organizational vision, mission, capacity, 1 2 3 4 5and available resources7.04 To involve staff in strategic planning and setting theorganization’s mission7.05 To ensure that the board plays an active role in settingorganizational direction7.06 To align organizational vision, mission, strategies, and valuesstrategically7.07 To review the vision and mission on a periodical basis and tomake sure they are owned by all key players of the organization7.08 To make sure that the vision and mission are expressed andadvanced in all the organization’s work7.09 To ensure that the needs of men and women and people ofdifferent ages and backgrounds are recognized in program7.10 To ensure a good balance between stability and flexibility ofof responses to environmental changes7.11 To relate the board’s and committees’ current agendas to theorganization’s strategic plan7.12 To practice strategic leadership, i.e., to ensure that planningand evaluation occurs regularly1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 57.13 To practice strategic participation, i.e., to ensure that theboard is involved at key moments, particularly when planning 1 2 3 4 5and evaluation converge7.14 To strengthen the gender and equal-opportunities perspectivesof the organization1 2 3 4 57.15 To establish an information system that captures theinformation and knowledge needed to steer the organization 1 2 3 4 5towards stability8. Sustainability Level of Importance8.01 To develop a financial plan that ensures financial stability forthree to five years and is consistent with the organizational 1 2 3 4 5mission and vision8.02 To incorporate sustainability issues into strategic planning 1 2 3 4 5

Governance Assessment Instrument 898. Sustainability Level of Importance8.03 To sustain skills/technical expertise in the organization 1 2 3 4 58.04 To diversify sources of income 1 2 3 4 58.05 To ensure that succession planning for the ED is in place 1 2 3 4 58.06 To make sure that there is ”new blood” on the board 1 2 3 4 58.07 To ensure that necessary resources will be available to pursuestrategies and achieve objectives1 2 3 4 58.08 To build capacity (of board, staff, and volunteers) in fundraising 1 2 3 4 58.09 To change the mindset and practices (of the board) fromreactive, tactical, and project-based to proactive, strategic, and 1 2 3 4 5mission- and vision-based8.10 To make sure resources are used effectively and efficiently 1 2 3 4 58.11 To be more proactive in searching for resources 1 2 3 4 58.12 To avoid wastage of resources by ensuring that programdevelopment and delivery are result based1 2 3 4 58.13 To ensure sustainability plans are aligned with theorganizational mission and values1 2 3 4 58.14 To ensure that policies and procedures for risk managementare in place1 2 3 4 58.15 To make sure there is a database of funding agencies 1 2 3 4 59. The Recruitment and Oversight of the ED Level of Importance9.01 To make sure that there are clearly written roles andresponsibilities for the ED1 2 3 4 59.02 To precede the recruitment of the ED with a thorough needsassessment1 2 3 4 59.03 To make sure that updated job descriptions are used duringthe ED recruitment process1 2 3 4 59.04 To make sure that the ED understands and takes fullresponsibility for the performance of the organization1 2 3 4 59.05 To make sure that the newly recruited ED is oriented in theorganization’s functioning and expectations of her/him1 2 3 4 59.06 To ensure that the ED’s authority matches his/her responsibility 1 2 3 4 59.07 To ensure the full commitment of the ED to the organizationalvision, mission, strategy, etc. during the recruitment process1 2 3 4 510. Organizational Culture/Enabling Environment Level of Importance10.01 To promote good teamwork in the organization 1 2 3 4 510.02 To make sure that there is respect for organizational norms 1 2 3 4 5

90ACHIEVING EXCELLENCE in Your NGO10. Organizational Culture/Enabling Environment Level of Importance10.03 To introduce the concept of “learning organization” at everylevel of the organization10.04 To ensure that everybody in the organization is stronglycommitted to the organizational vision1 2 3 4 51 2 3 4 510.05 To ensure that relationships are built on trust 1 2 3 4 510.06 To recognize the value added by staff and encourage theirparticipation in decision making10.07 (The board and the ED) To lead the rest of the organizationby example1 2 3 4 51 2 3 4 510.08 To make sure that there is a commitment to excellence 1 2 3 4 510.09 To make sure that the mission is owned by all who areexpected to contribute to it10.10 To ensure that there are shared values at all levels of theorganization1 2 3 4 51 2 3 4 510.11 To examine organizational values on a regular basis and tothen evaluate the organizational mission to make sure the 1 2 3 4 5values are evident in it11. Organizational Monitoring (By the Board) Level of Importance11.01 To review the programs and services regularly and make surethey are tied to specific program outcomes1 2 3 4 511.02 To devise a mechanism that makes sure the ED’s compensationbears a reasonable relation to services performed for the 1 2 3 4 5organization11.03 To establish a performance plan for the ED and review theED’s performance annually11.04 To develop action plans for what to do if the ED does notperform11.05 To establish parameters (i.e., output and outcome indicators)to evaluate the performance of the organization11.06 To identify appropriate types of liability and develop riskmanagementpractices that apply to the organization11.07 To ensure that the organization operates responsibly as well aseffectively11.08 To establish an effective system of governance at the boardlevel, including an evaluation of board performance11.09 To measure organizational effectiveness (i.e., the ability toachieve the organizational mission)11.10 To install results-based approaches in program planning anddevelopment1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 5

Governance Assessment Instrument 9111. Organizational Monitoring (By the Board) Level of Importance11.11 To establish an information system that generatesand captures project/program performance data1 2 3 4 512. Conformance to Laws and Regulations Level of Importance12.01 To make sure that every board member is aware of the bodythat regulates NGOs in their country12.02 To ensure that every board member has the updated versionof the organization’s articles of association and bylaws12.03 To make sure that every board member receives a copy ofupdated rules and regulations issued by the regulatory body1 2 3 4 51 2 3 4 51 2 3 4 512.04 To review the bylaws on a periodical basis 1 2 3 4 512.05 To make sure that the following are written in the bylaws: theorganization’s purpose, service area, defined members, definedboard of directors, specific meeting guidelines, defined officers, 1 2 3 4 5defined committees, guidelines for amending bylaws, andguidelines for financial and legal procedures12.06 To refer to the bylaws in the meeting to ensure all decisionsmade do not violate the bylaws12.07 To ensure that there are conditions in the articles for expellingnon-compliant board members1 2 3 4 51 2 3 4 512.08 To make sure that the board and the ED are aware ofconstitutional requirements12.09 To develop mechanisms to check adherence to key provisionsof the constitution12.10 To develop corporate policies that tell the staff things theyshould always do and things they should never do1 2 3 4 51 2 3 4 51 2 3 4 512.11 To ensure equal opportunity in organizational policies, rules,and regulations pertaining to staff, volunteers, and board 1 2 3 4 5members, which incorporate gender and age issues12.12 To make sure that there is a code of ethics for the board andstaff1 2 3 4 512.13 To establish an audit committee to regularly review theorganization’s policies and procedures for how it does business 1 2 3 4 5and manages its financial affairs12.14 To have a third party perform the external auditing (i.e., tomake sure the organization is complying with applicable laws 1 2 3 4 5and regulations)12.15 To have the entire board do the internal auditing togetherrather than delegating the task to an audit committee or third 1 2 3 4 5party

92ACHIEVING EXCELLENCE in Your NGO13. Transparency and Accountability Level of Importance13.01 To prepare and circulate periodic reports of the organization’sfunctioning, the board’s decisions, and the organization’s 1 2 3 4 5performance to key stakeholders in a timely manner13.02 To make sure that the reports and information shared withthe community are in a form accessible to them, taking into 1 2 3 4 5consideration their literacy and experiences13.03 To make sure that benefits to current and future generationsare taken into account when developing strategic plans13.04 To build capacity (of the board, staff, and volunteers) instakeholder needs identification13.05 To build capacity (of the board, staff, and volunteers) involunteer management1 2 3 4 51 2 3 4 51 2 3 4 513.06 To involve community members in program planning, design,implementation, monitoring, and evaluation in an ongoing 1 2 3 4 5manner13.07 To report and document results in relation to expected outputand goals and disseminate them to all concerned1 2 3 4 513.08 To install clear accountability measures for each stakeholder 1 2 3 4 513.09 To make sure that policies and practices on equal opportunitiesand gender sensitivity are in place1 2 3 4 513.10 To make sure the needs and concerns of various stakeholdersare identified and well-understood1 2 3 4 514. Public Relations Level of Importance14.01 To identify the key stakeholders of the organization andunderstand their needs1 2 3 4 514.02 To stay in touch and establish a positive relationship with keystakeholders (community, government, donors, other NGOs, 1 2 3 4 5and relevant private sector companies)14.03 To make sure that board members are accessible to stakeholdersin a structured manner1 2 3 4 514.04 To maintain legitimacy and credibility in the community 1 2 3 4 514.05 (The board) To represent the organization in the public arenaby attending meetings, seminars, or conferences 1 2 3 4 514.06 To organize regular meetings with key stakeholders to giveand get feedback14.07 To build relationships around shared values, common vision,and a common understanding of mission1 2 3 4 51 2 3 4 514.08 To immerse the board regularly in feedback from the community 1 2 3 4 5

Governance Assessment Instrument 9314. Public Relations Level of Importance14.09 To look into areas of collaboration, especially with localgovernment units14.10 To tap the expertise and knowledge of government agenciesand peer NGOs14.11 To build capacity (of the board) in advocacy and buildingexternal relationships14.12 To raise the profile of the organization at the local, national,and international levels1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 515. Financial Integrity Level of Importance15.01 (The board) To assist in developing the annual budget 1 2 3 4 515.02 To make sure that the annual budget reflects the strategicareas identified in the long-term plan15.03 To make sure that the board is educated about theorganization’s fundraising activities15.04 To make sure that the board understands the annual budgetbefore approving it15.05 To make sure that the board reviews financial reports timelymanner15.06 To make sure that the board receives regular and completefinancial and audit reports15.07 To ensure that financial development strategies are in line withthe mission and vision of the organization15.08 To strengthen the organization’s financial policies based on theoutput of audit reports15.09 To make sure that the board reviews the monthly reports ofexpenditures and revenues every six months15.10 To make sure that there is a procedure for confidentialreporting of suspected improprieties1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 5Section II: Self-Assessment Checklists on Quality of GovernanceInstruction: Please rate each statement according to your perception of yourorganization’s current level of performance in this area, as compared to its desiredlevel of performance.1 – We are doing poorly in this area2 – We are not doing very well in this area3 – We are average in this area4 – We are doing quite well in this area5 – We are excellent in this area

94ACHIEVING EXCELLENCE in Your NGO1. The Board’s Functions Level of Performance1.01 To make sure that there are clearly written roles andresponsibilities for the board, individual board members, chair, 1 2 3 4 5president, and other office bearers (if any)1.02 To ensure that the board understands and takes fullresponsibility for its role as governing body1.03 To ensure that every board member’s authority matches his/her responsibility1.04 To develop board policies that serve as a guideline for how theboard can best work together1.05 To ensure that each board member has updated board policiesor operation manuals1.06 To regularly review and update the articles of incorporation/bylaws on the functions and authority of the board1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 52. The Structure and Composition of the Board Level of Performance2.01 To regularly scan board members’ skills to fill the gaps in skillsthrough new members2.02 To make sure that updated job descriptions are used duringthe recruitment process2.03 To establish a nominating committee to define the selectioncriteria for board members1 2 3 4 51 2 3 4 51 2 3 4 52.04 To take into consideration the diversities of ethnicity, gender,economic status, culture, disabilities, age, skills, and expertise 1 2 3 4 5during the nominating process2.05 To set a limit on the number of consecutive terms for boardmembers1 2 3 4 52.06 To make sure that the board and committee structures aresimple and straightforward enough to allow the board to 1 2 3 4 5communicate, avoid redundancy, and make timely decisions2.07 To make sure the composition of the board reflects thestrategic areas of the organization1 2 3 4 52.08 To ensure that new board members are recruited not only fortheir expertise and connections but also for their belief in the 1 2 3 4 5organizational mission2.09 To make sure that (new or existing) board member’s personalvalues are aligned with the organizational values1 2 3 4 52.10 To make sure that there is at least one member of the boardwho has technical competence in the programs the 1 2 3 4 5organization undertakes2.11 To ensure that board members are elected in a staggered mannerto prevent a board with all new members and no continuity1 2 3 4 5

Governance Assessment Instrument 953. Board Development Level of Performance3.01 To ensure that new board members are oriented in theorganization’s functioning (including the organization’shistory, mission, bylaws, policies, practices, and programs); 1 2 3 4 5expectations of him/her (governance roles and responsibilities);and conflicts of interest3.02 To make sure that there are ongoing training opportunitiesand resources for board members in areas such as teambuilding, communication skills, fundraising, and public 1 2 3 4 5relations so that they are equipped with the necessary skills tocarry out their duties3.03 To make sure that board orientations are of the highestquality and are mission-revealing experiences3.04 To educate the board on the concept of the programs theorganization undertakes1 2 3 4 51 2 3 4 53.05 To regularly update the board with development trends, i.e.,what’s happening in the sectors the organization is in volved in, 1 2 3 4 5locally and internationally3.06 To have a mechanism to identify the training needs (type oftraining, preferred training method, timing and duration, etc.) 1 2 3 4 5of the board4. The Board and Staff Relationship Level of Performance4.01 To make sure that board members are accessible to staff(volunteer and paid) in a structured way1 2 3 4 54.02 To have staff representatives on board committees 1 2 3 4 54.03 To gain feedback from the staff on board decisions 1 2 3 4 54.04 To establish a grievance procedure where staff can approachthe board about concerns if they can prove they have tried to 1 2 3 4 5work with the ED to resolve the issues4.05 To ensure that there is consistent staff support for the board,its committees, and its other activities4.06 To build teamwork, communication, and expertise amongboard and staff4.07 To develop clear policies and establish an adequate systemthat captures the concerns of staff and the ED4.08 To ensure that staff contributions to the organization arerecognized by the board1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 55. The Board and ED Relationship Level of Performance5.01 To ensure that there are clear lines of accountability andresponsibility between the board and the ED1 2 3 4 5

96ACHIEVING EXCELLENCE in Your NGO5. The Board and ED Relationship Level of Performance5.02 To make sure that opportunities are provided to the ED forenhancing his/her leadership effectiveness5.03 To ensure that the ED cooperates with the board in thegovernance of the organization1 2 3 4 51 2 3 4 55.04 To define areas of leadership effectiveness for the ED 1 2 3 4 55.05 (The board) To make sure that the ED is clear about theboard’s expectations1 2 3 4 55.06 (The board) To understand what the ED needs from the board 1 2 3 4 55.07 To ensure mutual support and respect between the board andthe ED1 2 3 4 55.08 (The board) To prevent founder’s syndrome in theorganization. This syndrome occurs when, rather thanworking toward its overall mission, the organization operatesprimarily according to the personality of a prominent person1 2 3 4 5in the organization, for example, the founder, board chair/president, chief executive, etc.5.09 To ensure that the board and the ED exercise leadershipthrough continuous self-improvement, i.e., that theyperiodically reflect on their functioning and seek toimplement necessary improvements1 2 3 4 55.10 To make sure that the board and the ED share a common vision 1 2 3 4 55.11 To make sure that there is unity of command and reporting,i.e., the ED receives orders from the board and reports to 1 2 3 4 5them as a whole6. Board Meeting Management Level of Performance6.01 To evaluate productivity of meetings at least occasionally 1 2 3 4 56.02 To ensure that the board meets regularly 1 2 3 4 56.03 To ensure that board meetings are well-attended 1 2 3 4 56.04 (The chair) To develop an agenda in consultation with the ED 1 2 3 4 56.05 To circulate the meeting agenda and background documentsin advance (to provide sufficient time for reading)1 2 3 4 56.06 To make sure that the board focuses on strategic issues ratherthan trivial, administrative tasks in the meeting1 2 3 4 56.07 To ensure that the discussions at meetings are participatory 1 2 3 4 56.08 To apply a consensus or near consensus decision-makingapproach, rather than a majority rule approach1 2 3 4 56.09 To develop an annual meeting calendar or board’s annualwork plan1 2 3 4 5

Governance Assessment Instrument 976. Board Meeting Management Level of Performance6.10 To maintain a policy for conflicts of interest 1 2 3 4 56.11 To make sure that the board’s decisions are being respected, i.e.,the board speaks in one voice after the decision has been made1 2 3 4 56.12 To encourage conflict resolution rather than prevention 1 2 3 4 56.13 To make sure that everybody is given a chance to voice theiropinions 1 2 3 4 56.14 To ensure that there are policies and procedures for handlingurgent matters between regularly scheduled meetings 1 2 3 4 56.15 To make sure that all the minutes of meetings are recordedand kept in a safe place1 2 3 4 57. Direction Setting Level of Performance7.01 To ensure that the organizational vision and mission articulatethe organization’s main focus1 2 3 4 57.02 To establish clear goals, strategies, objectives, and timelines;at least to make sure there is careful planning of the next 1 2 3 4 512 months7.03 To devise strategies in such a way that they match with theenvironment and the organizational vision, mission, capacity, 1 2 3 4 5and available resources7.04 To involve staff in strategic planning and setting theorganization’s mission7.05 To ensure that the board plays an active role in settingorganizational direction7.06 To align organizational vision, mission, strategies, and valuesstrategically1 2 3 4 51 2 3 4 51 2 3 4 57.07 To review the vision and mission on a periodical basis and tomake sure they are owned by all key players of the organization 1 2 3 4 57.08 To make sure that the vision and mission are expressed andadvanced in all the organization’s work 1 2 3 4 57.09 To ensure that the needs of men and women and people ofdifferent ages and backgrounds are recognized in programs7.10 To ensure a good balance between stability and flexibility ofresponses to environmental changes7.11 To relate the board’s and committees’ current agendas to theorganization’s strategic plan7.12 To practice strategic leadership, i.e., to ensure that planningand evaluation occurs regularly1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 5

98ACHIEVING EXCELLENCE in Your NGO7. Direction Setting Level of Performance7.13 To practice strategic participation, i.e., to ensure that the boardis involved at key moments, particularly when planning and 1 2 3 4 5evaluation converge7.14 To strengthen the gender and equal-opportunities perspectivesof the organization1 2 3 4 57.15 To establish an information system that captures theinformation and knowledge needed to steer the organization 1 2 3 4 5towards stability8. Sustainability Level of Performance8.01 To develop a financial plan that ensures financial stability forthree to five years and is consistent with the organizational 1 2 3 4 5mission and vision8.02 To incorporate sustainability issues into strategic planning 1 2 3 4 58.03 To sustain skills/technical expertise in the organization 1 2 3 4 58.04 To diversify sources of income 1 2 3 4 58.05 To ensure that succession planning for the ED is in place 1 2 3 4 58.06 To make sure that there is ”new blood” on the board 1 2 3 4 58.07 To ensure that necessary resources will be available to pursuestrategies and achieve objectives1 2 3 4 58.08 To build capacity (of board, staff, and volunteers) in fundraising 1 2 3 4 58.09 To change the mindset and practices (of the board) fromreactive, tactical, and project-based to proactive, strategic, and 1 2 3 4 5mission- and vision-based8.10 To make sure resources are used effectively and efficiently 1 2 3 4 58.11 To be more proactive in searching for resources 1 2 3 4 58.12 To avoid wastage of resources by ensuring that programdevelopment and delivery are result based1 2 3 4 58.13 To ensure sustainability plans are aligned with theorganizational mission and values1 2 3 4 58.14 To ensure that policies and procedures for risk managementare in place1 2 3 4 58.15 To make sure there is a database of funding agencies 1 2 3 4 59. The Recruitment and Oversight of the ED Level of Performance9.01 To make sure that there are clearly written roles andresponsibilities for the ED1 2 3 4 59.02 To precede the recruitment of the ED with a thorough needsassessment1 2 3 4 59.03 To make sure that updated job descriptions are used duringthe ED recruitment process1 2 3 4 5

Governance Assessment Instrument 999. The Recruitment and Oversight of the ED Level of Performance9.04 To make sure that the ED understands and takes fullresponsibility for the performance of the organization9.05 To make sure that the newly recruited ED is oriented in theorganization’s functioning and expectations of her/him1 2 3 4 51 2 3 4 59.06 To ensure that the ED’s authority matches his/her responsibility 1 2 3 4 59.07 To ensure the full commitment of the ED to the organizationalvision, mission, strategy, etc. during the recruitment process1 2 3 4 510. Organizational Culture/Enabling Environment Level of Performance10.01 To promote good teamwork in the organization 1 2 3 4 510.02 To make sure that there is respect for organizational norms 1 2 3 4 510.03 To introduce the concept of “learning organization” at everylevel of the organization1 2 3 4 510.04 To ensure that everybody in the organization is stronglycommitted to the organizational vision1 2 3 4 510.05 To ensure that relationships are built on trust 1 2 3 4 510.06 To recognize the value added by staff and encourage theirparticipation in decision making1 2 3 4 510.07 (The board and the ED) To lead the rest of the organizationby example1 2 3 4 510.08 To make sure that there is a commitment to excellence 1 2 3 4 510.09 To make sure that the mission is owned by all who areexpected to contribute to it10.10 To ensure that there are shared values at all levels of theorganization1 2 3 4 51 2 3 4 510.11 To examine organizational values on a regular basis and tothen evaluate the organizational mission to make sure the 1 2 3 4 5values are evident in it11. Organizational Monitoring (By the Board) Level of Performance11.01 To review the programs and services regularly and make surethey are tied to specific program outcomes1 2 3 4 511.02 To devise a mechanism that makes sure the ED’s compensationbears a reasonable relation to services performed for the 1 2 3 4 5organization11.03 To establish a performance plan for the ED and review theED’s performance annually11.04 To develop action plans for what to do if the ED does notperform1 2 3 4 51 2 3 4 5

100ACHIEVING EXCELLENCE in Your NGO11. Organizational Monitoring (By the Board) Level of Performance11.05 To establish parameters (i.e., output and outcome indicators)to evaluate the performance of the organization11.06 To identify appropriate types of liability and develop riskmanagementpractices that apply to the organization11.07 To ensure that the organization operates responsibly as wellas effectively11.08 To establish an effective system of governance at the boardlevel, including an evaluation of board performance11.09 To measure organizational effectiveness (i.e., the ability toachieve the organizational mission)11.10 To install results-based approaches in program planning anddevelopment11.11 To establish an information system that generates andcaptures project/program performance data1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 512. Conformance to Laws and Regulations Level of Performance12.01 To make sure that every board member is aware of the bodythat regulates NGOs in their country12.02 To ensure that every board member has the updated versionof the organization’s articles of association and bylaws12.03 To make sure that every board member receives a copy ofupdated rules and regulations issued by the regulatory body1 2 3 4 51 2 3 4 51 2 3 4 512.04 To review the bylaws on a periodical basis 1 2 3 4 512.05 To make sure that the following are written in the bylaws: theorganization’s purpose, service area, defined members, definedboard of directors, specific meeting guidelines, defined 1 2 3 4 5officers, defined committees, guidelines for amending bylaws,and guidelines for financial and legal procedures12.06 To refer to the bylaws in the meeting to ensure all decisionsmade do not violate the bylaws1 2 3 4 512.07 To ensure that there are conditions in the articles for expellingnon-compliant board members1 2 3 4 512.08 To make sure that the board and the ED are aware ofconstitutional requirements1 2 3 4 512.09 To develop mechanisms to check adherence to key provisionsof the constitution1 2 3 4 512.10 To develop corporate policies that tell the staff things theyshould always do and things they should never do1 2 3 4 512.11 To ensure equal opportunity in organizational policies, rules,and regulations pertaining to staff,volunteers and board 1 2 3 4 5members, which incorporate gender and age issues

Governance Assessment Instrument 10112. Conformance to Laws and Regulations Level of Performance12.12 To make sure that there is a code of ethics for the board and staff 1 2 3 4 512.13 To establish an audit committee to regularly review theorganization’s policies and procedures for how it does business 1 2 3 4 5and manages its financial affairs12.14 To have a third party perform the external auditing, i.e., tomake sure the organization is complying with applicable laws 1 2 3 4 5and regulations12.15 To have the entire board do the internal auditing togetherrather than delegating the task to an audit committee or third 1 2 3 4 5party13. Transparency and Accountability Level of Performance13.01 To prepare and circulate periodic reports of the organization’sfunctioning, the board’s decisions, and the organization’s 1 2 3 4 5performance to key stakeholders in a timely manner13.02 To make sure that the reports and information shared withthe community are in a form accessible to them, taking into 1 2 3 4 5consideration their literacy and experiences13.03 To make sure that benefits to current and future generationsare taken into account when developing strategic plans13.04 To build the capacity (of the board, staff, and volunteers)in stakeholder needs identification13.05 To build capacity (of the board, staff, and volunteers) involunteer management1 2 3 4 51 2 3 4 51 2 3 4 513.06 To involve community members in program planning, design,implementation, monitoring, and evaluation in an ongoing 1 2 3 4 5manner13.07 To report and document results in relation to expected outputand goals and disseminate them to all concerned1 2 3 4 513.08 To install clear accountability measures for each stakeholder 1 2 3 4 513.09 To make sure that policies and practices on equalopportunities and gender sensitivity are in place1 2 3 4 513.10 To make sure the needs and concerns of various stakeholdersare identified and well-understood1 2 3 4 514. Public Relations Level of Performance14.01 To identify the key stakeholders of the organizationand understand their needs1 2 3 4 514.02 To stay in touch and establish a positive relationship with keystakeholders (community, government, donors, other NGOs, 1 2 3 4 5and relevant private sector companies)

102ACHIEVING EXCELLENCE in Your NGO14. Public Relations Level of Performance14.03 To make sure that board members are accessible to stakeholdersin a structured manner1 2 3 4 514.04 To maintain legitimacy and credibility in the community 1 2 3 4 514.05 (The board) To represent the organization in the public arenaby attending meetings, seminars, or conferences1 2 3 4 514.06 To organize regular meetings with key stakeholdersto give and get feedback1 2 3 4 514.07 To build relationships around shared values, common vision,and a common understanding of mission1 2 3 4 514.08 To immerse the board regularly in feedback from the community 1 2 3 4 514.09 To look into areas of collaboration, especially with localgovernment units1 2 3 4 514.10 To tap the expertise and knowledge of government agenciesand peer NGOs1 2 3 4 514.11 To build the capacity (of the board) in advocacy and buildingexternal relationships1 2 3 4 514.12 To raise the profile of the organization at the local, national,and international levels1 2 3 4 515. Financial Integrity Level of Performance15.01 (The board) To assist in developing the annual budget 1 2 3 4 515.02 To make sure that the annual budget reflects the strategicareas identified in the long-term plan1 2 3 4 515.03 To make sure that the board is educated about theorganization’s fundraising activities1 2 3 4 515.04 To make sure that the board understands the annual budgetbefore approving it1 2 3 4 515.05 To make sure that the board reviews financial reports in atimely manner1 2 3 4 515.06 To make sure that the board receives regular and completefinancial and audit reports1 2 3 4 515.07 To ensure that financial development strategies are in linewith the mission and vision of the organization1 2 3 4 515.08 To strengthen the organization’s financial policies based onthe output of audit reports1 2 3 4 515.09 To make sure that the board reviews the monthly reports ofexpenditures and revenues every six months 1 2 3 4 515.10 To make sure that there is a procedure forconfidential reporting of suspected improprieties1 2 3 4 5

Excellence Attribute Assessment Instrument 103ASSESSMENT INSTRUMENT 4Excellence AttributeAssessment InstrumentADISTINCTIVE IMPACTKey Area Rating (1–4)1 Uniqueness of your organization’s contribution to society in general2 Ability to make a critical difference in the lives of your constituency3 Perceived as a mission-critical entity (i.e., if you cease to exist,there will be a hole in the NGO sector that nobody else can fill inthe short term)BLASTING ENDURANCE1 Institutional structure, processes and systems are deemed properlyset up, effective and stable2 Financially secure3 Effectiveness of programsC STANDING OUT1 Recognized by stakeholders for your superior performance anduncompromising ethical practices2 Perceived as a leader in your field3 Created a name-brand for yourselfD INFLUENTIAL1 Ability to set trends in the sector2 Ability to influence policy decision and action3 Ability to change mindset of the public and create demand forservices

104ACHIEVING EXCELLENCE in Your NGOESYMBOL OF TRUSTKey Area Rating (1–4)1 Ability to attract financial and in-kind support2 Viewed as credible by various stakeholders3 Respected within and outside the NGO sector and givesthe NGO sector a good name

Excellence Practices Assessment Instrument 105ASSESSMENT INSTRUMENT 5Excellence PracticesAssessment InstrumentThis tool was designed to help NGOs assess their practices and performance againstexcellence standards. It was developed based on the available internationalexcellence standards and practices of NGOs. You may use this tool to assess yourorganization by rating the following statements using a scale of 1 to 4, where 4=high,3=moderate, 2=low and 1=very low. Notes are provided for statements requiring“yes” or “no” answers. Write N/A on statements that are not applicable to you.IAExemplary Leadership and ManagementExecutive LeadershipKey Area Rating (1–4)1 The executive director has a reasonable term limit2 Potential leaders are available within the organization3 There is a trend that shows that a succession process at theexecutive leadership level is planned4 The executive director leads people and resources towards effectiveand efficient pursuit of organizational objectives5 The leadership catalyzes commitment to and vigorous pursuit ofvision, stimulating higher performance standards6 The leadership builds enduring greatness through a blend ofpersonal humility and professional will7 There are relentless efforts to upgrade the staff, using every encounteras an opportunity to evaluate, coach, and build self-confidence8 The leadership inspires calculated risk taking and learning bysetting examples

106ACHIEVING EXCELLENCE in Your NGOIAExemplary Leadership and ManagementExecutive LeadershipKey Area Rating (1–4)9 The leadership inculcates a climate that attracts, keeps, andmotivates top-quality peopleBSystems and Processes1 The organization has standard policies, procedures, and manuals(Yes=4; No=1; if yes, also answer 2 and 3)2 The board and staff comply with the standard policies, procedures,and manuals of the organization3 Standard policies, procedures, and manuals are regularly reviewedand updated4 The organization has an effective and appropriate compensationand benefits system, including a retirement plan5 The staff clearly understand the organizational structure6 The actual operation of the organization shows evidence ofeffective leadership and participatory decision making7 There is proper documentation and quarterly reporting offinancial and project transactions8 Reports and information are regularly shared among board andkey staff9 Reports and information collected are properly utilized in decisionmakingprocessesB Systems and Processes10 A monitoring and evaluation system has been institutionalizedbased on a set of objectives and indicators of program success11 The organization has a clear system of assessing the beneficiaries’readiness to sustain the projectC Program and Project Management1 Program plans are written and based on vision, mission, and goals2 The planning includes: baseline data, short- and long-term goalsand timetables, expected outcomes from target clients, indicators,and performance levels3 Program planning is regularly conducted4 Staff is given adequate autonomy in decision making at theprogram level5 The results achieved by programs are based on plans andsets of indicators

Excellence Practices Assessment Instrument 107ICExemplary Leadership and ManagementProgram and Project ManagementKey Area Rating (1–4)6 Monitoring and evaluation results are utilized to (1) enhanceproject design, (2) serve as inputs for program review andorganizational assessment, (3) provide feedback to partners andconstituents7 Results of previous assessments and performance outputs areutilized in planning and decision making8 Programs are adapted to the changing needs of the clientele andthe environmentDHuman Resources Management1 The responsibilities, duties, and functions of the staff are writtenand clearly defined and are understood by the staff2 There are clear personnel policies and procedures, includingstaff-development programs3 Administrative and technical staff have the necessary technicaland soft skills to undertake projects/tasks4 There are a sufficient number of staff members to achieve thenecessary tasks and the vision/mission5 Staff members reflect the diversity of the organization’s clientele6 The organizational chart clearly indicates lines of authority,workflow, and accountability7 Staff make contributions through talent, knowledge, skills, andgood work habits8 The staff utilize their time efficiently9 Staff performance appraisals are conducted regularly10 There is proper communication of performance appraisal results toconcerned staff members11 There are adequate opportunities for staff members to enhancetheir competencies and promote growth12 The staff stay in their jobs for a reasonable length of time13 There is a mechanism to handle transitions and successionplanning in staffingE Organizational Culture1 The organizational climate encourages an open exchange of ideasand always harnesses efforts towards consensus building2 There is a prevalence of trust among staff

108ACHIEVING EXCELLENCE in Your NGOIEExemplary Leadership and ManagementOrganizational CultureKey Area Rating (1–4)3 The staff has a reasonably high level of morale4 There is a prevalence of teamwork among staff5 There is a strong sense of organizational ownership6 There is a high level of concern for client satisfaction7 The staff strive for excellence in all activities8 There is an alignment of personal and organizational values amongthe majority of the staff9 The board and staff members act in the best interest of theorganization rather than for the furtherance of personal interestsor interests of a third party10 There is openness of communication at the professional levelamong staffIIASound Resource ManagementFinancial Management1 There is a written policy and procedure that adheres to generallyaccepted accounting standards and internal controls2 The organization maintains a general ledger, general journal, cashreceipts book, and cash disbursement book3 Financial and management accounts are prepared monthly4 The books of account are registered with the tax revenue agencyof the government5 The organization maintains a bank account6 Bank reconciliations are prepared monthly7 Receipts are documented by official receipts registered with thetax revenue agency8 Check disbursements are supported by pre-numbered checkvouchers and follow a proper internal control system9 The approving officer for disbursements is different from thebookkeeper and cash custodian10 The bookkeeper is separate and distinct from the custodian11 Supporting documents for financial transactions are properlymaintained for audit purposes12 An internal control system is written in manual form andcomplied with

Excellence Practices Assessment Instrument 109IIASound Resource ManagementFinancial ManagementKey Area Rating (1–4)13 There is an adequate monitoring of cash flow14 Financial reports are reviewed by the executive director and theboard regularly15 An annual audit is made by an independent accountant, registeredwith the Securities and Exchange Commission, tax revenue agency,and professional regulatory board.16 The organization evaluates its service delivery costs vis-à-vis benefits17 The organization has the ability to estimate the rate of expenditureand the rate of revenue generation18 Variance analyses are carried out regularly to compare actual resultsto planned results (e.g., expenditures vs. budget, funds raised vs.fundraising targets)19 There is a mechanism for disclosure in fundraising activities20 The organization is conscious about cost efficiency21 There is an efficient cash management procedure for the timelydisbursement of funds22 Monitoring and evaluation of financial efficiency (cash flow,expenditures, etc.) are adequately doneB Resource Mobilization and Utilization1 There is an annual budget2 The organization has a resource mobilization plan (Yes=4; No=1;if yes also answer 3)3 The resource mobilization plan is deemed viable4 There are person(s) specifically responsible for resource mobilization(Yes=4; No=1)5 The organization has internally generated funds6 Resources are utilized according to plans and priorities7 Administrative expenses do not exceed 30% of revenues receivedand of total expenses for the calendar year8 The clientele is willing to pay for the organization’s services and/or contribute funds to the organization9 Adequate volunteers are available for the organization’s needsC Sustainability1 The organization has a core fund (Yes=4; No=1; if yes, also answer 2)

110ACHIEVING EXCELLENCE in Your NGOIICSound Resource ManagementSustainabilityKey Area Rating (1–4)2 The core fund could support core programs of the organizationfor (6 months or below=1; between 6–12 months=2; between12–24 months=3; more than 24 months=4)3 The organization has a cash reserve that is equivalent to at least25% of the annual operating budget4 The board is actively involved in raising funds for the organization5 The organization is able to develop independent, diversified, anddependable sources of revenue6 Current projects are securely funded7 The organization has experienced a financial crisis in the past(Yes=1; No=4)D Business Development1 The organization actively conceptualizes new project ideas2 The organization regularly develops project proposals3 Project proposals are available in the pipeline4 Project ideas are regularly marketed to donors5 Leaders and staff members possess skills in business planning6 Services and programs are adequately promoted to clientele7 Leaders and staff members are willing to apply appropriateeconomic models8 Leaders and staff members are open to the idea of generatingearned incomeIII Active Engagement of StakeholdersA Empowerment of Clientele1 The clientele served by the organization are clearly identified andsegmented2 The organization has a personalized and customized relationshipwith its clientele3 The organization provides complete information and a wide arrayof choices to its clientele4 Efforts are made to transfer necessary skills to the clientele5 The clientele are actively engaged in decision-making processesand are referred to other service providers as needed6 The clientele are well-informed of the organization’s activities,accomplishments, etc.

Excellence Practices Assessment Instrument 111IIIAActive Engagement of StakeholdersEmpowerment of ClienteleKey Area Rating (1–4)7 The clientele provide support to the organization8 Mechanisms are established to sustain benefits to the beneficiaries9 The empowerment process is being implemented as designedB Demand Creation1 The organization is able to develop the demand of its clientele2 The organization reaches out to others who do not avail themselvesof its services but have unmet needs3 The staff extends respect and courtesy to the organization’s clientele4 The organization has legitimacy with clientele5 There is a set of indicators to measure client retention rateC Networking and Public Relations1 Stakeholder mapping is conducted to identify stakeholderexpectations and interests2 There is a design to build relationships with stakeholders3 There are clear intra- and inter-agency linkages4 There is an advocacy policy that defines the process by which theorganization determines specific issues it will promote or carryforward5 The information provided to the media or distributed to thepublic is factually accurateIVARelentless Pursuit of Mission, Vision, and GoalsMission1 The organization has a clearly written mission statement2 The organization exists in response to the identified needs of itstarget clientele3 The mission statement clearly sets forth why the NGO exists andwhat it hopes to accomplish4 The board, staff, and clientele clearly understand and are ableto articulate the mission of the organization5 The board, staff, and clientele value the mission of the organization6 The board and staff revisit the mission statement at least everythree years to determine its validity7 The mission statement is made available to all stakeholders andthe general public

112ACHIEVING EXCELLENCE in Your NGOIVARelentless Pursuit of Mission, Vision, and GoalsMissionKey Area Rating (1–4)8 The organization consciously ensures that it continues to operatewithin its mission9 The organization has a set of core values10 Organizational values are clearly writtenBVision1 The organization has a clearly written vision statement2 The board, staff, and clientele clearly understand and are able toarticulate the vision of the organization3 The board, staff, and clientele value the vision statement4 The board and staff revisit the organization’s vision at least everythree years to determine its validity5 The vision statement is made available to all stakeholders and thegeneral public6 The vision statement clearly identifies the organization’s intendedclientele7 Conscious efforts are made to ensure that strategies are developedto achieve the organization’s visionC Goals and Strategies1 The organization has a clear set of written goals and objectives toaccomplish its mission and vision2 The organization’s goals are reasonably attainable given theorganization’s available resources3 The organization conducts SWOT (Strengths, Weaknesses,Opportunities, Threats) analyses regularly4 The organization has a strategic plan (Yes=4; No=1, if yes alsoanswer 5 and 6)5 The strate.3 and staff fully understand the strategic plan of theorganization7 The strategies clearly support the organization’s goals8 The organization has an annual operational plan to implement itsgoals and strategiesV Effective GovernanceA Board Composition1 The organization has adequate board members for its needs

Excellence Practices Assessment Instrument 113VAEffective GovernanceBoard CompositionKey Area Rating (1–4)2 The board members’ qualifications and expertise are consistentwith the vision, mission, and goals of the organization3 Board members’ skills are regularly scanned to identify theirtraining needs and the support they require from the organization4 There is a clear policy and process for board selection, election ofofficers, rotation of functions, and determination of terms of office5 Board members are elected in a staggered manner to prevent aboard with all new members and no continuity6 The board and committee structure is simple and straightforwardenough to allow the board to communicate, avoid redundancy,and make timely decisions7 A statement of policy on conflicts of interest covering the board,staff, and volunteers is clearly documented and complied withBBoard Roles and Responsibilities1 New board members are oriented in the organization’s functioning(including the organization’s history, mission, bylaws, policies,practices, and programs); expectations of them, and the policy onconflicts of interest2 The roles and responsibilities of the board, individual boardmembers, the chair, the president, and other office bearers areclearly written3 The board has a clear governing function and is not involved inimplementation4 Board members are actively involved in the organization’s policy,program formulation, and direction setting5 A dynamic relationship exists between the board and theexecutive director as they seek to implement policies6 A policy review is regularly conducted by the board and staff7 The board is actively involved in resource mobilization8 Board members act as ambassadors of the organization andestablish relationships with key stakeholders9 There is a written policy that addresses attendance and participationat board meetings10 There are ongoing training opportunities and resources for boardmembers in areas such as team building, communication skills,fundraising, and public relations

114ACHIEVING EXCELLENCE in Your NGOKey Area Rating (1–4)V Effective GovernanceC Board Operations and Governance Processes1 The board has an annual work plan2 The board meets as regularly as needed to fully and adequatelyconduct the business of the organization3 The board applies a consensus or near consensus decision-makingapproach rather than one based on majority rule4 Board meetings and decisions/resolutions are properly documentedand circulated to all members5 There is a mechanism to evaluate the effectiveness of boardmeetings at least annually6 The organization has a clear policy on conflicts of interest coveringthe board and staff, including volunteers, if any7 The board oversees financial management, including externalaudits of the organization8 The board ensures that the organization complies with thegoverning laws of the land, such as the labor laws9 The members of the board serve without compensationVI Brand Building1 The practical benefits of the organization’s unique services areclearly identified and articulated to stakeholders2 The organization makes a unique contribution to society3 The unique services of the organization are adequately leveraged4 Different stakeholders view the organization positively5 The products and services of the organization give it name recall6 The organization actively builds networks with differentstakeholders7 An effective communication system is in place to ensure that theorganization’s profile, products, services, accomplishments, andaspirations are properly communicated to different stakeholdersand the general publicVIIALearning OrganizationKnowledge Management1 The concept of “learning organization” is appreciated at every levelof the organization2 There is a champion for learning within the organization3 Knowledge databases are available and accessible to staff members

Excellence Practices Assessment Instrument 115VIIALearning OrganizationKnowledge ManagementKey Area Rating (1–4)4 There is a system for building and sharing knowledge within andoutside the organization5 The effectiveness and success of knowledge management initiativesare monitored and evaluatedBDistilling Lessons Learned1 The organization consistently documents its experiences2 The organization learns from its own past mistakes and successes3 There is a conscious effort to learn from experiences of promisingpractices and failures4 The organization engages in sharing its experiences with otherinstitutions in hopes of generating constructive feedback5 Efforts are consciously made to prevent previous mistakes fromrecurringC Openness to New Things1 The organization has the ability to respond to changes in theenvironment and realign plans as necessary2 The staff are comfortable learning new approaches to enhaceprogram/project operations3 Benchmarks are utilized to improve practices4 The organization practices the continuous improvement of allaspects of its operations5 The organization promotes innovations

116ACHIEVING EXCELLENCE in Your NGO

Revisiting/Creating a Shared Vision 117PART CINTERVENTION TOOLS

118ACHIEVING EXCELLENCE in Your NGO

Revisiting/Creating a Shared Vision 119INTERVENTION TOOL 1Revisiting/Creating aShared Vision“A vision without action is just a dream; an action without vision just passes time; a visionwith an action changes the world.”A~Nelson Mandelan organization’s inability to clearly articulate and communicate its vision maystifle its effectiveness. Without a common vision, the organization may not beable to marshal its resources and energies where it should and may end up doingseveral things without accomplishing anything worthwhile. This intervention toolhelps you to clarify or come up with a shared vision for your organization.What is a Vision?A vision is a guiding image of success often expressed in terms of impact and image.It answers the question: “What will success look like?” It enables the organization’smembers to stretch their expectations, aspirations, and performance. An effectivevision is compelling and inspires and motivates people to achieve it together. Avision statement conveys both an external and internal image of organizationalsuccess. The external vision describes how society will be changed once theorganization’s internal vision is achieved. While the external vision defines how theorganization plans to change society, the internal vision describes what theorganization wants to become.

120ACHIEVING EXCELLENCE in Your NGOTable IT 1.1. Characteristics of a Vision Statement• Ambitious • Inspiring• Appropriate • Realistic• Clear • Responsive to change• Compelling • Well-articulated• CredibleAs a vision links the present to the future, it attracts commitment and energizes people.It is not merely a dream; it is something that is doable and for which people in theorganization are willing to devote their emotions and energy. It helps an organizationspot and harness opportunities. It needs to be emphasized, however, that these benefitswill only be realized to the extent that everybody in the organization shares in thevision.Many leaders seek to achieve the commitment and focus that come with genuinelyshared visions. The challenge lies in creating a sense of purpose that binds peopletogether and propels them to fulfill their deepest aspirations. As one writer puts it,leadership is not about imposing the leader’s solo dreams; it is about developinga shared sense of destiny; it is about enrolling others so that they can see howtheir own interests and aspirations are aligned with the visions and therebybecome mobilized to commit their individual energies to its realization. (Kouzesand Posner, 1991)Catalyzing people’s aspirations does not happen naturally; it requires time, care, andstrategy. Thus, the discipline of building shared vision is centered around a neverendingprocess of reevaluating vision, values, why the work matters, and how it fits inthe larger world. It is not enough for a leader to have a vision. The members of theorganization must understand, accept, and commit to the vision. When they do, theorganization’s ability to change and reach its potential soars.When leaders effectively communicate their vision, that vision has very potent effects,including the following:1. Job satisfaction2. Motivation3. Commitment4. Loyalty5. Team building6. Clarity about organizational values7. Pride in the organization8. Organizational productivity

Revisiting/Creating a Shared Vision 121A Vehicle for Building Shared MeaningA successful approach to building shared vision may be built around several key concepts:1. Every organization has a destiny: a deep purpose that expresses the organization’sreasons for existence.2. Clues to understanding an organization’s deeper purpose can often be found in itsfounder’s aspirations and in the reasons why the whole sector came into being.3. Not all visions are equal. Visions, which tap into an organization’s deeper sense ofpurpose and articulate specific goals to make that purpose real, have the uniquepower to engender aspiration and commitment.4. Many members of the organization, especially those who care deeply for itsexistence, have a collective sense of its underlying purpose.5. At the heart of building shared vision is the task of designing and evolving ongoingprocesses in which people at every level of the organization and in every role canspeak from the heart about what really matters to them and be heard by seniormanagement and others.6. Finally, there is an innate pull that emerges when a clear picture of the vision isjuxtaposed with current reality.Box IT 1.1. Key Elements in Creating Shared Vision• Vision: an image of your desired future. A vision is a picture of the future youseek to create, described in the present tense as if it were happening now. Astatement of vision shows where you want to go and what you will be like whenyou get there. Because of its tangible quality, a vision gives shape and directionto the organization’s future.• Values: how you expect to travel to where you want to go. Values describehow you intend to operate on a day-to-day basis as you pursue your vision.When values are articulated but ignored, an important part of the shared visioneffort is shut off.• Purpose or Mission: what the organization is here to do. Purpose or missionrepresents the fundamental reason for the organization’s existence. What areyou here to do? You may never reach the ultimate purpose of your organizationin your lifetime, but you will have many insights along the way.• Goals: milestones you expect to reach before too long. Every shared visioneffort needs not just a broad vision but also specific, realizable goals. Goalsrepresent what an organization commits itself to do. Goals often address barriersand obstacles that must be overcome to reach your vision.Source: Peter Senge, The Fifth Discipline Field Book (1994)

122ACHIEVING EXCELLENCE in Your NGOModes for Building Shared VisionShared vision strategies should be developmental. Every stage of the process should helpbuild both the listening capacity of the top leaders and the leadership capacity of the restof the organization. There are four possible strategic modes for building shared vision.Every organization uses one mode predominantly. You can objectively assess whichmode your organization uses and then plan to move to the next, higher mode. (Note:the term “Boss” is used in the text that follows to mean a formal leader, executive manager,or somebody who has sufficient authority and autonomy to preside over a visioningprocess. Other participants are referred to as “members.”The four strategic modes are telling,selling, testing/consulting, and cocreating,which are elaborated on below.1. Telling: The boss knows what thevision is and the organization is goingto have to follow it. Although“telling” is a traditional andsomewhat authoritarian form ofinstigating change, a told “vision” is still a vision with power to galvanize activity.In this mode, the boss might clearly describe the vision and say that the organizationcannot afford to do otherwise. Leaders make full use of the power of language tocommunicate a shared identity and give life to visions. After a period of time,people will have to leave if they cannot support the new direction of theorganizational vision. There are limits to telling. People often do not rememberwhat they are told or interpret it differently. It often works when there is a crisisor when people in the organization have full trust in the leader.2. Selling: The boss knows what thevision should be but needs theorganization to “buy in” beforeproceeding. The leader attempts toenroll people in the vision, enlistingas much commitment as possible.“This is the right thing to do and Ibelieve in it,” a chief executive maysay, “but we can only do it if theorganization comes on board withme.” There are limits to selling. The“My enthusiasm, excitement, andcommitment were contagious. I spoke fromthe heart, with conviction and sincerity.”~Sony Lopes, Air Force Officeof Special Investigations, quoted inKouzes and Posner (2003)“Sharing the vision statement met withskepticism at first, but as I kept comingback to parts of it over time, everyonebought into the idea. People began tosee it as a statement about what wewanted to build together.”~Kevin Philbin, Solectron, quoted inKouzes and Posner (2003)boss wants to hear yes and the employees want to hear that they will keep theirjobs. A compliant “yes” often seems to be the safest course of action. If morecommitment is needed then the higher strategical modes of testing/consulting orco-creating are needed.

Revisiting/Creating a Shared Vision 1233. Testing/Consulting: The boss is putting together a vision and tests his ideas orconsults to seek creative input from others. Testing is used when the leader “draftsthe vision for testing” but is prepared to revise it if necessary. Consulting with thekey stakeholders of the organization like the staff and board members is the preferredmode for a boss who recognizes that he or she cannot possibly have all the answers.The first task in enlisting others is to identify constituents and find out what theiraspirations are. But the consulting process may throw open many options and itmay be difficult to reconcile them. This, therefore, requires a higher level oforganizational capacity. If the organization is not ready for consulting, then testingor selling may be the modes to use. By knowing constituents, listening to them,and taking their advice, leaders are able to give voice to constituents’ feelings.4. Co-creating: The boss and members of the organization, through a collaborativeprocess, build a shared vision together. It is an important day in anyone’s life when heor she begins to work for what he or she wants to build rather than to please a boss.The organization whose leaders and members understand this is ready to benefit froma “co-creating” process for building shared vision. In this process, teams articulatetheir sense of common vision. They start with their personal visions, and theorganization becomes a tool for people’s self-realization. Many leaders imagine thatencouraging people to identify and express their personal visions will lead to anarchyand disarray. But experience shows that this assumption is ill-founded. Most teamsactually experience a fundamental alignment among their individual visions. If thereis a deep lack of alignment, then the leader should be concerned about it.Thus, each higher mode of creating shared vision involves a higher level of capacity onthe part of the organization. Telling involves a higher dependence on the boss’s capacityfor leadership and less dependence on the members of the organization. In contrast,co-creating involves less dependence on boss’s leadership capacity and requires a highlevel of capacity among members.Figure IT 1.1. Four Strategical Modes for Creating Shared VisionRequired capacityfor directionsetting andlearningTellingDependence on theboss’s leadershipcapacitySellingTesting/ConsultingCo-creatingDependence on the members’leadership capacitySource: Peter Senge, The Fifth Discipline Field Book (1994)

124ACHIEVING EXCELLENCE in Your NGOWays of Creating Shared VisionJames M. Kouzes and Barry Z. Posner (The Leadership Challenge, 2003) give thefollowing advice for creating a shared vision, using a mix of the above strategic modes:1. Get to know your constituents2. Find the common ground3. Draft a collective vision statement4. Expand your communication skills5. Breathe life into your vision6. Speak from the heart7. Listen first and often8. Hang outDrawing from the advice of Kouzes and Posner and other management gurus, youcan create your organizational vision through a two-step process. First, seek answersto key questions. Second, seek the common motivators of stakeholders.1. Creating a shared vision by answering key questions. This process allows theparticipants to spend time answering questions that are meaningful to them andto the organization. An example of this process is shown in Box IT 1.2.Box IT 1.2. Process for Creating a Shared Vision Through QuestionsStep 1. Vision of the future. Give team members the following scenario: “It is five yearsfrom today’s date. Now it is your job to describe this future as if you are able to see it,realistically, around you, using the following questions….” Make sure each member ofthe team has an opportunity to comment on each of the questions. Note the mainpoints on a flip chart that everyone in the group can see. The questions are as follows:1. Who are the stakeholders of this organization that we have created (five yearsfrom now)?- How do we work with them?- How do we produce value for them?2. What are the most influential trends in our sector?3. What is our image among our clients and competitors?- How do we compete?- What is our organization’s role in our community?4. What is our unique contribution to the world around us?- What is the impact of our work?5. How do we raise our needed financial resources?6. What does our organization look like?- How do we handle good times?- In what ways is our organization a great place to work?- How do we know that the future of our organization is secure?

Revisiting/Creating a Shared Vision 125Box IT 1.2. Process for Creating a Shared Vision Through Questions7. What are our values?- How do people treat each other?- How are people recognized?Step 2. Current reality. Now come back to the current year and look at theorganization today.1. What are the critical forces in our systems?2. Who are our stakeholders today—inside and outside the organization?What changes do we perceive taking place among our stakeholders?3. What are the most influential trends in our sector today?4. What aspects of our organization empower people today?5. What aspects of our organization dis-empower people today?6. How is the strategic plan currently used?7. What major losses do we fear?8. What do we know (that we need to know)?9. What don’t we know (that we need to know)?Step 3. Deliberation. Finally, please assess the current vision statement.1. What, for you, are the key words in this vision statement?2. Do you feel that it is a meaningful vision?3. Based on your own reactions and feelings, what implications do you see in thisvision statement about your organization’s visioning process?2. Creating a Shared Vision by Seeking the Common Motivators of Stakeholders.This involves three steps: (1) stakeholder analysis; (2) clarification/creation of avision; and (3) development of indicators of success.Undertaking the steps above may involve many activities. It could be done throughbrainstorming, conversational dialogues, or focus group discussions. It is ideal that allmembers of the board and staff are given the opportunity to give their input into theorganization’s vision. This process is iterative in nature (Figure IT 1.3).Figure IT 1.3. Articulation/Clarification of Vision FrameworkStakeholderAnalysisClarification/Creationof a VisionDevelopment of Indicatorsof Success

126ACHIEVING EXCELLENCE in Your NGOStep 1: Stakeholder AnalysisAttention to stakeholders’ concerns is crucial because the key to the success of NGOsis the satisfaction of their key stakeholders. NGOs exist to meet the unmet needs oftheir constituencies and advance their well being in the long run through direct services,capacity building, research, information dissemination, and advocacy. To carry outtheir initiatives effectively, NGOs need to collaborate with other NGOs, involve thebroad participation of communities, link with the government, and secure donorsupport.An important part of stakeholder analysis is generating and obtaining enoughinformation about stakeholders. Basically, the important information that theorganization must know about the stakeholders is their needs and expectations.Generating this information may include the following:• Gathering information from internal stakeholders based on their own knowledgeand experience;• Conducting a quick survey of stakeholders by phone, face-to-face interviews, orthe sending of questionnaires;• Performing secondary reports or surveys;• Documenting feedback from clients; and• Involving some stakeholders in the analysis and interpretation of findings.A more difficult part of the process is the synthesizing and integrating of the differingand sometimes conflicting needs and expectations of different stakeholders. Stakeholderanalysis may involve answering the following questions, which your organization canadopt, revise, or rephrase depending on your requirements:• What are the stakeholders’ unmet needs and expectations that they wish theorganization could fulfill?• How would they assess the ability of the organization to fulfill those needs andexpectations?• How do they think the organization could fulfill those unmet needs andexpectations?An example of information generated from stakeholders is shown in Table IT 1.2. Itshows who the stakeholders are, their needs and expectations, the criteria they used toassess the organization’s performance, and the approach they believe is required tofulfill those needs and expectations.

Revisiting/Creating a Shared Vision 127Table IT 1.2. Stakeholder AnalysisStakeholders Needs/ Criteria for Judging Approach Required forExpectations Performance ImprovementWomen clients Gender-based • Gender sensitivity • Consultation with womenclinic services • Accessibility stakeholders• High quality • Involvement of women• Affordability stakeholders in design• Regular feedback mechanismsAdolescent Adolescent • Confidentiality • Involvement of adolescentsclients reproductive • Youth friendly in designhealth services • Gender sensitivity • School and community basedGovernment Complementing • Accessibility to • Joint development ofof family planning underserved groups interventionsprograms in far- • Intimacy with • Regular feedbackflung villages clients • Development of a clear referralsystemDonors Institutionalization • Cost efficiency • Regular dialoguesof sustainability • Cost effectiveness • Clear-cut sustainabilitymechanisms • Development of indicatorsresource mobilization • Free flow of informationmodelsPartner NGOs Sharing of skills • Openness • Open communicationand expertise • High staff • Regular leveling off ofcompetenceexpectationsStep 2: Clarification/Creation of a Shared VisionIt is essential that an organization’s vision be formulated in stakeholder terms. Thisway, the vision reflects the needs and expectations of stakeholders.Vision Clarification. After looking at the stakeholders’ needs/expectations, anorganization with an existing vision has to determine whether or not its current visionis still valid. The basic question, therefore, is: Is the current vision still valid in lightof the current context and expectations and needs of stakeholders?The clarification process may involve asking the following questions about the existingvision:• Is it responsive to stakeholders’ needs and expectations?• Is it measurable against the criteria of stakeholders as well as those of theorganization?• Does it make us distinct from the rest?• Does it reflect organizational values and beliefs?• Is it practical?

128ACHIEVING EXCELLENCE in Your NGOUsing the above questions, the organization can make a judgment on whether todevelop a new vision or to abide by the existing vision statement.Vision Creation. For organizations without a shared vision, a visioning process maybe undertaken involving a broad number of stakeholders such as staff members;management; board members; and even representatives from the constituency,government, donor agency, or community. The process may involve brainstormingor focus group discussions where participants are encouraged to give their societal andorganizational visions. The participants may be asked the following key questions:• What would you like our organization to be five years from now?• Describe how society can be changed or improved if our organization achieves itsnew, shared vision?A number of vision statements may be shortlisted. The same questions as above maybe used to evaluate the shortlisted vision statements. The creation of the visionstatement may be undertaken in one session or a series of sessions, depending on howquickly a consensus can be reached. One organization in the Philippines crafted itsvision statement in six months. The process involved a broad spectrum of stakeholdersincluding the board, staff members, management, and members of the community.As all participants could not meet altogether at once, the staff members begandeveloping their visions statements for them. Two options were developed, whichwere shared with the board. The board incorporated the two options plus their ownideas and came up with one vision statement. The vision statement was then returnedback to the staff members who fine-tuned it. Finally, representatives from differentstakeholder groups came together and agreed on the vision statement. It may havebeen a long and arduous process, but the stakeholders believe it is truly a shared visionthat everybody can own and strive to achieve.Below are the vision statements of this NGO in the Philippines, which will be referredto as the Reproductive Health Coalition (RHC).Box IT 1.3. Examples of Vision StatementsInternal Vision Statement“As a pioneer, RHC continues to be at the forefront in advocating for, developing programapproaches in, and addressing the unmet needs in women’s health and reproductivehealth and facilitating others to implement them.”External Vision Statement“RHC envisions a society where women and youth:• Enjoy good health—physically, mentally, emotionally, socially, and spiritually—frombirth to death;

Revisiting/Creating a Shared Vision 129Box IT 1.3. Examples of Vision Statements• Are respected and treated with dignity, regardless of age, civil and social status, income,gender preference, or religious or ideological beliefs;• Are equipped with adequate and proper information on reproductive and sexualhealth and have access to quality services to be able to exercise their reproductiverights, including decisions on the number and spacing of their children; and• Are co-deciders and -policymakers in all aspects of their personal, family, civic, andprofessional lives and at all levels of society, particularly in matters regarding theirwelfare, health, bodies, and relationships.”Visioning Process. Revisiting and crafting a vision statement generates commongoals, hope, and encouragement; offers a possibility for fundamental change; givespeople a sense of control; gives a group something to move toward; and generatescreative thinking and passion. The process can take many forms. It can be undertakenthrough brainstorming, conversational dialogues, and focus group discussions. It isideal that all members of the board and staff have the opportunity to give their inputinto the organization’s vision. The following process may be useful:1. A facilitator may be appointed to lead the process. An external consultant may beengaged if needed.2. Organize a half-day session wherein all members of the board and staff are invitedto participate.3. The participants maybe divided into groups of three to six members.4. Each group will be engaged in brainstorming sessions wherein they have to answerthe following questions:• What would you like our organization to be five years from now?• Describe how society could be changed or improved if our organization succeedsin achieving its vision?5. In developing their vision statements, the participants may be guided by thefollowing questions:• Is the vision responsive to stakeholders’ needs and concerns?• Does it reflect organizational values and beliefs?• Is it feasible?6. The groups may be given one hour to discuss their vision statements.7. After an hour, each group will present their vision statements in a plenary session.8. Similar ideas will be grouped together and all participants will discuss the visionstatements and agree upon the one that best reflects what they want the organizationto be in the future.9. If there is no consensus, the session may be ended and another session maybecalled for further discussion until a shared vision is reached for the organization.

130ACHIEVING EXCELLENCE in Your NGOIn some organizations, revisiting/crafting a vision statement can be a complicatedprocess and may even generate tension, but for others it is as easy as ABC. For example,during a staff meeting of an organization in the Philippines, there was a clamor torevisit the vision statement of the organization. After some discussion, the staff membersdecided to craft a new vision statement for the organization. Since no member of theboard was present, the staff members communicated the new vision statement to themembers of the board. It was tackled during the next board member meeting afterthree months. The board reviewed the existing vision statement of the organizationand the vision statement drafted by the staff members. From the review, the boardintegrated the existing and newly crafted vision statement of the staff. The boardcame out with a new vision statement, which was passed on to the staff members todiscuss. The board and the staff members finally met during a strategic planningworkshop where both sides were able to exchange insights and came out with a revisedvision statement for the organization.Feeling the Success of a Vision (Elwood Chapman, Book details?). By answeringthe questions in table IT 1.3, you (executive director, board, or key staff) will be ableto determine whether your vision is suitable. If you obtain eight or more “Yes” answers,then your vision is appropriate for your organization.Table IT 1.3. Guide Questions on Vision’s SuitabilityQuestion Yes No1. Does this vision lead everyone within the organization in the bestpossible direction?2. Will it benefit all members equally?3. Will it help to sustain and protect the organization over the longterm?4. Can I, as a leader, articulate the mission clearly to all members ofthe organization?5. Can the vision be expressed as a slogan?6. Will the members of the organization accept the vision withenthusiasm?7. Am I highly enthusiastic about it myself?8. Will the vision increase motivation appreciably?9. Is it sufficiently visionary to work?10. Is it the best vision under the circumstances?Number of Yes / No

Revisiting/Creating a Shared Vision 131Step 3: Development of Key Success Factors to Achieve VisionOnce the organization has developed its shared vision, it is imperative that key successfactors or indicators are developed. These indicators will help the organizationdetermine whether it has or hasn’t achieved its vision in the years ahead. The indicatorswill further help the organization clarify what its vision statement really means.Indicators may be developed taking into account the stakeholders’ criteria forperformance as well as the elements embedded in the vision statements. Using theexamples in Box IT 1.3, the organization (RHC) may develop the following indicatorsas key success factors:1. Ability to maintain the status of being at the forefront of advocacy for women’sand reproductive health.2. Capacity to maintain the status of being at the forefront in developing programapproaches in women’s and reproductive health.3. Ability to help other groups such as NGOs and government agencies replicateprogram approaches on women’s and reproductive health.4. Contribution to the promotion of a society where women and youth:• Enjoy good health—physically, mentally, emotionally, socially, and spiritually—from birth to death;• Are respected and treated with dignity, regardless of age, civil and social status,income, gender preference, or religious or ideological beliefs;• Are equipped with adequate and proper information on reproductive and sexualhealth and have access to quality services to be able to exercise their reproductiverights, including decisions on the number and spacing of their children; and• Are co-deciders and -policymakers in all aspects of their personal, familial,civic, and professional lives and at all levels of society, particularly in mattersregarding their welfare, health, bodies, and relationships.

132ACHIEVING EXCELLENCE in Your NGOINTERVENTION TOOL 2Developing orValidating Strategies“Strategy is viewed as an ‘operator’ which is designed to transform the organization fromthe present position to the position described by the objectives, subject to the constraints ofthe capabilities and the potential…”T~H. Igor Ansoffhis century produced a plethora of books and materials on strategy. Strategiesinclude the broad priorities and directions adopted by an organization. In NGOmanagement, strategy has to do with responding to a dynamic and often hostileenvironment in pursuit of a public service mission. It defines overall programs andorganizational priorities and therefore suggests where the organization should beinvesting its resources now and over the next few years. Thinking strategically meansbeing informed and consciously responsive and proactive to this environment. Strategyallows organizations to allocate resources in order to achieve goals. It determines whatthe organization intends to achieve and how the organization and its resources aredirected towards accomplishing its goals over time. A good strategy strikes a balancebetween the heart and head: passion and vision combined with careful analysis.If your organization has already developed a current strategy recently, you may onlywish to assure yourself of its validity. However, if some time has elapsed since thestrategy was developed and either the external environment or internal conditionshave changed, then you may wish to develop a strategy once again. In this section,you will first be presented with a primer on developing a strategy, as it is not possibleto discuss the voluminous knowledge on developing strategy available in the literature.Then, we will discuss how you can validate your current strategy should you not wishto develop a new one.

Developing or Validating Strategies 133Developing a StrategyThe concept of strategy can be traced back to its roots in the military field. It emergedout of the necessity to gain a better vantage point against enemies through themovement of troops, supplies, and ammunitions on the battlefield. This concept hasalso been adopted in the business battlefield to achieve a competitive advantage.In the context of NGOs, however, the adoption of strategy need not necessarily involveconflict, competition, or defeat to achieve goals. Collaboration rather than competitionis the name of the game in the NGO arena. If there are enemies to be dislodgedthrough the employment of strategy, these are organizational shortfalls or impedingforces such as inefficiency, ineffectiveness, lack of stakeholder participation, or unclearvision, to name a few.One need not apply a command-and-control style to implement a strategy. A welldefinedstrategy can foster a climate of tacit coordination that is more efficient thanmost administrative mechanisms. Strategy must be driven by a need to achieve socialvalue such as improved quality of care, effective client-responsive services, and enhancedcommunity participation.What is Strategy?If a mission is a statement of why an organization exists and a vision is a statement ofwhere it is headed, strategy is a statement of how it intends to get there. In otherwords, strategy is the overall framework governing the decisions and actions to betaken by an organization to achieve its vision and realize its mission. Such decisionsneed to fit into the overall pattern of the organizational tapestry, consistent with eachother and congruent to organizational vision.The strategy development process is a mechanism that assists organizations to identify,evaluate, and formulate organizational strategic options flowing from vision andmission. Different approaches to strategy development may be employed by differentorganizations and tailored to their own characters and aspirations.What is Strategy for NGOs?Some skeptics may argue that an organization does not need to develop strategies toflourish. This could be true to some extent, but organizations without strategiesnever survive the test of time—they either die of natural causes or by being clobberedby the changing environment. Hence, all organizations require effective strategies.Strategy is a set of actions that will position the organization to be most effective inmeeting present and future challenges. According to a 1989 survey by the Society ofAssociation Executives, two of the characteristics that distinguish “very successful”from “less successful” nonprofit executives are the former’s leadership in policy matters

134ACHIEVING EXCELLENCE in Your NGOand their focus on strategies (Bart Nanus and Stephen Dobbs, Leaders Who Make aDifference, 1999).Unfortunately, in many cases, the strategies of NGOs are unclear or no longer effective.This usually stems from their lack of proper understanding of the concept of strategycoupled with inadequate skills in strategy formulation. NGOs need to develop effectivestrategies to successfully serve their constituents, achieve their shared vision, and adaptto the changing and sometimes turbulent environment. Effective strategies enable anNGO to communicate to stakeholders that it has taken charge of its destiny and isprepared to face deviations and obstacles along the way. Strategies should be used tocoordinate and commit the board, leadership, staff, and volunteers to position theorganization so that it can respond quickly to and take advantage of changes in theexternal environment. Further, strategies should provide NGOs with benchmarksagainst which organizational performance can be measured in the long term.The key function of strategies is to provide coherence to organizational actions so thatNGOs will be guided to achieve their superordinate goal of advancing their mission. OftenNGOs need to collaborate and work together to achieve their vision of an improved society.Implicit in this is the concept of shared power that encompasses diverse constituencies andincludes bargaining and negotiation. Strategy development can help NGOs organizecollective thought and action within an inter-organizational network where no one personor institution is in charge but in which many are involved. Strategy development shouldbe conducted not only because it is the right thing to do, but also because it is an indispensablelink to vision. Through strategy development, NGOs are able to marshal and allocatetheir limited resources in the best way, by analyzing their unique strengths and limitingattributes while considering opportunities and threats in the environment.Strategy development is a challenging management process that has received muchattention and a lofty reputation during the 20 th century. As with other managementprocesses, it is used to help organizations focus their energy, align their capabilities tosupport the achievement of a shared vision, and adjust their direction in response tothe changing environment. In other words, strategy development is an effort to producefundamental decisions and actions that shape and guide what an organization is, whatit does, and why it does this, with vision as the fulcrum.Strategy development can be complex and even messy. For businesses, effective strategiesare considered key to gaining a competitive advantage; however, for NGOs, effectivestrategies are springboards towards creating a difference in society. This task has becomemore critical as NGOs have to wrestle with a tough environment characterized byincreased competition for funding, shifting patterns of donor priorities, changingdemand for services, increased calls for transparency and accountability, and greaterexpectations from various sectors. Therefore, leaders and managers of NGOs must beeffective strategists if their organizations are to fulfill their missions and effectivelyserve their constituents in the years ahead.

Developing or Validating Strategies 135Below we describe a practical framework and tools developed and specifically tailoredfor NGOs, especially those in the third world. The concepts, process, and designpresented in the module have been shaped by ICOMP’s work over the years with anumber of NGOs. A good strategic formulation process will help NGO leaders,managers, and practitioners to:1. Align organizational capabilities congruent to organizational vision;2. Allocate and prioritize resources and energy optimally and synergistically; and3. Achieve excellence by maximizing organizational core competence.The recommended process is neither a formula to be rigidly adhered to nor a magicwand that can transform organizations instantly. It is a suggested approach that canbe adapted and modified to fit the needs of NGOs and the peculiarities of each situation.The application of this process requires commitment, creativity, and flexibility.Lessons Learned in Strategy DevelopmentIn his book, The Rise and Fall of Strategic Planning, Henry Mintzberg alerts readersabout the fallacies of strategic planning that must be avoided. He argues that the term“strategic planning” is itself an oxymoron “because analysis is not synthesis… andanalysis cannot substitute for synthesis, no amount of elaboration will ever enableformal procedures to forecast discontinuities, to inform managers who are detachedfrom their operations, to create novel ideas.” He further states that while the fallaciesof predetermination and detachment are generously integrated, some have reservationson the fallacy of formalization on the premise that strategy formulation is both ascience and art. The approach towards strategy formulation depends on the natureand character of the organization. It can be formalized or spontaneous as the situationwarrants. It is up to the organization’s judgment to apply the right approach. KenichiOhmae, in his book, The Mind of the Strategist, offers a balance between mechanicallinear process and creative analysis. He argues that strategy formulation contrastssharply with a more conventional mechanical systems approach, but it also contrastswith an approach that relies entirely on intuition, without any framework. Theframework below, which adapted Mitzberg’s and Ohmae’s concepts, provides someanalytical tools that allow for iterative analysis using nonlinear brainpower.How Do We Get Started?Prior to embarking on strategy development, it is very important that the organization’sreadiness be examined. In order to determine that an organization is ready to undertakestrategy formulation, the following conditions must be met:1. Commitment and support from top leadership, especially the executive directorand board, throughout the entire process.2. Commitment to gather and use relevant information for assessing current programsand evaluating how to meet current and future client needs.

136ACHIEVING EXCELLENCE in Your NGO3. Willingness to be inclusive and encourage broad participation so that people feelownership and are energized in the process.4. Board and staff understanding of the purpose of the process and, what it is and isnot able to accomplish, and consensus about desired outcomes.5. Good working relationships and no extremely serious conflicts among keyparticipants.If any conditions for success above are missing, then strategy formulation may not beappropriate at this time. In cases when the organization is halfway through the processand realizes that it is not really prepared to continue the process, the process should behalted. The organization may then reflect and reassess how the process will proceed.Strategy Development ProcessThe strategy development process discussed below is based on a five-phase frameworkdelving into a confluence of factors that influence approaches and options for theNGO strategy development process. Under each phase, a number of exercises may beconducted using available management tools adopted from business or nonprofitliterature. Briefly, the phases are as follows:Phase 1: Articulation/Clarification of VisionPhase 2: Strategic AnalysisPhase 3: Participatory Strategy DevelopmentPhase 4: Planning for Strategy ImplementationPhase 5: Implementation, Monitoring, and EvaluationThe process is envisaged to be highly participatory, with participants coming from alllevels of the organization and from all groups of stakeholders. The idea of the process isto get as much involvement from those people who will be implementing the strategies.The Strategy Development FrameworkThe anchor premise in undertaking the strategy formulation process is shown in theStrategy Development Framework (Figure IT 2.1).Phase 1. Articulation/Clarification of VisionThis phase involves drafting or clarifying the organization’s vision statement. Fororganizations without a vision, this means developing one, and for organizations withan existing vision, this phase allows members of the organization to reflect and validatethe current vision vis-à-vis its constituency and the environment. Revisiting or craftinga vision statement generates a common goal, hope, and encouragement; offers apossibility for fundamental change; gives people a sense of control; gives a groupsomething to move toward; and generates creative thinking and passion.

Developing or Validating Strategies 137Figure IT 2.1. Strategy Development FrameworkStakeholders’ AnalysisCreation/Clarificationof Vision andMission StatementsDevelopment ofIndicatorsExternal AssessmentThreats andOpportunities: Political,Economic, Social,Technological TrendsStrategy ValidationInternal AssessmentStrengths andWeaknessesExamining and PrioritizingKey Strategic IssuesInnovationValue AddedStrategy FormulationIssue ResolutionGrowth andSustainabilityFinancial andProgramStakeholdersStrategy Mapping:Planning forImplementationDevelopment andImplementation ofAction PlansInternal ProcessInnovation andLearningMonitoring andEvaluation

138ACHIEVING EXCELLENCE in Your NGOPhase 2. Strategic AnalysisStrategic analysis is concerned with integrating the internal and external forces thatinfluence the strategic decisions of an organization. As no organization exists in avacuum, organizations undergoing strategy formulation must be conscious of theirever-changing environments. This phase outlines the process for assessing theorganization’s internal processes and strategies and its environment, encompassingthe political, economic, social, and technological (PEST) spheres. From these analyses,the organization can determine the strategic considerations it must focus on.This phase involves two analytical processes:• Internal Analysis: Examining the internal strengths and weaknesses of theorganization by looking at its systems, structure, style, shared values, superordinategoals, and skills.• External Analysis: Assessing the external environment by looking at the threatsand opportunities in the PEST dimensions.• Integrating Internal and External Analyses: Comparative analysis of both theinternal and external situations to determine the opportunities and threats thatthe organization currently faces or is about to face.Figure IT 2.3. Strategic AnalysisExternal AssessmentThreats and Opportunities:Political, Economic, Social,Technological TrendsStrategy ValidationInternal AssessmentStrengths andWeaknessesThese processes require gathering relevant information from various sources.Information can be generated from internal stakeholders, namely the board, staffmembers, and volunteers; external stakeholders such as clients, donors, communitymembers, the government, and other key informants; and primary and secondarydata such as project reports, client feedback, clinic records, and financial reports, amongothers.Internal AnalysisInternal analysis looks at the strengths and weaknesses of the organization. The process mayinvolve examining the following organizational dimensions: (1) programs and services, (2)systems and structure, (3) management process, (4) staff competence, (5) finance, (6) leadership,(7) governance, and (8) relationships and organizational culture.

Developing or Validating Strategies 139Below is an example of information used in an internal analysis:Table IT 2.1. Internal AnalysisKey Areas Strengths WeaknessesPrograms and services • Strong track record • Inability to track changes in• Performance is highly praised community needsSystems and structure • Flexible and not “by the • Financial system requiresbook”improvement• Results-based approach • Management information• Open line of communication system (MIS) is not yet fullyoperationalManagement process • The leadership has a deep • Planning process notunderstanding ofadequately given attentionmanagement processesStaff competence • Technical expertise is high • Facilitation skills need• Excellent interpersonal improvementrelations skills • Weak documentation skillsFinance • Cost-effective and efficient • Large chunk of support• Some support from the comes from donorsgovernment and communitiesLeadership • Skilled and competent • Lacking in secondaryexecutive directorleadershipGovernance • Board members are active • Some members of the board• Consultative process is are not comfortable withpracticedcondom distributionRelationships and • High staff commitment • Teamwork is weakorganizational culture • Strong sense of ownershipExternal AnalysisThis process involves looking at the opportunities and threats in the externalenvironment by considering the political, economic, social, and technological forcesthat influence the organization. The organization may gather as much informationon the environment’s influence on the organization as it sees fit. A checklist of someinformation that the organization may require is shown in Table IT 2.2.Table IT 2.2. Checklist of PEST ConsiderationsPolitical (government policies and laws) Economic• Stability • Employment rates• Government relationship with donor • Community disposable incomecountries • Community’s willingness to pay for services• Regulatory framework • Prices of clinic materials• GNP growth• Income distribution

140ACHIEVING EXCELLENCE in Your NGOSocialTechnological• Extent of unmet needs and the reasons • New discoveries that may influencethey remain unmetdevelopment programs• Population and demographics • Speed of technology transfer• Level of education • Rates of obsolescence• Lifestyle changes • Government spending on research and• Social mobility development• Attitudes towards available services• Presence of other service providersBelow is an example of a matrix that contains the information gathered by anorganization in the Philippines, which we will call the Reproductive Health Coalition(RHC).Table IT 2.3. External AnalysisKey Factors Opportunities ThreatsPolitical • Devolution of health services • Conservative presidency mayallows NGOs to work together hamper initiativeswith local government units • Official Development Assistance(LGUs)(ODA) support to development• NGOs could serve as a programs declining worldwideresource to LGU personnelon healthcare management• There is a lack of care for theelderly, which the organizationcan offerEconomic • Migration of men and women • Migration exposes men andopen economic opportunities women to health risks• Economic zones flourish • Increased health risks due topollution from factories• Purchasing power of communitiesdeclinesSocial • Increasing number of NGOs • Increasing number of youngfocusing on adolescentpersons vulnerable to HIV andreproductive health (ARH) AIDS• Schools participating in • Low understanding of youngreproductive health (RH) persons, especially girls, on theirawareness raisingRH rightsTechnological • New technology in clinical • Recent research not easilyservicesaccessible• Availability of low-cost HIV/ • Inability of staff members to adoptAIDS treatmentnew technologies

Developing or Validating Strategies 141Integrating Internal and External AnalysisWhile the internal and external analyses can be useful in generating strategic considerationsfor the organization, there is a tendency, at this phase, toward linear thinking, and someconflicting strategic considerations may not emerge. One useful tool that will furtherenhance the analytical process is the SWOT Grid developed by Prof. Kevin P. Kearns(“Comparative Advantage to Damage Control: Clarifying Strategic Issues Using SWOTAnalysis” Nonprofit Management and Leadership, Fall, 1992). The grid shows the interplayof organization strengths, weaknesses, opportunities, and threats (SWOT) and showshow congruence between internal and external factors can be used in making strategicdecisions (Figure IT 2.3). The grid will enable the organization to determine strategicconsiderations emanating from the strengths, weaknesses, opportunities, and threats.Figure IT 2.3. SWOT GridOpportunitiesThreatsWeaknesses StrengthsINVESTClear matches of strengths andopportunities lead to comparativeadvantageJUDGMENT CALLAreas of opportunity matched byareas of weakness require a judgmentcall; invest of divest; collaborateDEFENDAreas of threat matched by areas ofstrength indicate a need to mobilizeresources either alone or with othersDAMAGE CONTROL/DIVESTAreas of threat matched by areas ofweakness indicate need for damagecontrolUsing the grid above, an organization could match the external and internal factorswith a set of guide questions, as shown in Table IT 2.4.Table IT 2.4. SWOT Grid Guide QuestionsINVEST: Strengths and Opportunities• What actions are necessary to maximize the opportunities and strengths?• What resources are required? Will someone pay for it?• Will it contribute to the achievement of our vision?• How would it benefit the constituency?• How will the stakeholders see the organization if action is taken?• If we do not do anything what will be the scenarios?

142ACHIEVING EXCELLENCE in Your NGODEFEND: Strengths and Threats• What will it take to protect the strengths? Will it be worth it? Why?• What resources are needed?• Who could possibly help/collaborate?• If we do not do anything what will be the scenarios?JUDGMENT CALL: Weaknesses and Opportunities• What criteria are we going to use to make a judgment?• If we invest, how would it benefit the constituency? Will it help us achieve our vision?• If we invest, what resources are required?• Will collaboration be needed? With whom?DAMAGE CONTROL/DIVEST: Weaknesses and Threats• Will divesting improve effectiveness?• Who will be the most affected?• Will there be conflict with organizational values?Below is an example of SWOT grid mapping that builds on the external and internalanalyses used as examples in the previous sections. The example shows only a fewpossible options and is not exhaustive. While developing strategy considerations foreach cell, the guide questions should be in the minds of the participants.Table IT 2.5. Example of SWOT GRIDOpportunitiesThreats• Devolution of health • Conservative presidencyservices allows NGO/LGU • Worldwide decline inpartnerships; NGOs could ODA support to RHserve as a resource to LGU • Migration increases healthpersonnel on health care risksmanagement• Pollution hazardous to• High demand for elderly healthcare• Decline in purchasing• Migration opens powereconomic opportunities • Increasing vulnerability• Economic zones flourish of youth to HIV and AIDS• Increasing number of • Youth lack knowledgeNGOs focusing on ARH of RH and RH rights• Schools participate in • Inaccessibility of recentRH awareness raising research on RH• New technology in • Lack of knowledge ofclinical servicesnew technologies• Availability of low-costHIV and AIDS treatment

Developing or Validating Strategies 143Strengths Invest Defend• Strong program track • Build on community • Harness communityrecord and performance performance and resources• Flexible and not “by the collaborate with • Integrate HIV and AIDSbook” structure government to replicate in ARH program• Results-based approach promising programs inis highly usedother areas• Participatory decision • Further enhancemaking and open line of organizational competencecommunicationto become a resource on• Deep understanding of the government’s healthcareleadership on management servicesprocesses; competent • Broaden technical andleadershipmanagement skills to• Technical expertise is high explore possibility of• Excellent interpersonal offering elderly carerelations skillsservices• Cost-effective and efficient• Some support from thegovernment andcommunities• Active board• High staff commitmentand strong sense ofownershipWeaknesses Judgment Call Divest• Inability to track changes • Develop a tracking • Financial managementin community impact mechanism embedded must be improved• Financial system requires in MIS and a monitoring • Need to advocate forimprovement and evaluation system increased resource• MIS is not yet fully • Engage board in values support to RHoperational reflection • Need to link research to• Planning process not MISadequately given attention• Staff facilitation skills needimprovement• Weak documentation skills• Large chunk of supportcomes from donors• Lacking in second-lineleadership• Some conflicting valuesbetween board andorganization• Teamwork is weak

144ACHIEVING EXCELLENCE in Your NGOPhase 3. Participatory Strategy DevelopmentThis phase is a critical turning point in the strategy formulation process. At thisphase, the organization begins examining the relationships and interplay of the variousstrategic considerations that emerged from external analysis, internal analysis, andstrategy validation. This phase involves the following processes:1. Strategic considerations prioritization process2. Strategy development processFigure IT 2.4. Strategy Formulation ProcessExamining and PrioritizingKey Strategic IssuesInnovationIssue ResolutionStrategy FormulationValue-addedGrowth and SustainabilityStrategic Considerations Prioritization AnalysisStrategic considerations prioritization analysis stems from the previous phase wherevarious factors that support or impede organizations from achieving their vision areexamined and analyzed. The process allows the organization to keenly analyze whichstrategies must be prioritized for implementation, taking into consideration a numberof factors such as the strategy’s importance to stakeholders, organizational fit, and fitwith donor’s priorities. The analysis involves integrating analyses undertaken earlier.Prioritization of concerns to be addressed is very important as organizations need toclearly determine how to allocate their resources within a certain timeframe. Theprocess may involve evaluating the different strategic considerations vis-à-vis a set ofquestions. Below is an example of a Strategic Considerations Prioritization Matrix(Table IT 2.6), which builds on our earlier examples. In this case, the organizationmust try to answer the following key questions:1. How important is this concern to our stakeholders? What benefits will they gain?Will there be any groups that will be discriminated against?2. Do donors consider it an important concern? Will they support addressing theconcern?

Developing or Validating Strategies 1453. Do we have the capacity to address the strategic consideration? Does it align withour vision and values?4. Will the different strategic considerations conflict with each other?By answering these questions, the organization will be able to prioritize the strategicconsiderations it wishes to address. If they want, they may classify them as “primarystrategic considerations” and “secondary strategic considerations.”Table IT 2.6. Strategic Considerations Prioritization MatrixStrategicConsiderationsImportance toStakeholdersFit WithDonor’sPrioritiesOrganizationalFitOverallFit/RemarksBuild on communityperformance and collaboratewith government to replicatepromising programs in otherareasFurther enhance organizationalcompetence to become aresource on government’shealthcare servicesBroaden technical andmanagement skills to explorepossibility of offering elderlycare servicesDevelop a trackingmechanism embeddedin MIS and a monitoring andevaluation systemEngage board in valuesreflectionHarness community resourcesIntegrate HIV/AIDS intoARH programImprove financialmanagementLink recent research to MISAdvocate for increasedresource support to FP/RHBuild capacity of LGUpersonnel

146ACHIEVING EXCELLENCE in Your NGOStrategicConsiderationsImportance toStakeholdersFit WithDonor’sPrioritiesOrganizationalFitOverallFit/RemarksDevelop and nurturecommunity leaders andmechanisms to institutionalizethe partnership processConsult more on effectiveARH servicesCreate more demand forservices and develop clinicpayment schemeMarket research services tomore clientsStrategy Development ProcessUsing the matrix above, the organization may be guided to think and reflect andeventually develop strategies. The process is not just about fixing what is wrong butalso nurturing what is right. Strategies that will be developed will not only focus onthe resolution of strategic considerations but also on strategies that will promoteinnovation, address strategic concerns, and espouse growth and sustainability. Hence,the following key strategies must be developed:1. Strategies for the resolution of issues.2. Strategies for innovation.3. Strategies for growth and sustainability.4. Strategies building on a competitive edge.It must be noted that strategy formulation does not have to be forced or contrived andmay not necessarily be based on frameworks or structures. Some strategies may justcome up when someone is taking a bath. Strategies come from ideas and ideas mustbe nurtured. A few principles drawn from John Bryson’s Strategic Planning for Publicand NonProfit Organizations (2004) are useful:1. Necessity and threat, but also opportunity, are the mothers of invention.2. Ideas flourish in organized anarchies, but implementation of those ideas is difficult.3. Ideas are the rallying point for collective action. They transcend isolated peopleand organizations. People and structures are the byproducts of changing ideas.4. Ideas plus resources equal power.5. After a good idea dies, give it a funeral or a wake.The process of developing strategies includes listing prioritized strategic issues and developingcorresponding strategies for each of these. An example is shown in Table IT 2.7. In thistable, the strategies developed above are classified into four key strategy areas:

Developing or Validating Strategies 1471. Issue resolution2. Innovation3. Growth and sustainability4. Social value addedThe reason why we propose that strategies be developed in this way is that organizationsusually have the tendency to address issues and concerns but fail to develop strategiesthat address innovation, growth and sustainability, and social value added services.Table IT 2.7. Strategy Development for Organizational ConsiderationsStrategy ClassificationStrategyIssue ResolutionInnovationGrowth and SustainabilitySocial Value AddedStrategy PrioritizationOnce the organization has already developed its different strategies, it has to prioritizeits strategies in order to properly marshal its resources. The process may involvedeveloping a set of criteria that the strategies will be evaluated against. An example isshown below, where the strategies are assessed against the criteria using a priorityrating scale of high (3), medium (2), and low (1). Criteria may vary from organizationto organization. The example uses the following criteria: (a) effectiveness, (b) financialfeasibility, (c) organizational capacity, and (d) congruence to vision.Table IT 2.8. Strategy Prioritization MatrixStrategyFinancial Organizational Congruence OverallEffectivenessClassification Feasibility Capacity to Vision RatingIssue ResolutionInnovationSocial Value AddedGrowth andSustainability

148ACHIEVING EXCELLENCE in Your NGOPhase 4: Planning for Strategy ImplementationPrioritized strategies are broad directions for the organization. Operationalizing themis critical for implementation. Developing operational strategies for NGOs involvestwo synergistic components, as suggested by Samuel Paul (Strategic Management ofDevelopment Programmes, 1983):1. Service–Beneficiary-Sequence (SBS). This involves addressing three goalorientedquestions:• What service is to be provided?• Who is the beneficiary?• What will the sequence of introduction of services be?2. Demand-Supply-Resources (DSR). This involves addressing three task-orientedquestions:• How will demand be generated?• How and where will services be provided?• Who will provide the resources?For each strategy, an operational strategy should be developed. Using a matrix, thefollowing questions may be considered in developing operational strategies:1. Services• What interventions will be provided? Will they be single or integratedinterventions?• How will quality be introduced and maintained?2. Target Beneficiaries• Who will be the target group? What are their characteristics (homogenous ordiverse)?• Will interventions differ for each group?3. Sequence• What interventions will be provided first?• What services will be gradually added?4. Demand Generation• How will social acceptability be created (advocacy, participation in all phases, etc.)?• How will services be promoted (e.g., information, education, communicationmaterials, one-to-one counseling, target-specific messages)?5. Service Delivery Mechanism• Where will the interventions be offered?• How will referrals be arranged?• How will communities be involved?

Developing or Validating Strategies 1496. Resource Mobilization• What resources are available? What resources are required?• How will resources be mobilized and from whom (donors, government,business)?• Who will provide the services? What skills are needed (technical, interpersonal,gender-related)? How will skills be developed?Table IT 2.9. Operational Strategy MatrixStrategyServicesTargetGroupSequence(Timing)Demand Supply ResourcesIssue ResolutionGrowth andSustainabilityInnovationSocial Value AddedPhase 6: Implementation, Monitoring, and EvaluationStrategies developed, no matter how novel and powerful they are, if not implementedare futile. This step enables organizations to determine how to implement operationalstrategies and what necessary steps to take.A useful tool in strategy mapping for implementation is the Balanced ScorecardApproach. Developed by Robert S. Kaplan and David P. Norton, the BalancedScorecard is a revolutionary management performance tool designed to measureorganizational performance in a comprehensive way. It affords an organization a fastbut comprehensive view of the interplay among its various strategies and suggests howto implement them in a coherent way, with the overarching vision as the focus.This approach is discussed in Part C: Intervention Tool 3.In the course of implementing the strategies of the organization, it is important that asystem and process of monitoring and evaluation is developed. This will providebenchmarks and checkpoints on how well the strategies are implemented and correctdeviations, should there be any.Overall ReviewA first step is to ask a few questions to evaluate the overall strategies:

150ACHIEVING EXCELLENCE in Your NGO1. Do they provide guidance for both long-term and short-term priorities?2. Do they help allocate resources?3. Are they responsive to the organization’s best understanding of its internal andexternal environments?4. Are they a product of consensus and a commitment-building process?5. Have they been formally adopted by the board?6. Are they realistic?7. Are they anchored on vision?Establishment of CheckpointsIt is critical that progress of implementation is tracked using the following processes:1. Develop major indicative milestones of progress based on strategies developed.2. Schedule regular reviews.3. Questions to ask:• Is the implementation on target? What has been accomplished? What has notbeen accomplished?• Are the assumptions about the internal and external environment still valid?• What are the current issues facing the organization, and, after discussing theseissues, are there any changing or new priorities that have to be added?• Are there new performance targets, and/or modified intermediate checkpointsthat need to be looked at?Validating the Current StrategyStrategy Validation ProcessStrategy validation is a systematic process through which an organization examines,reflects on, and evaluates how well its current strategies can achieve its vision. Theprocess guides organizations to continually look at how strategies fit with their visionand vice versa by using a set of criteria. It sharpens organizational focus so that allorganizational resources are optimally utilized, convergent factors are exploited, anddivergent factors are diluted or expunged. It also determines how clear strategies arein the minds of people throughout the organization. Unless the strategies are clear tothose who actually implement them, the process of developing strategies will be nothingmore than an academic exercise with little or no benefit to the organization. Theprocess, therefore, could result in determining to develop new strategies or continuouslypursue, refocus, drop, or revise an existing one.Table IT 2.10 provides an example of strategy validation where the organization usedthree criteria to validate its strategies: social acceptability, responsiveness/effectiveness,and financial viability.

Developing or Validating Strategies 151Table IT 2.10. Current Strategy ValidationOrganizational Is it socially Is it responsive/ Is it financially StrategyStrategy acceptable? effective? viable? ConsiderationsCollaboration Currently Training of The LGUs Build morewith LGUs working with a LGU personnel provide capacity amongthrough number of LGUs is key to substantial LGU personnel;training, who expressed expansion of allocation. develop andcommunity satisfaction outreach areas. Communities nurturelinkage, and with the Community pay minimal communityprovision of partnership. champions fees. Change leaders andservices A number of need nurturing. of leadership mechanisms toLGUs seek may change institutionalizecollaboration. the scenario. the partnershipCommunitiesprocess.welcome process.Gender-based Many clients Quick survey Fees are Consult moreclinic services seek clinical shows generated from on effective ARHusing the life- services. Women’s reduction in the clients but services; createcycle approach groups, unmet needs earnings are more demand forgovernments, in some not yet enough services andand donors communities. to sustain develop clinicsupport the Feedback from overall payment schemeapproach. clients is operations.Youth clients, positive overall.however, arestill minimal.Research on Improvement Research was All research was Market researchimproving in the quality used as inputs commissioned services to morequality of care of care is being in program and paid for. clientsaspired to by development The projectall stakeholders. and decision could sustainmaking. itself.This stage aims to validate the existing strategies of the organization and how theyrelate to the organization’s overarching vision.The strategy validation process is marked by the following characteristics:1. It involves a reexamination of priorities. It looks at how best the organization canrespond and be proactive to the dynamic and sometimes chaotic environment.NGOs have many options in the face of changing client needs and fundingscenarios, competing demands, and other factors. Validating an organization’sstrategy, therefore, requires recognition of these choices and commitment to oneset of responses instead of another.

152ACHIEVING EXCELLENCE in Your NGO2. It raises questions that help organizations examine past experiences, test oldassumptions, gather and incorporate new information about the present, andanticipate the environment in which the organization will be operating in thefuture.3. It builds commitment. Involving key players within the organization in the processof validation allows disagreements to be engaged constructively and supports bettercommunication and coordination. It allows a broad consensus to be built, resultingin enhanced accountability throughout the organization.The strategy validation process may be appliedin a number of ways. Based on experience,however, the following process has proven tobe effective:1. A three-member team may be organizedto lead the entire process. An externalconsultant or a member of the team mayfacilitate.2. Set aside a half-day session whereinmembers of the board and key staffmembers are invited to participate.3. The team may prepare a short papershowing the different strategies of theorganization and how these strategies wereimplemented. The paper may bedistributed to the participants a few days inadvance.4. The process of validating the strategyduring the session can be in the form offocus group discussions, facilitateddiscussions, presentations and discussions,or a mix thereof, depending on the numberof members in the group or the consensusof the participants.Box IT 2.1. Validity Criteria• Social Acceptability: Arestrategies acceptable to thestakeholders as appropriatemeans of addressingcommunity needs orconcerns? Are they justifiablemeans considering the sociocultural,political, andeconomic context andnuances within which theorganization operates?• Responsiveness toCommunity Needs: Arestrategies targeted at solving ormeeting the unmetcommunity needs, problems,and aspirations?• Financial Viability: Arestrategies affordable for theorganization? Are they costeffectiveand efficient? Couldthey be sustained in the longrun?5. While the organization can develop its own set of questions or criteria againstwhich the strategies maybe validated, the following key questions may be useful:• Is the strategy socially acceptable?• Is the strategy responsive to community needs?• Is the strategy financially viable?

Developing or Validating Strategies 153A matrix below can be used in this process. It involves listing organizational strategies.Each strategy is then assessed using the criteria of social acceptability, responsiveness,and financial viability. Assessment of each strategy may be undertaken by just answeringyes or no, giving the reasons why, and plotting the answers in the cells of the matrix.Another way of doing this is by ranking the strategy’s success in each area using thehigh, medium, low scale.Table IT 2.11. Validating Organizational StrategiesOrganizationalSocialFinancialResponsivenessStrategy Acceptability ViabilityBelow is an example of how one partner organization applied the matrix using the“yes or no and why” assessment scale.Table IT 2.12. Validation of Strategy Assessment Matrix of KRF FoundationOrganizationalSocialFinancialResponsivenessStrategy Acceptability ViabilityTraining NGO Yes—indicated by Yes—indicated by No (at the moment)leaders and 30 to 40 paying positive evaluation —some trainingpractitioners participants per from participants. programs of thesession (5 sessionsorganizationper year). Thegenerate minimalinstitute is accreditedincome. Theby the Regulationprogram hasCommission. Thepotential to be selftraining program issustaining.currently supportedHowever, there is aby a number ofneed to develop anfoundation anddonor agencies.effective marketingstrategy for theorganization topromote and “sell”its training programs.

154ACHIEVING EXCELLENCE in Your NGOOrganizationalSocialFinancialResponsivenessStrategy Acceptability ViabilityResource center Yes—indicated by Yes—the center is No (at the moment)about 50 to 60 users dubbed the only —has potential to bea month and referrals comprehensive RH self sustaining. Itfrom schools. resource center in earns minimal userSupported by a the country. Most charges. Couldnumber of book titles could increase usageorganizations. not be found through partnershipsanywhere else inthe country.with libraries andadvertising (e.g.,regular updates).There is a need tomarket the center totarget clients.Direct services Yes—as indicated by Yes—although the Yes—although thethe number of clients. impact of prevention earnings are not yetservices is difficult to enough to sustaintrack.overall operations.Having validated its existing strategies, an organization will gain a clear idea of whetherto add new strategies or to pursue, drop, or revitalize existing ones. In the exampleabove, the organization felt that its current strategies were still valid, but it may needto pay more attention to its financial viability.

Implementation of Strategy: The Balanced Scorecard Approach 155INTERVENTION TOOL 3Implementation of Strategy:The Balanced ScorecardApproachStrategies, no matter how novel and powerful they are, if not implemented arefutile. This tool enables organizations to determine how to implement operationalstrategies and what necessary steps to take.A useful tool in strategy mapping for implementation is the Balanced ScorecardApproach. Developed by Robert S. Kaplan and David P Norton, the Balanced Scorecardis a revolutionary management performance tool designed to measure organizationalperformance in a comprehensive way. It involves measuring the organization’sperformance from the following perspectives:1. Financial and program;2. Stakeholders;3. Internal process; and4. Innovation and learning.The Balanced Scorecard Approach affords an organization a fast but comprehensiveview of the interplay among its various strategies and suggests how to implementthem in a coherent way, with the overarching vision as the focus. It allows anorganization to determine the pertinent knowledge, skills, and systems needed tostrengthen its competencies to achieve organizational vision and serve the greatersatisfaction of stakeholders. It makes strategy a continuous process owned not just bytop management but by everyone in the organization. This approach is the productof ten years of learning and research into more than 200 companies that have used thetool.Figure IT 3.1 shows the logical interrelationships of different perspectives that theorganization must examine to determine its performance.

156ACHIEVING EXCELLENCE in Your NGOFigure IT 3.1. Balanced Scorecard Framework for NGOsVisionFinancial and Program PerspectiveIf we succeed, how will we look toour financial donors? How do wesustain ourselves programmaticallyand financially?Stakeholders PerspectiveTo achieve our vision, how mustwe look to our stakeholders?Internal ProcessTo satisfy our stakeholders, financialdonors, sustainability, and vision, whatinternal processes must we excel at?Innovation and Learning PerspectiveTo achieve our vision, how must ourpeople learn, communicate, innovate,and work together?The Balanced Scorecard Approach to strengthen strategy implementation has threesteps:1. Map the strategy using the four perspectives.2. Assess current organizational performance from these four perspectives.3. Identify the gaps between (a) and (b) and develop action plans for making necessarychanges.These steps are elaborated on below.Step 1: Strategy Implementation MappingStrategy implementation mapping basically looks at the interplay of the four BalancedScorecard Approach perspectives and the operational strategies.Innovation and Learning Perspective. This perspective answers the question: Toachieve our vision, how must our people learn, communicate, innovate, and work together?Understanding the dynamics of the innovation and learning perspective enables anorganization to align its human resources to work in a coordinated, collaborative fashiontowards the organization’s desired goals. An organization’s ability to innovate, improve,

Implementation of Strategy: The Balanced Scorecard Approach 157and learn relates directly to the organization’s value. This perspective defines thefollowing to support strategies towards desired performance:1. Core competencies2. Skills3. Technologies4. Organizational cultureThe matrix shown below can be used to develop the scorecard of the operational strategiesfrom the innovation and learning perspective. The first column shows the operationalstrategies, the middle columns pertain to key areas of this perspective where the strategiesshould be examined, and the last column indicates the actions needed. The organizationcan list as many key areas as it wants the perspective to be examined in. The performanceof each operational strategy can be examined using the high (3), medium (2), and low(1) scale.Table IT 3.1. Innovation and Learning MatrixKey Areas for EvaluationOperationalOrganiza- ActionsCore InnovativeStrategy Technology tional Others NeededCompetencies MindsetCultureIssue ResolutionGrowth andSustainabilityInnovationSocial Value AddedInternal Process Perspective. This perspective answers the question: To satisfy ourstakeholders, donors, sustainability, and vision, what internal processes must we excel at?The internal process perspective measures the organization’s critical processes and theactivities that have the greatest impact on overall operations, which can be transformedinto desired and measurable targets. Depending on the organization, these processesand activities may include the following:1. Technical capability2. Services3. Decision making process4. Structure5. Processes and systems6. Staff competenceThe matrix shown below can be used to develop the scorecard of the operationalstrategies from the perspective of internal processes.

158ACHIEVING EXCELLENCE in Your NGOTable IT 3.2. Internal Processes MatrixKey Areas for EvaluationOperationalProcessActionsTechnical DecisionStaffStrategy Services Structure and NeededCapability MakingSystems CompetenceIssue ResolutionGrowth andSustainabilityInnovationSocial Value AddedFinancial and Program Perspective. This perspective answers the questions: If wesucceed, how will we look to our financial donors? How do we sustain ourselvesprogrammatically and financially? The financial and program perspective measureswhether the organization’s strategy, implementation, and execution are contributingto financial and program sustainability. Typical financial and program key areas mayinclude the following:1. Resource mobilization2. Diversity of revenue3. Cost-effectiveness/cost-efficiency4. Client reach5. Client satisfaction6. Service effectivenessTable IT 3.3. Financial and Program MatrixKey Areas for EvaluationOperationalCost-Client ServiceResource DiversityClientActionsStrategy Effectiveness Satisfac- Effecti-Mobilization of RevenueReachNeeded/-Efficiencytion venessIssueResolutionGrowth andSustainabilityInnovationSocial ValueAdded

Implementation of Strategy: The Balanced Scorecard Approach 159Stakeholders Perspective. This perspective answers the question: To achieve our vision,how must we look to our stakeholders? Generally, NGOs are set up with a noble objectiveof responding to certain societal concerns or issues. Thus, it is very important tomeasure how an organization responds to these concerns and issues from the perspectiveof its stakeholders. The measurement process may also include organizational imageand impressions. Typical NGO stakeholders include the following:1. Government2. Clients3. Donors4. Partner NGOs5. Staff and board6. Business communityThe matrix shown below can be used to develop the scorecard of the operationalstrategies from the perspective of the stakeholders.Table IT 3.4. Stakeholders PerspectiveOperationalIssueResolutionGrowth andSustainabilityInnovationSocial ValueAddedKey Areas for EvaluationActionsPartner Staff and BusinessClient Government DonorsNGOs Board Community NeededStep 2: Organizational Performance Assessment ProcessThe organizational performance assessment stage basically looks at the followingquestions:1. How does the organization perform vis-à-vis its stated goals? (Financial andprogram perspective)2. How do stakeholders see the organization? (Stakeholders perspective)3. How do the organization’s internal processes, dynamics, decisions, and actionssatisfy its stakeholders? (Internal process perspective)4. How can the organization continue to improve and create more value forstakeholders? (Innovation and learning perspective)

160ACHIEVING EXCELLENCE in Your NGOAll the perspectives except for the stakeholders perspective can be undertaken internally.However, the stakeholders perspective needs to be undertaken by an outside consultantas it delves into the perceptions and insights of stakeholders about the organization.External consultants should be engaged to generate candid, honest, and objectiveviews and feedback.The assessment process for the other three perspectives (financial and program, internalprocess, and innovation and learning) maybe undertaken through a facilitateddiscussion or a series of meetings. The stakeholders perspective may includeinterviewing various stakeholders of the organization and may take about two months.Before embarking on the assessment process, the organization can do the following:1. Assign a point person or a team to take the lead in evaluating each perspective.2. For each perspective, identify key areas where organizational performance couldbe evaluated.3. For each key area, develop a set of indicators that these key areas maybe evaluatedagainst. Examples of indicators and key areas for each perspective will be shownin the ensuing pages. However, organizations have to develop their own key areasand indicators considering their own organizational nuances and context.During the actual assessment process, a matrix may be used, as shown in the examplebelow. Using the indicators, the actual performance in each key area is evaluated andeventually rated using the high, medium, low scale, after which the reasons for theperformance in each key area are identified and noted.Financial and Program Perspective. The financial and program perspective measureswhether the organization’s strategy, implementation, and execution are contributingto financial and program sustainability. Typical financial goals have to do with costeffectiveness,cost-efficiency, growth, expansion, and sustainability. These goals couldbe measured using income, diversity of sources of income, trends in income, andtrends in expenditures, among others. Below is a matrix that organizations can use inmeasuring their financial and program positions followed by an example of how oneorganization used the matrix.Table IT 3.5. Financial and Program Perspective MatrixKey Areas IndicatorsPerformance Reasons forActualRating (High, Performance/PerformanceMedium, Low) GapsFinancial PerspectiveIncomeTrends in incomeTrends in expenditures

Implementation of Strategy: The Balanced Scorecard Approach 161Key Areas IndicatorsPerformance Reasons forActualRating (High, Performance/PerformanceMedium, Low) GapsPersonnel utilizationDiversity of sources of incomeService cost-efficiencyExtent of self-relianceCost recoveryProgram PerspectiveClient reachServices offeredTraining offeredTable IT 3.6. Example of a Financial and Program Perspective MatrixKey Areas IndicatorsPerformance Reasons forActualRating (High, Performance/PerformanceMedium, Low) GapsCost recovery 30 percent 20 percent Medium • Low clienteleof total • Nominal usercostfee charges• Image of beinga welfareorganization• Presence ofother serviceprovidersClient reach 2 million 2.2 million High • Strategies wereimplementedsmoothly asplanned• New areas werecovered recentlyStakeholders Perspective. Generally, NGOs are set up with a noble objective ofresponding to certain societal concerns or issues. Thus, it is very important to measurehow an organization responds to these concerns and issues from the perspective of itsstakeholders. The measurement process may also be directed toward organizationalimage and impression. Typical NGO stakeholders include the government, clients,donors, and like-minded organizations. Below is an example of a matrix that could beused by a consultant in undertaking the stakeholders perspective assessment.

162ACHIEVING EXCELLENCE in Your NGOTable IT 3.7. Stakeholders Perspective MatrixPerformance Reasons forActualKey Areas Indicators Rating (High, Performance/PerformanceMedium, Low) GapsClient satisfaction(women, men,adolescent boysand girls)CommunityCommunity leadersPeer NGOsGovernmentDonorsLike-mindedprivateorganizationsVolunteersOther serviceproviders• Retention ofclients• Additionalclients• Client intimacy• Partnershipwith clients• Image ofexcellent service• Champion ofprogramservices• Respect• Effectivenetworking• Politicalsupport• Financialsupport• Increasedtechnicalassistance andfinancialsupport• Effective andresponsivenetwork• Communitymobilization• Effectivereferral systemInternal Process Perspective. The internal process perspective measures theorganization’s critical processes and activities that have the greatest impact on overalloperations—quality, employee skills, and productivity, for example. These criticalactivities can be transformed into desired targets that are measurable.

Implementation of Strategy: The Balanced Scorecard Approach 163A sample matrix is shown below.Table IT 3.8. Internal Process Perspective MatrixPerformance Reasons forActualKey Areas Indicators Rating (High, Performance/PerformanceMedium, Low) GapsServicesDecision makingStructureShared valuesProcessStaff competence• Excellentservices• Comprehensive• Responsive toclient needs• Cost-efficient• Participatory• Flexible• Responsive• Adaptable tochanges• Serviceexcellence• Clientsatisfaction• Efficientutilization ofpersonnel time• Efficient useof resources• High qualityoutputsInnovation and Learning Perspective. An organization’s ability to innovate, improve,and learn relates directly to the organization’s value. This exercise defines the corecompetencies and skills, the technologies, and the organizational culture needed tosupport strategies to achieve desired performance. Understanding the dynamics ofthe innovation and learning perspective enables an organization to align its humanresources to work in a coordinated, collaborative fashion towards the organization’sdesired goals.

164ACHIEVING EXCELLENCE in Your NGOTable IT 3.8. Innovation and Learning MatrixPerformance Reasons forActualKey Areas Indicators Rating (High, Performance/PerformanceMedium, Low) GapsEmployee competencyTechnologyContinuouslearningInnovationsServices/practicesOrganizationalculture• Alignmentwith goals• Up-to-dateskills• Adaptivemental models• Leadershipskills• Integrated view• Leader in thefield• Adoption ofnew technologies• Learning aboutbest practices/new services• Pioneer newpractices/products• Continuousimprovementin services/products• Best practices• Alignment ofpersonal andorganizationalgoals• Personal growth• FunctionalexcellenceStep 3: Developing an Action Plan for Strategy ImplementationThe strategy map and organizational assessment will reveal differences between whatwill be needed and the current situation from four perspectives. Now, you need todevelop an action plan to change the innovation and learning and the internal processes,which should lead to desired changes in the stakeholders and the financial and programperspectives.

Implementation of Strategy: The Balanced Scorecard Approach 165You can use the following steps:Step 1: Summarize Strategy Maps. For each perspective, list the key actions neededto achieve organizational strategies using the matrix in Table IT 3.10.Table IT 3.10. Matrix for Summarizing Strategy MapsPerspectiveFinancial and ProgramStakeholdersInternal ProcessInnovation and LearningRequirements to Achieve StrategyStep 2: Summarize Performance Gaps. For each perspective, list the organization’sshortfalls in achieving its strategies using Table IT 3.11.Table IT 3.11. Performance Gaps SummaryPerspectiveFinancial and ProgramStakeholdersInternal ProcessInnovation and LearningCurrent PerformanceStep 3: Key Action Steps. Develop specific action steps to implement strategies basedon the gaps between requirements to achieve strategies and current performance usingTable IT 3.12.Table IT 3.12. Action Plan MatrixPerspectiveFinancial andProgramStakeholdersInternal ProcessInnovation andLearningRequirementsto AchieveStrategyGaps BetweenCurrent Requirements ActionsPerformance and Current StepsPerformance

166ACHIEVING EXCELLENCE in Your NGOINTERVENTION TOOL 4Identification of Critical Role andOrganizational CompetenciesCompetencies are a mix of knowledge, attitudes, skills practice, and on-the-jobbehavior. To implement its strategy effectively, any organization needs to enhanceits role, organizational, and core competencies if it wants to succeed over time.Role CompetenciesAn organization’s role competencies largely depend on the main roles it plays. Theseroles may vary from organization to organization; however, in general, most rolesinclude provision, advocacy, resource mobilization, and project management.Using this tool means assessing the role competencies of the organization to determinehow well it performs and which competencies require improvement to carry outorganizational strategies effectively. This is undertaken with the assumption that theorganization knows very well its performance and reasons for such performance.Looking at performance gaps, the organization can then identify to which rolecompetency the gap in performance is linked.An example of a key role assessment matrix is shown in Table IT 4.1, which can betailored to the needs of specific organizations. This stage involves the following processes:• Classification of performance gaps by role competency. The participants mayfirst list the role competencies of the organization and indicate the performancegaps in each role competency. This process answers the question: To which rolecompetency can organizational performance gaps be attributed?• Evaluation of role competency. Each role competency is now rated based on itsoverall performance using the high, medium, low scale. This process answers thequestion: How does each role competency perform overall?

Identification of Critical Role and Organizational Competencies 167• Identification of reasons for role competency performance. After assessing theperformance of each role competency, reasons for overall performance must beidentified. This process answers the question: What are the reasons for the rolecompetency performance?In the example below, an organization examines its cost recovery for its clinic operationswhich it rates “low” based on its assessment. The analysis shows that the reason forthe performance is that the clinic has a very low number of clients availing themselvesof its services. In this case, apparently, the role competency that needs improvementis direct service delivery. After linking the gaps and role competencies, the processproceeds to analyzing which areas of organizational competency will be required toimprove the situation. Further analysis shows that the service delivery role performanceof the organization is ranked as low overall due to lack of monitoring and evaluationof clinic operations, which fall under the rubric of management systems. Other factorscome to the forefront as well, such as lack of staff motivation and skills development(issues that fall under management process development).Table IT 4.1. Assessment of Key Role Competencies MatrixOverall Performance Reasons forGaps in Role Competencies of Role Competencies Performance and(High, Medium, Low) Action NeededDirect Service Delivery Low • The services of the• Low client reach clinics are not known• Inaccessibility of clinics to those in need,especially those wholive in isolatedcommunities.Information Provision• Inability to widely distribute IECmaterials• Staff lacks counselling skillsAdvocacy• Lack of a research base for advocacy• Inadequate skills in lobbyingResource Mobilization• Inadequate skills infundraisingProject/Program Management• Lack of skills in proposalpreparation• Lack of skills in implementation,monitoring, and evaluation

168ACHIEVING EXCELLENCE in Your NGOOrganizational CompetenciesThe organizational competencies are largely generic and are necessary for every NGO.However, their criticality will vary depending upon the organization’s current context.In Table IT 4.2, we list some possible competencies that an organization may wish toassess.Table IT 4.2. An Assessment of Organizational CompetenciesGaps Under OrganizationalCompetenciesOverallGovernance LeadershipTasksStrategy formulationProgram developmentResource mobilizationProject managementStaffProposal developmentParticipatory planningClient analysisProgram technical updatesSystemsPlanningFinance and budgetingHuman resources managementMonitoring and evaluationStyleDecision-making styleOverall Performance ofOrganizational Competencies(High, Medium, Low)Reasons forPerformance andAction NeededCore CompetenciesYour NGO should have core competencies even though you may not have thought ofthem as such. Examples of core competencies are community organizing, socialmarketing, and reaching marginal populations.

Identification of Critical Role and Organizational Competencies 169Why should you be concerned about core competencies? One, you need to consciouslycontinue to strengthen core competencies as they tend to deteriorate over time, bothbecause new knowledge becomes available and because some of the tacit knowledgeand skills may be lost if people leave or move within the organization. Two, corecompetencies allow you to serve your clients and community in a better way. Forinstance, if your organization has a core competency in community organizing forhealth, you may be able to use it for girls’ education as well. Three, you can build yourorganization’s profile as your NGO’s core competencies are recognized and valued byyour stakeholders. Thus, the attributes of a core competency are:1. It provides potential access to a wide variety of client service segments;2. It makes significant contributions to client benefits; and3. It is difficult for others to imitate or acquire.Core competencies reflect collective learning and bring together the client/community,technology, and service delivery. Therefore, it is important that a core competency isnot closely aligned to any one of these alone. Core competencies are a meaningfulcluster of skills and technologies. They require reflection and deep analysis andorganizational members should be able to describe them in a similar, unified way.Exercise 1 will guide you to identify your NGO’s core competencies.Exercise 1. Identify Your NGO’s Core Competencies:Step 1. Form one or more groups to list all your skills, technologies, services/products, and client segments.Step 2.Step 3.Step 4.Step 5.Cluster the items on your list in terms of competencies and give labels tothese competencies.Identify how such competencies create client/social value.Identify which of these competencies are core (not shared by many, noteasy to acquire or imitate, not reducible to documentation, and requiringdiverse knowledge and skills to deploy).Bring groups together and finalize the list.As your situation changes, your current core competencies may no longer be as relevant.In this situation, you need to acquire new core competencies. Take the case of anNGO with a core competency in non-formal education at the primary level. As mostchildren near the completion of their primary schooling, the NGO may need to begindeploying and strengthening its core competency for vocational education as well.Thus, the acquisition of new core competencies depends upon the client/community’semerging needs. The next exercise will allow you to develop an agenda for acquiringnew core competencies.

170ACHIEVING EXCELLENCE in Your NGOExercise 2. Build an Agenda for Acquiring New Core CompetenciesBring together key staff in your organization and go through the following questions:1. Current Clients• How can you better serve your current clients using your existing corecompetencies?• What additional competencies will improve the quality of life of your currentclients by meeting their unmet or emerging needs?2. New Clients• Using your core competencies, who else can you serve? This providesopportunity for expansion.• To meet the needs of potential clients, what new competencies do you need?This requires being sensitive to new emerging opportunities. For instance,Grameen Bank in Bangladesh began providing cell phones to its micro-financegroups to serve them better as this technology became available.Answering these questions will also indicate whether some of your NGO’s currentcompetencies will no longer be as relevant or become obsolete.Building new core competencies is not easy and it may take several years to buildthem and have them be recognized by your stakeholders. Therefore, you need todevelop a careful strategy for building new core competencies once your key stakeholders(board, donors, community members, and staff) have agreed to this. However, asbuilding new core competencies is not a linear process, you will need to continuouslymonitor and make necessary mid-course corrections.

Resource Mobilization 171INTERVENTION TOOL 5Resource MobilizationWith increasing pressures among NGOs to sustain themselves comes the issueof resource mobilization and fundraising in particular. There was a time whenNGO leaders, especially from the developing and underdeveloped countries, had littleto worry about with regard to funding since poor countries were recipients of largeamounts of aid. In fact, at some point, many international donors competed to findprograms and organizations to fund. Along with a large influx of aid came generousmeasures of funds for organizational support. This resulted in the dependence ofmost NGOs and development programs in the developing countries on aid flows.However, when the “dependency-creating aid” approach was questioned, donor agenciesbegan imposing conditions on their support. One such popular condition wasgovernance. When good governance gained momentum as a prerequisite for funding,many of the poorest countries were isolated from large-scale development assistance,resulting in the reduction of donor support to NGOs as well. A new school of thoughtemerged on linking development to free market economics with the idea that aseconomies grow, the private sector should become socially responsible. A majorproblem with this thinking is that where good governance does not exist, economiesdo not grow, and where there is growth, the reorientation of the private sector to bemore socially sensitive has been very slow.Resource Mobilization in the Changing ContextLeaders of NGOs in recent years have found themselves in a very different workingenvironment. Traditional sources of reliable funding have dried up and NGOs havehad no choice but to retool their organizations and programs to adapt to the newsituation and take advantage of whatever new opportunities exist. They have learnedto examine the history and practice of local philanthropy and to invest more of their

172ACHIEVING EXCELLENCE in Your NGOlimited resources in local fundraising. Many creative ideas have surfaced such asinvesting in stocks, offering fee-based services, and even operating businesses themselves.NGOs have been challenged to look at the ways other programs and organizationsraise funds all over the world and to adapt lessons from the successes and failures ofothers.In summary, the rather prosperous and comfortable industry of development indeveloping countries funded by liberal flows of aid from developed countries has givenway to a new approach to development. This new approach requires the indigenizationand strengthening of civil society in the developing world, which must begin with thedevelopment of its local constituency and local accountability. This revolutionaryparadigm shift has dramatically increased the importance of resource mobilizationfrom an optional extra to a necessity for survival.Defining Resource MobilizationAs a product of the post-WWII era and the massive transfers of funds from developedto developing countries, many organizations began to develop the art and science ofsecuring funds from official, governmental, or institutional donors. This disciplinewas referred to as “funding” and essentially amounted to the preparation of proposalsthat competed with others, normally to deliver short-term specific objectives. Logicalframeworks became one of the essential tools people in this area had to master.In addition to targeting official, governmental, and institutional donors, a wide rangeof sources for funding were sought, including individuals from all walks of life. Thisis usually called fundraising, an endeavor that revolves around building relationshipswith people to win them over to the NGO’s cause and get them to invest in it. Suchindividual donations normally start small and grow through a number of levels ofgiving until legacies are dedicated to the organization’s cause after the donor dies.Many nonprofit organizations and charities have grown and prospered on this type ofresource mobilization. Some of the biggest success stories are the early sponsorshipagencies like Christian Childrens’ Fund (CCF), Plan International, World Vision,and ActionAid as well as the cancer charities and those dedicated to environmentalprotection like Greenpeace and World Wildlife Fund (WWF).Aside from mobilizing the most popular type of resource—money—NGOs areincreasingly learning how to mobilize non-financial resources as well. Quite often, itis such resources that enable the start up of new programs and organizations. Peopleand companies can volunteer their services or contribute goods in kind. Volunteerscan work with communities, conduct research, help with fundraising, train staff, writearticles, and prepare publications. Companies can give a wide range of donated servicesin the professions (legal and financial advice); technical advice (management, leadership,and other technical services); warehousing services; transport services; and freeaccommodation and use of facilities.

Resource Mobilization 173Given the above, several definitions on resource mobilization have sprung up. For thepurposes of this book, however, resource mobilization is defined as the process ofraising and generating financial resources and non-financial resources to operate andsustain programs’ and NGOs’ institutional benefits.Sources of Financial ResourcesIn this book, the focus is on mobilizing financial resources and, more specifically,fundraising, which NGOs are struggling with. There is a wide range of financialresources NGOs can mobilize. These are classified into three categories: donationsand grants, income generation, and cost recovery.Donations and GrantsThere are a number of different types of sources for donations and grants, most ofthem listed below.• Institutional Donors include the more traditional multilateral and bilateral donorslike UN, WB, USAID, DFID, CIDA, Sida, and JICA, which still have largeinvestments in development programs in many countries. Funds from institutionaldonors are generated through project proposal development. This is generally adeclining and unsustainable resource.• Trusts and Foundations can be family-owned or a manifestation of a business’social responsibility. These foundations, whose mandates range from a single causesuch as cancer to a wide range of development issues such as poverty and population,extend grants to NGOs who qualify and fulfill their requirements. During theeconomic booms of the 20 th century, a number of exceptionally wealthy individualsand companies established endowment or trust funds to produce income thatwould be used to support development or social causes of the donor’s choice. Thecapital fund remained intact and only the investment income was used to providedonations to social causes. Some of the better-known foundations are: Ford,Rockefeller, Mott, Packard, and—more recently—the Gates Foundation. Today,the concept of endowment funds is growing fast all over the world withapproximately 100 such foundations in East Africa alone.• Local Community Resources include labor for construction; voluntary serviceprovision and support; savings towards revolving loans; funds from service fees forwater and health programs; and income generated from other community projects(grain banks, collective marketing, and revolving fund income).• Government Funding is available where development financing has beendecentralized under poverty reduction strategic plans (PRSPs) and local governmentfinancing programs. National programs provide funds to local initiatives, andgovernment contracts are available in many countries.

174ACHIEVING EXCELLENCE in Your NGO• Local Business Leaders are increasingly interested in social responsibility wherethere is a direct or indirect benefit to their businesses and community relationships.At the national level many companies are also committed to supportingdevelopment programs perceived to be working for a goal that is in their interest.Drug companies, food companies, and companies producing products for babiesand young mothers may all be interested in supporting health programs.• The General Public may be approached to support programs. Where developmenthas a high public profile, many people will be prepared to give if approached in aneffective way. People may support advocacy campaigns on female genital mutilation(FGM), promoting AIDS education, and providing health facilities and servicesfor the poorest and most vulnerable people.• International NGOS (INGOs) have special programs for capacity building forlocal community based organizations (CBOs) and NGO programs. Examplesare: ActionAid, CARE, CCF, Plan International, Save the Children Fund, andWorld Vision. Similarly, many faith-based donors have funding available for localinitiatives.Income GenerationMany good NGOs soon realize that they can generate their own income from operatingbusinesses using existing assets. Some of the best-known income generators are Oxfam,through their high street charity shops in the UK; Bangladesh Rural Action Committee(BRAC), through their craft marketing, property management, and internet businessesin Bangladesh; and the Population Development Association (PDA) in Thailand,through a number of surplus-creating businesses, the most famous being the “Condomsand Cabbages” restaurant. Other popular income-generating businesses include:marketing, professional services, and printing and publishing.Cost RecoveryRather more controversial in recent times, many nonprofit social programs are at leastpartially financed by the people who are provided education, health, and other advisoryservices. Not only does this approach generate income to enable the program todeliver services more widely, but it also introduces an element and indicator of programsustainability. Among the most successful types of cost recovery are small-scale creditprograms that repay credit with administrative costs, which enables the same creditresource to be used on a continual basis with many community groups.Fundamental Principles of FundraisingReviewed below are the fundamental principles of fundraising through grants anddonations being promoted by Resource Alliance (http://www.resource-alliance.org).While such funds may be donated on behalf of organizations, institutions, and

Resource Mobilization 175foundations, the focus of these principles is upon the relationship between the fundraiserand the individual representing either himself or the donor.1. Believe in the cause.Fundraising is not about money; it is about selling the cause you are involved in.This entails being able to articulate the problem, show how you can respond tothe need and demonstrate the difference you and your donor can make.2. Know your donor. Research and plan ahead!You should do your homework and know your target donors well in advance.Understand their capacity to give and motivations and tailor fit your fundraisingapproach based on this information.3. Focus on building a relationship. Friendraising not fundraising!Relationship building is critical in engaging your donors to your cause. It is easierfor people to give to those they know and trust than to total strangers. Hence,make friends with your donors and know them by heart.4. Keep in mind that education and information are integral to fundraising!Educating donors about your cause and allowing them to identify with it as theirown is important if you wish to sustain their support.5. Be consistent with your ethics. Know your values and stick to them!Organizations that succeed in fundraising are those that practice ethical standardsand abide by the values they stand for. Be reminded that your noble cause andcredibility can both be damaged or undermined by taking money fromunacceptable donors.6. Understand that people give to people.Give your fundraising effort a face. Remember that people are interested in thelives of other people, how they live, what they do, and how they are overcomingtheir problems. While you can talk about your organization to establish yourcredibility and track record, donors are more interested about how their supportcould change people’s lives.7. Remember that you don’t get what you don’t ask for!Be clear about what you are asking for. Do not be shy to ask at the right time.Make very clear what your needs are and ask the donor to give accordingly.8. Always tell the truth: if things go wrong, say so!Your reputation with your donor depends on trust. Do not compromise yourcredibility by not telling the truth to donors if things do not work out the wayyou have planned them.

176ACHIEVING EXCELLENCE in Your NGO9. Remember to say thank you!Don’t forget to say thank you to your donors. Say it always and loud. Donors areturned off when their support is not acknowledged.Formulating a Resource Mobilization StrategyGenerally, you would have developed a resource mobilization strategy along with yourorganization’s overall strategy. If not, however, you can (and should) still do so afterthe fact. Note that you may have to revisit your organization’s original strategy if youcannot develop a resource mobilization strategy to support its implementation. Theresource mobilization strategy should include:1. The primary direction of your resource mobilization program;2. The way your organization proposes to use fundraising techniques to generateresources needed to support your organizational strategy;3. A description of an attainable (in three to five years) but different resource situationto the one you have today; and4. The financial development priorities your organization has set.The essential feature of a resource mobilization strategy is that it is a broad directionyou are setting for your resource mobilization activities.For example, if:1. You are starting up—you may be aiming to establish a donor base or to identifythree or four different institutional donors to support your work.2. You face many unmet needs—you may be looking for growth in your levels ofincome.3. You have been working intensively with the same donors for many years—you may wish to diversify your fundraising.4. Few people know of your existence—you may need to improve your publicprofile.5. Your fundraising patterns have been erratic—you may wish to strive for moreregular income.Strategic planning does take considerable time and organizational resources away fromthe day-to-day job of delivering your program. However, if you move forward withoutone, the costs to your organization can be far greater. Simply copying an idea that hasworked for someone else may lead you into big losses if such an activity is not suitablefor your organization. It is also important to avoid the temptation of bringing in aconsultant to produce a strategy for you. Consultants can help, but it is you and yourteam of stakeholders that have to develop your organization’s strategies.

Resource Mobilization 177You can use a similar approach to resourcemobilization strategy as you would toformulating an organizational strategy (BoxIT 5.1)—SWOT analysis, issue analysis, orthe goal/objective approach, as discussed inPart C: Intervention Tool 2. Theseapproaches begin with your strategy andseek to find resources to implement it.On the other hand you can begin with whereresources may be available and formulateyour resource mobilization strategy aroundthat. For this purpose, you can use therevenue matrix analysis tool given in ITAnnex 5.1. What follows is a simple andpractical ten-point process for producing astrategic resource mobilization plan(www.icomp.org.my).Step 1: Assess Your Organization• Start from where you are and buildupon what you have. Assess yourcurrent fundraising activities andBox IT 5.1. Benefits of Formulatinga Resource Mobilization Strategy• It involves all key stakeholderrepresentatives and generatessupport for your resourcemobilization plans and activities.• It ensures your resourcemobilization is consistent withyour organizational mission,values, and operations.• It ensures your organization isready to achieve your newresource mobilization aspirationsand that your resourcemobilization activities areappropriate to yourorganization.• It ensures that all your resourcemobilization activities are inharmony and support oneanother.identify the most critical elements for future success in resource development.Identify your existing strengths and weaknesses in resource mobilization. Buildon the strengths and ask yourself which are the most critical gaps to be filled at thistime for future organizational development.• Ask yourself whether your organization has a legitimate claim to philanthropicsupport. Is your mission clear? Is the need for your work established? Is there aclearly-defined constituency for your work? Is yours the only organizationaddressing your mission for this constituency? Are there people and/or institutionswilling to underwrite the cost of your work? Are you serving needs that would nototherwise be served?• Ask yourself if your organization is well positioned. Is there good leadership inplace? Does your mission meet real needs and will your program be valued by ameaningful constituency?• Position yourself. You must be able to define the uniqueness of your organization.You need a sound positioning statement that will powerfully summarize the casefor giving. Before you can mobilize resources from a donor, you need to positionyour organization both generally and in the context of a particular donor. General

178ACHIEVING EXCELLENCE in Your NGOpositioning is derived from your vision and mission, your identity, services youprovide, and your track record. These should position you with a unique advantage.You also need to position your organization more specifically for a particular donoryou wish to mobilize resources from. This requires that you know about thedonor—their preferences, what they fund, what will appeal to them, and whyshould they be involved with you. These become the bases for your resourcemobilization strategy.• Assess your record-keeping system. You need fast, accurate, and complete gift/grant processing; checks endorsed and deposited promptly; quick giftacknowledgement (within 24 hours of receipt); accurate, complete, and timelydata entry to capture all useful information about each incoming gift; segmentationoptions for grouping donors into smaller subsets; multi-dimensional reports onyour donor files on a regular basis; security to protect against loss of data; andarchival record keeping.• Conduct an ethics self-test. Nonprofit private or government organizations arein a privileged position in society. They are tax-exempt or are funded from taxesand they exist to serve public concerns using public funds. All such groups aretherefore morally obligated to adhere to the highest ethical standards. If yourorganization falls into this category, you must ask yourself a number of questions.Is your organization well-governed? Do you have a written policy on fundraisingethics or conflict of interest? Are all board members and trustees free of financialself-interest relating to the organization? Are all written materials accurate,transparent, and honest? Do you prepare and distribute annual audited accounts?Step 2: Assess the Fundraising Strengths of your Board and StaffYou must select a resource mobilization strategy that builds on your organizationaland personnel strengths. Knowing your board and staff will help you choose a courseof action your team will be able to carry out. When presenting your strategy to theboard and management team you will need to know what additional personnelrequirements there are.• Assess your board. How active are individual members and in what respects?Understand your board membership profile by looking closely at such factors asmembership, leadership, regular board meeting attendance, contribution of ideas,participation in decision-making, and provision of regular donations. Is there aboard development program in place? Is there an efficient process for boardmembership rotation? Do board members act in the best interest of theorganization? Do they conduct an annual assessment of the CEO? Do boardmembers provide access to potential donors? Do they complete tasks on time?Does the board conduct a regular review of the budget and financial support?

Resource Mobilization 179• Assess your CEO. How competent is he/she? Is he/she vigilant about high ethicalstandards? Does your CEO understand fundraising? Is he/she accountable to theboard? Is he/she strategic, supportive, and interested in fundraising? Does yourCEO take a team approach, keeping everyone informed and involved in strategicdecision making? Is he/she a good leader? Does he/she listen well? Does yourCEO make well-considered decisions? Can he/she motivate the board?• Assess your fundraising director. How competent is he/she? Is he/she vigilantabout maintaining high ethical standards? Is your fundraising director accountableto the CEO and experienced in fundraising? Does he/she maintain a strategicperspective, motivate others, and mobilize and communicate with a fundraisingteam? Is he/she actively involved and deeply committed? Does your fundraisingdirector make his/her own contributions and meet targets?• Assess your organization’s access to consultants and volunteers. What otherfundraising resources do you have at your disposal or have access to? Can youdraw on people to give their time and expertise to assist? Have you builtrelationships with consultants who have fundraising experience and an affinityfor your mission?Step 3: Assemble a Team to Select the Best Fundraising StrategyAs with all other major organizational endeavors, a team approach is far more effectivethan an individual one. Now is the time to establish a task force or working group tolead the process of selecting your fundraising strategy and even being responsible forguiding and monitoring its progress. It will be up to this team to involve all keystakeholders in identifying the most appropriate fundraising strategy. This team canmeet over a number of days for two hours a day or hold a two-day retreat.• Select team members. Criteria for selection should include: number of years withthe organization, availability for meetings, knowledge of mission, and willingness tolisten. Apply these criteria to key stakeholders who should include the board chairman,the CEO, the board development committee chair, the fundraising director, thehead of a partner organization, a community leader, a fundraising staff member, along-time donor, a short-time or potential donor, and others. The ideal number ofmembers is from seven to nine individuals (with a minimum of five and maximumof twelve). Ensure that at least one board member, two senior managers, two otherstaff members, and at least one friend or outsider are included.• Appoint a chairperson for this team. The chairperson will not necessarily be thefundraising director. The fundraising director may not be the best chairpersonsince he/she may become overly defensive of his/her own ideas. Pick someonewho is result oriented, listens well, analyses and summarizes well, and is fullycommitted to your organization’s mission.

180ACHIEVING EXCELLENCE in Your NGO• Create a positive, constructive, and enabling environment. Use a comfortable,quiet, and accessible meeting room. Use a round table and arrange chairs to createa friendly but businesslike atmosphere. Emphasize punctuality. Plan ample breaksfor meals and getting to know each other. Provide necessary materials and facilities.Establish some team ground rules at the outset.Step 4: Analyzing Costs and Benefits of the Two Objectives for Fundraising SuccessAfter defining your current fundraising status and your needs, it is important to considerthe advantages and disadvantages of each of the following two major fundraisingobjectives: growth and stability. Analyze each in turn and select a primary and secondarystrategy accordingly.Creating strategies to achieve the two major fundraising objectives is great, but thesestrategies cannot both be pursued at the same time since the methods required may beconflicting, the results mutually exclusive, and the investments required prohibitive.For example, if you are going primarily for growth, all your resources should be investedin this objective (http://www.resource-alliance.org).• Objective 1: Growth. The strategy for growth should expand your donor base,increase the number of donors in your database, and expand the number of peoplefrom your existing or new constituencies that give to your organization. Thisstrategy normally requires a high level of investment in research, list-buying,consultancy fees, and the design and execution of a direct mail or media campaign.Such an approach may not be very cost-efficient since first-time donors give smallerdonations and have a low level of involvement with your organization. But abigger database will be a great asset to build upon in the longer term. For thisstrategy you need funds to invest but should have no immediate need for the bestreturn on your available funds.• Objective 2: Stability. The stability objective is about balance between andcontinuity of various income sources. If your primary concern is to diversify yourdonor base to ensure long-term funding and sufficient income to cover your corecosts, you are pursuing a stability strategy. The establishment of an endowmentfund; the generation of income through enterprise; and a healthy mix of locallygenerated and external resources from government, institutional, and private sourcesconstitute tactics to secure a stable funding base. Stable funding also results inmaintaining a healthy reserve that is invested for income and capital growth.The above objectives can be supported by three secondary objectives as shown in BoxIT 5.2.

Resource Mobilization 181Box IT 5.2. Secondary Objectives for Mobilization StrategiesInvolvement: This objective is about improving the quality of your relationshipwith your existing donors. It is an important step to increasing the level of givingand the time frame over which existing donors provide you with repeated gifts.This objective requires investment into improved management and maintenanceof your existing donor base: updating files, conducting research into your database,improving segmentation, and providing each donor the type of information theyrequire. Investment in an interactive website, the provision of a regular newsletteror magazine, holding focus group meetings among your donors, and providinglocalized donor support services are examples of tactics that promote this strategy.Visibility: This objective is about raising the profile of your organization and itscause (see Part C: Intervention Tool 11). The visibility objective requires largeinvestments in media and publicity and the engagement of your senior managersand board members in high-profile events likely to receive extensive media coverage.In the short term, returns on such investments in the form of new donors or fundsraised may be limited, but you are preparing a more conscious and aware public forfuture fundraising appeals and campaigns when the time for a growth strategyarrives. This strategy may also support advocacy programs and networkinginitiatives.Efficiency: If you have limited resources for investing in fundraising and you are primarilyinterested in the best fundraising return on your investment then you are selecting anefficiency objective. This may result in money but no names for your database, afundraising campaign limited to people who already know of you, and little publicprofile. You may also be generating more resources from a single source, which doesnot offer sustainability over the long term.Your fundraising team needs to consider each of the above objectives and developstrategies in light of your current organizational strengths and your current fundingbase.Step 5: Selecting the Right Fundraising Objective and StrategyAs mentioned previously, although the above objectives both have a certain appeal,you need to choose one, a primary objective, and if needed, a secondary one. Choiceshave to be made in terms of what is right for your organization at present. Once youhave chosen your primary objective, you may ask yourself what the biggest obstaclesto and opportunities for achieving your primary objective are and develop a strategyto address them.

182ACHIEVING EXCELLENCE in Your NGOStep 6: Setting Fundraising GoalsHaving selected your primary strategy, you now need to translate this into a set ofgoals and objectives. This step is about setting goals that will help you achieve yourfuture fundraising strategy. Goals need to be ambitious and far reaching. For example,if you chose the growth strategy, goals might be doubling the size of membershipwithin three years or increasing the number of large donors by 20 percent. Vision,ambition, and optimism are the order of the day at this stage in the process.Step 7: Turning Goals into Achievable ObjectivesOnce your fundraising strategy team has agreed on the fundraising strategy and goals,it is time to involve a wider cross-section of staff—particularly those involved inimplementing the fundraising strategy—in establishing achievable objectives and goingon to prepare the work plan, which includes a task analysis. While your goals shouldbe ambitious, objectives must be realistic and achievable, or “SMART.” They must bespecific (S), measurable (M), achievable (A), realistic (R), and time bound (T). Thosepeople setting objectives have to be practical and pragmatic about what can realisticallybe achieved. How do you move incrementally from where you are now to where youwant to be?Step 8: Choosing the Right TacticsNow is the time to choose the right methods, techniques, and tactics to accomplishyour objectives. This is the job for your resource-development or fundraising staffand other individuals who have fundraising experience. If your team is fairly new tothis, it may help to list all the types of funding sources you can think of (e.g., foundationsand trusts; multilateral and bilateral agencies; businesses and corporations; individuals(general public, wealthy philanthropists, specific constituencies); your own incomegeneration; and cost recovery). Since most funding comes from individuals, you thenneed to consider the many different ways you can generate funds from these individuals(e.g., major gifts, capital campaigns, planned giving, direct mail, telephone fundraising,the website, and special events). You then need to analyze each source for and type offundraising and consider which ones fit with your chosen strategy. If your organizationis new to fundraising this may be an appropriate time to get advice from your boardmembers with marketing experience and from external resource people who can assistwith creative ideas.Step 9: Produce Your Operational Plan and Implementation CalendarNow that you have decided upon your tactics you need to convert these into animplementation plan, using a Gantt Chart, Critical Path Analysis, or similar planningtool. Indicate clearly each implementation step, who is responsible for that step, andan agreed-upon time frame. This implementation plan will enable you to allocateassignments to all staff and volunteers involved and to budget when various investmentsare required and income anticipated.

Resource Mobilization 183Step 10: Monitor and Measure Progress and ResultsIn addition to regular monitoring of progress, it is important to measure the results ofyour new strategy and the activities planned to achieve your objectives. The first levelof measurement is therefore against your measurable objectives. Did you achievewhat you aimed for? If not, why? What does this mean for future activities of thistype? The second level of measurement is against your goals, which were by definitionmore ambitious than the objectives you set. How much progress has been made? Arethe goals still valid? Can you define a new objective building on the last one? Finally,there may be a number of strategic issues you wish to measure in order to indicateyour readiness for a new fundraising strategy. Such measures include size of donorbase, number of donors involved in organizational activities, levels of media coverage,cost ratio of fundraising investment to income generated, and proportions of incomegenerated by each fundraising program.Building Capacity for Resource MobilizationWe have already seen how the context in which our organizations operate has greatinfluence on how we generate the resources required to implement our programs.One traditional and major source of funding to civil society organizations in thedeveloping countries, bilateral aid, has been severely restricted over the past ten yearsor so, and those who have relied on this source of funds now face major challenges infinding ways to replace this support or are scaling down their operations. Somegovernments have also faced large reductions in aid and their priorities have beenamended accordingly. The post cold war period has been one in which both civilsociety organizations and governments have been forced to review their priorities andlook for the resources they need from other sources. However, as NGO programslook to other sources for their funds, they have discovered that different types ofdonors require different profiles, levels of accountability, communication, and impact.These new demands force program leaders to strengthen and diversify the capacity oftheir organizations as they seek funding from new sources.There are two major aspects of capacity building: institutional capacity building andindividual capacity building. Institutional capacity building includes improvinggovernance, leadership, management, organizational structure, strategic planning,program impact, communications, and fundraising, while individual capacity buildingfocuses on fostering the new knowledge, skills, and attitudes required within yourorganization.For many of you, fundraising from the general public, business leaders, and privateindividuals will be an entirely new concept and experience. For others, the idea ofusing your assets to generate your own unrestricted income is a dramatic departurefrom established practice. For those of you working in the voluntary sector, contractingto provide the government with services is a complete turnaround in the nature of

184ACHIEVING EXCELLENCE in Your NGOgovernment and civil society relationships. For those who have been used to providingfree charitable services, the notion of self-sustaining, self-sufficient, and self-reliantprograms is a major change of approach and organizational culture.Individual capacity building involves the development of existing volunteers and staffand, most likely, the introduction of new volunteers and staff. These are necessary tobring in new contacts, networks, knowledge, skills, and attitudes. However, enhancedindividual capacity can only benefit the organization if it, too, is strengthened anddeveloped. Institutional and individual capacity building are both necessary if youare to achieve optimum results. For example, if you bring into the organization thecapacity to mount a public fundraising campaign but have not enhanced the profileof your organization, you are unlikely to meet with success. Similarly, bringing in abusiness manager to manage your assets for income generation cannot be successfulwithout the board’s approval and their active support for such an endeavor.In the past, many development NGOs have relied on a few donors, mostly of thesame type or genre (i.e., bilateral and multilateral aid agencies). Over many yearssuch institutions have refined the skills required to access such resources and havedeveloped a culture that reflects this particular type of institution-to-donor relationship.In the current era, you may find your traditional donors withdrawing their supportand/or changing their demands upon your organization.As you turn to other forms of resources to support your organization and its work,you will have to develop new characteristics to become attractive to these new donors.The wider the variety of donors you turn to, the greater the impact on your organization.Institutional capacity building is best accomplished around a critical task oforganizational proportions, and the most practical and useful of these is thedevelopment of strategic directions for the organization. A major task of this natureinvolves a review of fundamentals (values, vision, mission, and strategic objectives); areview and analysis of the external context within which the organization is operating;an internal assessment of strengths and opportunities; an assessment of relationshipswith partners; and the establishment of a new strategic direction for the program,organization, and resource development plan. All these major activities require strongleadership, artful facilitation, comprehensive documentation, and the engagementand involvement of everyone in the organization.Within this framework, resource people may be invited; external facilitators engaged;and a wide range of seminars, workshops, team-building exercises, and training coursesundertaken.Once you have made the organizational decision to explore some of these newopportunities in resource mobilization, you need to ask yourself what new skills willbe required and what elements of organizational capacity will need to be strengthened.

Resource Mobilization 185When people actually receive economic benefit from financial services, they are evenmore willing to contribute towards those services. Such an approach is not only in theeconomic interest of the organization providing such services; it is also a programmaticstrength that builds in an important element of self-reliance and self-sustainability forthe partner communities.Table IT 5.1. Individual Capacity Building for Resource Mobilization (RM)StakeholderMajor Capacity AreasRelated to RMHow to DevelopCapacityBoard members • Own values, vision, and mission Involvement• Are committed to strategic directions Involvement• Are familiar with financial situation and Informationfunding requirements• Understand resource mobilization strategy Involvement• Have business and public relationships Recruitment(PR)/communications experience andstrong networking capacity• Are committed and perform voluntarily Board evaluation &• Understand roles and functions program rotation inductionManagers • Have fundraising expertise Recruitment• Work together Team buildingLeaders • Understand context Reading, analysis, andregular discussion• Are committed to organizational strategy Involvement• Understand relationships between Information sharing andprogram, funding, and financial strategies teamwork• Able to communicate and win people Training and personnelover (staff, volunteers, and donors) development skills• Have networking and presentational skills Training and budgetsupportStaff • Have appropriate fundraising skills Recruitment and training• Understand RM strategy Involvement• Own values, vision, mission, and Involvement and goodstrategyinternal communications• Understand context Outside speakersVolunteers • Are motivated to achieve mission Induction• Receive appropriate rewards Involvement• Understand the organization—its work Recognitionand resource needsThanks• Have program exposure• Have fundraising skills

186ACHIEVING EXCELLENCE in Your NGOIT Annex 5.1. Revenue Mix AnalysisDirect/Individual Local Sponsors Donors Earned Income1. Identify this group 1. Who are they? 1. Who are our 1. Which of—who are we Philanthropists? current donors? our programstrying to reach? Individuals? 2. Have we had or services2. What are their Corporations? repeat funding generatesneeds and The community? from these income? (e.g.,expectations that can 2. Where are they donors? If sale ofbe addressed? located? In the not, why? publications3. Are they capable same area as our 3. Which other or incomeof paying? Are they program or service donors could from trainingwilling to pay? How or elsewhere? we tap for courses?much are they 3. What is the most our programs? 2. If we take thiswilling to pay for a effective way to 4. What are approach, canparticular service or access this group? their priorities we retain ourproduct? 4. What are their and interests? clients?4. What is the most interests and 5. Who are their 3. If oureffective way to reach motivations that other grantees? programs orthis group? we could leverage? 6. What is their services are5. Are there other Do they align funding pattern not generatingNGOs with a with our values? —how much income, howsimilar program 5. Do we share the and for how can we turnservicing this same same clients (i.e., long? them aroundgroup? Are they do our clients 7. What is their to becomesuccessful? If not, form the principal funding incomewhy? What can we market for their window— generating?learn from their (if they are when do they 4. Do we havesuccess or failure? corporations) accept and assets that6. What do our target products or service? consider earn or couldclients expect from 6. Would they benefit proposals? potentiallyour program or from being earn income?service?associated with our7. Do we need to program or service?enhance our program 7. What will be theor service?implications of8. What differentiates our organizationour program or being associatedservice from other with them?NGOs?9. Can we raise ourprices?

Business Planning: A Simplified Approach for Non-Government Organizations 187INTERVENTION TOOL 6Business Planning:A Simplified Approach forNon-Government OrganizationsAbusiness plan is a roadmap for introducing specific products/services that willyield a mix of social and economic returns for the investment. It is normallyused for business ventures. During the last decade, however, the nonprofit sector hasborrowed this concept from the business world to chart its planned programs or even anentire organization’s long-term future. A well-formulated business plan can be used tomobilize funding from diversified sources.Why should you prepare a business plan?1. Funding sources for NGOs are becoming diversified, replacing the olderdependence solely on international donors because of changing socio-economicconditions (see Part C: Intervention Tool 5). Therefore, NGOs need to mobilizefunding from individuals, communities, local governments, corporations, localphilanthropies, and international donors.2. Donors are increasingly asking for a higher level of accountability for results. A businessplan needs to continuously demonstrate what results will be achieved and how.3. A business plan focuses on adding value to clients’ quality of life. Thus the focusshifts to meeting client needs rather than a specific donor interest. NGOs canprepare a business plan based on innovative ways to meet client needs and use itto generate funds from diversified sources.4. A business plan balances an emphasis on financial concerns and demand-generationwith non-financial concerns and service delivery.5. Increasingly, business plans are used by NGOs to generate earned income thatcan be used to support their other mission-oriented activities.

188ACHIEVING EXCELLENCE in Your NGOOften, NGOs are averse to the term “business plan” because they feel that NGOs donot exist for business purposes. In their minds, businesses use unethical practices toexploit society and are solely dedicated to profit. While this view may not exactlycorrespond to reality, it is widely held. As remarked at the beginning of this book,businesses create economic capital and are based on clients and businesses exchangingmoney for services/products. An NGO, on the other hand, is based on the“empowerment principle.” NGOs should empower the people they serve. That iswhy we often say “be businesslike but do not become a business,” emphasizingempowerment rather than exchange.NGOs normally use different forms ofplanning (Box IT 6.1). While these plansutilize different processes, business plansincorporate aspects of all of them.Many have used the term social entrepreneurto make a distinction between a typicalbusinessperson and one who applies thebusiness model within the NGO sector. SchollFoundation for Social Entrepreneurshipdefines social entrepreneurship as:• Applying practical, innovative, andsustainable approaches to benefit society ingeneral, with an emphasis on those whoare marginalized and poor;• A term that captures a unique approach toeconomic and social problems—anapproach that cuts across sectors anddisciplines; and• Grounded in certain values and processesthat are common to each socialentrepreneur, independent of whether his/her area of focus has been education, health,welfare reform, human rights, workers’rights, environment, economicdevelopment, agriculture, etc., or whetherthe organizations he/she sets up is anonprofit or for-profit entity.Box IT 6.1. Other Forms ofPlanning• Strategic planning is the formof planning most commonlyused by NGOs. It is used toconvert an organization’svision and mission intostrategies appropriate to thelocal context (see Part C:Intervention Tool 2).• Program planning is carriedout for a program that isimplemented on an ongoingbasis. These types of plans callfor activities to be carried outand state who will beresponsible for them. Theygenerally involve periodicity.• Project planning is carried outto ensure that projectobjectives will be achievedwithin a given time frame andcost. It outlines activities tobe carried out, who will beresponsible for them, andwhat resources would need tobe made available.It is this approach that sets the socialentrepreneur apart from the rest of the people and organizations who dedicate theirlives to social improvement.

Business Planning: A Simplified Approach for Non-Government Organizations 189A social entrepreneur is:• A pragmatic visionary who achieves large-scale, systemic, and sustainable socialchange through a new invention, a different approach, a more rigorous applicationof known technologies or strategies, or a combination of these; and• Someone who combines the characteristics represented by a mogul like RichardBranson and a humanitarian like Mother Teresa.Social entrepreneurs share some common traits, including:• An unwavering belief in the innate capacity of all people to contribute meaningfullyto economic and social development;• A driving passion to empower people to make these meaningful contributions;• A practical but innovative approach to social problems, often using market principlesand forces, coupled with a dogged determination that allows them to break awayfrom constraints imposed by ideology or field of discipline and pushes them totake risks that others wouldn’t dare take;• A zeal to measure and monitor their impact. Entrepreneurs have high standards,particularly in relation to their own organizations’ efforts and in response to thecommunities with which they engage. Data, both quantitative and qualitative,are their key tools, guiding continuous feedback and improvement; and• A healthy impatience. Social entrepreneurs don’t do well in bureaucracies. Theycannot sit back and wait for change to happen—they are the change drivers.Preparing a business plan can be a step towards social entrepreneurship.Business Planning FrameworkBusiness planning is usually conducted when starting a major venture such as thelaunch of a new product, service, or program. The process includes an analysis of thenew product, service, or program in terms of its current and potential demand ormarket; other existing or potential providers (called “competitors” in the businessworld); the comparative advantage of the proponent (called unique market propositionin the business world); the process of production, delivery, and promotion; costing;and management.There are many frameworks used for business planning from the simplest to the mostsophisticated. Most of these frameworks, however, are only applicable to the corporateworld. ICOMP’s Business Planning Framework for NGOs was developed with theunique features of NGOs in mind. This framework involves six steps which serve asbuilding blocks in the development of a business plan.

190ACHIEVING EXCELLENCE in Your NGOFigure IT 6.1. ICOMP’S Business Planning FrameworkMarketAnalysisPreliminaryAssessmentBusiness/ProgramModelDevelopmentFinancialPlanningInternalCapacityReviewManagementPlanningTo start with, an organization has to undergo a preliminary assessment whereby itmust identify what product, service, or program it wishes to study for its plannedventure. During the preliminary assessment, the NGO examines the alignmentbetween its mission and vision and the purpose of the business plan and the businessventure it wishes to probe into. It is important that the alignment is established;otherwise, the planned venture may need to be rethought before proceeding to marketanalysis. Understanding the market requires examining the target clients’ needs andexpectations as well as the proposed venture’s possible competition. The organizationthen embarks on internal organization review to assess its capacity to address marketdemand. Based on the needs of the market and the capacity of the organization, itthen develops the business/program model. The model includes details of the product,service, or program to be offered using a viable pricing structure and marketingstrategies. Once the business model is clearly articulated, the next step is to demonstratethe model’s financial feasibility through the development of a financial plan thatillustrates a cash-flow analysis and financial projections for return on investment.Finally, the business plan will not be complete without a management plan thatdescribes how the venture will be managed, the key positions required, and the peopleto be involved.Business plans are quite similar to project proposals except that proposals generallyrespond to donor interests whereas business plans respond to client needs and socialimpact. However, it is quite likely that the two may converge.Business Plan DevelopmentThe preparation of a business plan begins with a kernel idea and an assumption thatthis idea will have a social/economic return. This idea can originate from several

Business Planning: A Simplified Approach for Non-Government Organizations 191sources: a strategic plan, inspiration, client feedback, observations of otherorganizations, and so on. Developing a formal business plan requires rigor anddedicated staff time and financial resources. Often, it will require information andexpertise that may not be available within the organization. Depending upon thesituation, it may take anywhere between three weeks to six months to prepare.The team tasked with preparing a business plan should be familiar with the processand content of business planning preparation. The expertise required includemarketing, financial, technical, and organizational skills. The team leader should beable to guide such a multidisciplinary team of experts.You should be prepared to modify or even abandon the idea if the market and financialanalysis do not show a significant social/economic return.We will now discuss each section of the business plan in detail. Although the discussionis organized by section, it should be noted that it is an iterative process and modificationsfor each section may need to be made whenever new information or trends emerge.Step 1: Preliminary AssessmentA preliminary assessment of the innovation, outlining the service, product, or programand how it will meet the needs of the client is a crucial activity that an organizationembarking into business planning should carefully undertake. At this stage theorganization establishes the alignment between the planned venture and theorganization’s vision and mission. It sets the stage for the ensuing steps in businessplanning by allowing the organization to determine the purpose of preparing a businessplan and assess the potential of the business venture the organization would like topursue.Success in mobilizing funding will largely depend upon the quality of the innovation.The process of identifying an innovative idea that will have high socio-economic returnwill generally go through the following steps:(a) Generate many ideas for new products, services, or programs for new clients.Brainstorming is the process often used to generate new ideas. The objective ofthe process is to generate as many ideas as possible through free-flowing andnonjudgmental dialogues. The following are some questions to guide you throughthe brainstorming process:• Clients’ Perspective: Will the product meet some currently unmet need ormeet it better through increasing access, availability, affordability, convenience,follow-up services, or other characteristics?• Competitors’ Perspective: What competitive advantage will your offering ofthis product or service have? Will it be at a lower cost, more convenient, or ofbetter quality?

192ACHIEVING EXCELLENCE in Your NGO• Organization’s Perspective: What will utilize the organization’s competencies?What services or products can you deliver to your existing clients? How canyou use your current competencies/technologies to serve other clients? Canyou enhance utilization of your current physical/human resources, which maybe currently underutilized?(b) Analyze the products/services/products for new clients along with currentproducts/services.Compare new and existing products and services available in the market to guideyou in your decision whether to: (a) offer new products/services, (b) revise yourcurrent products/services, and/or (c) discontinue offering some products/services.(c) Prioritize and seek stakeholder support.Once you have identified new ideas, you need to prioritize which of these theorganization will pursue. Generally, the criteria used for prioritization are:• Potential Impact: Impact on the health/welfare of the potential clients and thecommunity.• Congruence with Mission and Vision: Are the products/services aligned withthe organization’s vision/mission.• Feasibility of Implementation: How easy will it be to implement? Will necessaryresources be available? Are there legal, policy, organizational, or social barriers?• Community Acceptability: How easy will it be to market these services? Willclients accept them? Will they be willing to pay?You may wish to create your own criteria for prioritization. Then you need to assessall of them using a matrix, as shown below (Table IT 6.1).Table IT 6.1. Product Prioritization MatrixProductPotentialImpactCongruencewith Missionand VisionFeasibility ofImplementationCommunityAcceptabilityProduct 1Product 2Product 3Once you have a list of prioritized products you wish to study, you can carry out apreliminary business planning assessment by asking the following questions:a) What is the purpose of business planning? Why does the organization need it?b) Broadly, what venture would the organization like to pursue?c) Does this venture align with the vision, mission, strategies, and values of theorganization?

Business Planning: A Simplified Approach for Non-Government Organizations 193d) What are the strengths the organization could leverage to undertake such a venture?e) What financial, staff, and physical resources are needed for the venture? Does theorganization have them? If not, how could the organization acquire them?f) What are the potential challenges the organization will face if it undertakes theplanned venture?g) Does the organization know of potential sources of revenue to support and sustain(quick market analysis) the venture? Examine the planned venture’s product andservices against the following sources of revenue:• Direct payer—those who directly pay for the products or services they acquire.• Indirect payer—those who are willing to pay for a particular product or serviceso that the direct beneficiaries (the supposed direct payers) can benefit fromsuch products or services. They are commonly called sponsors. Indirect payersare community based and have intimate relationships with direct payers.Examples of indirect payers include local government units, communityfoundations, and businesses. They are not typically known as donors.• Institutional donors—donors, mostly international ones.• Self-funded—revenue not coming from direct or indirect payers or donors.Examples include the organization’s income from its endowment, revenue fromconsulting jobs, proceeds from a business, etc., which could subsidize theproduct or service.If it turns out, for instance, that direct payer revenue is not viable based on this initialassessment, then your organization may only focus its market analysis on indirectpayers or institutional donors. Or, if a certain planned product does not pass thisstage, your organization can go back to brainstorming to come up with a new idea.Step 2: Market AnalysisYou need to convince prospective funders that the planned products, services, orprograms meet the needs of your target clients and that your NGO will be able tomarket these products, services, or programs. For this purpose, you will need tointerview clients and get information about potential competitors and stakeholders.Market analysis is the process of determining the demand for the planned product,service, or program. It helps the organization understand the needs, wants, andexpectations of its potential clients and the capacity of other existing and potentialproviders of comparable products, services, or programs. Market analysis:a) Aims to show that there is both a need and demand for a proposed product orservice;b) Demonstrates an understanding of clients in terms of demographics; andc) Examines the factors that will influence the target clients’ decision to support/buyyour product or service.

194ACHIEVING EXCELLENCE in Your NGOA market analysis asks four major questions:a) Who are your clients?b) Who are your competitors?c) What is your comparative advantage?d) What is the macroeconomic and industry context?These questions are meant to assist you in thinking about the feasibility of a businessidea in the context of your potential customers and marketplace. The ensuing tablescan be used as templates to guide you in answering these questions.a) Client Analysis: Who are they? What products or services do they currently use?Once the preliminary assessment clearly identifies which revenue sources havepotential, client analysis will focus on them and ask more specific questions. TableIT 6.2 outlines some of the key questions that could be used to further understandthe potential clients.Table IT 6.2. Client AnalysisProduct,InstitutionalService, or Direct Payers Indirect Payers Self-fundedDonorsProgramProduct 1 Who are they? Who are they? Who are they? Is there anyWhat are their What are their What are their income fromneeds and interests, interests, such as other sourcesexpectations? motivations, motivations, and consultingAre these and values? Is values? services?satisfied? there the How could weWhere do they possibility of an address these?currently get exchange deal? Are they athis product/ Is there potential sourceservice alignment of support for(competitive between our the product/analysis)? Are product, values, service? Is therethey willing to and donor alignmentpay? Are they priorities? between ourable to pay?product, values,and donorpriorities?b) Competition: Who else is offering the same product or service and targeting thesame people?

Business Planning: A Simplified Approach for Non-Government Organizations 195Table IT 6.3. Competitive AnalysisCompetitionYour Existing/ Qualities andOtherProduct PricingPotential Attributes of InfluentialStrategyCompetitor Their ProductsFactorsProduct 1Product 2Product 3c) Comparative Advantage: How will your proposed program or business bedifferent?Table IT 6.4. Comparative AdvantageYourProductNeeds andExpectationsYou Will SatisfyWhat OthersOfferClients’ EmergingNeedsProduct 1Product 2Product 3a) Macroeconomic and Industry Context: Are there major changes in what clientsor customers need and want? Are there any changes in the macroeconomicenvironment that are currently happening or might potentially happen in theshort run that might affect your planned initiative?Conducting market analysis is the most tedious step in business planning. In order togenerate the above information, your organization may need to conduct a quickquestionnaire survey, interviews, and a literature review.This analysis should lead to an estimated range of potential markets as well as acorresponding marketing plan.Step 3: Internal Capacity ReviewYou will not only be marketing the planned products or services but will also have todemonstrate your organizational capacity to the funders. Often funders may notknow that much about the planned products or services but may be willing to investif your organization has a good track record.

196ACHIEVING EXCELLENCE in Your NGOAfter examining the market, your organization will need to review its current assets—human, physical, financial, etc.—to determine its capacity to satisfy the market andsustain its planned venture. This phase is an elaboration of the organizational reviewundertaken during the preliminary assessment and should include a brief history ofyour organization, including:a) Its vision, mission, goals, and strategies;b) Past successes in related activities; andc) Organizational competencies.However, you will need to go beyond the preliminary assessment and probe intoorganizational capacity vis-à-vis the results of the market analysis. The followingtemplate can be utilized for this exercise.Table IT 6.6. Internal Capacity ReviewA. Describe the social purpose of your planned business or program. What specific product orservice do you plan to offer or enhance and who are your target customers?B. Capacity to address client needs and expectations. What programs do you have that currentlyserve the needs of your clients? Have the target clients expressed a special interest in newservices? What kinds of new services or programs are they interested in? Can you addresstheir needs and expectations by introducing a new product or service?C. What financial, staff, and physical assets do you have that you could use for the plannedventure? If none, do you think you could generate them? How?D. Can the organization compete or create a partnership with other providers? How?E. Other questions.Step 4: Business Model DevelopmentHaving understood the market and your organization’s capacity to satisfy the marketwith its planned product, service, or program, your organization can now design thespecific attributes of the product, service, or program; its pricing scheme; and itsmarketing strategies. If market analysis requires enormous “action” time, businessmodel development requires significant “thinking” time. Business model developmenthas four components, as follows:a) Description of the Product or Service: What are you offering and to whom?b) Pricing Analysis: What do you expect to charge for your product or service, howmuch will it cost to produce, and what do your competitors charge?c) Revenue Model: How do you intend to generate revenue from the product orservice?d) Marketing Strategy: What is your approach in terms of price; place; mode ofdelivery, positioning, and production; and promotional methods?

Business Planning: A Simplified Approach for Non-Government Organizations 197The template below can be used to guide your organization in designing its businessmodel:Table IT 6.7. Business Model Development Matrix1. Description of the Product or Service—What are you offering and to whom?• What products or services do you planto offer? Who will benefit from them?• What are the attributes of your productsor services?• What benefits do your products orservices provide?2. Pricing Analysis—What do you expect to charge for your product or service, how muchwill it cost to produce, and what do your competitors charge?• How much will it cost you to produce theproduct or service?• What do your competitors charge?• How much are customers willing tospend?3. Revenue Model—How do you intend to generate revenue from the product or service?• What will you charge for the product orservice? What are the “units” associatedwith this price (e.g., single product,package of services, or average productsales)?• How many units will you sell at thatprice?• What quality of products or services willyou provide—top class, modest, simple,sophisticated, etc.?• What is the unit cost for the business toprovide this product or service?e) Marketing Strategy— What is your approach in terms of price; place; mode of delivery,positioning, and production; and promotional methods?• How are you going to create awarenessabout your products or services? Howwill you educate your customers aboutthe attributes and benefits of yourproducts or services? Think about howyou might use promotion and place tocreate awareness.

198ACHIEVING EXCELLENCE in Your NGO• How can you convince your clients orcustomers to accept or try your productsor services? Think about how promotion,place, and price all have a role ingenerating trial.• How can you build preference or convincecustomers that your product or service isbetter than the competition? Think abouthow you might need to utilize all four“P’s”—product, promotion, place, andprice—to build preference.• How can you retain your existing andfuture clients or customers? Think aboutwhy promotion and price might be thebest tactics to use for generating repeatsales or usage.The above analysis will help you describe your marketing strategy and how it fits intoyour business model. You will need to establish marketing goals based upon theabove strategy and against which performance will be monitored.Step 5: Financial PlanningA financial plan tells the story of the sustainability and viability of the business andshows the revenues and expenses of the venture. It demonstrates that you have thoughtthrough the major risk factors and that you understand how they will affect the bottomline.The components of a financial plan consist of the following:a) Sales and Revenue Assumptions. The sales and revenue assumptions describethe following considerations used in financial calculations (see Annex IT 6.1):• Pricing structure;• Volume; and• Cost per unit of product or services.b) Financial Projections. Using the assumptions above, the financial projectionshows anticipated (normally for five years) annual revenues, cost of goods, grossprofit, staffing costs, fixed costs, net profit, and breakeven point. Financialprojections will help you:• Demonstrate how much it will cost to implement your plan by laying out theexpenses and costs of operating the business (“uses”); and• Show where the money comes from by indicating where the revenues andcash investments are expected to flow from (“sources”).

Business Planning: A Simplified Approach for Non-Government Organizations 199Annex IT 6.2 provides an easy-to-use template for a five-year projection, includingtemplates to calculate staffing costs, start-up costs, and fixed costs. The componentsof the financial plan include:• Cost and revenue estimates;• Sources and uses of funds statements; and• Capital needs by stage of development.Your business plan may not be fully justified based upon economic returns alone.Therefore, additional investments need to be justified based upon social benefits.You need to be clear about the risks associated with business; for example, the volumeof sales may be lower than the goals you set, and so on. It is useful to be explicit aboutthese risks and clarify how you will mitigate their impact. Thus this part shows that(a) you understand the possible weaknesses in your assumptions and that some ofthem may be due to factors beyond your control, and (b) you have a plan for what youwill do if your assumptions are wrong or something unpredictable happens to thebusiness.You may wish to relate this financial analysis to your organization’s current budgets.This will help your potential funders to determine the viability of your business plan.Step 6: Management PlanningA management plan describes the key positions that will be created as part of theproposed venture and the management supervisory relationships among those involved.A management plan:1. Explains who will lead the business venture and ensure its success;2. Highlights management strengths and shows that you recognize where gaps existand how to fill them; and3. Demonstrates proof of experience, leadership, and vision.Your description of the management team should demonstrate proof of experience;leadership and vision; and a description that should normally include:1. An introduction to the team, including a description of team members’ relevantexperiences and an explanation of the team’s experience working together;2. An explanation of key management team positions and bios for positions that arefilled; and3. A description of positions to be filled and skill sets sought for each position.Once you and your team have mastered the skill of developing business plans andhave been able to successfully generate needed investment, you can continue to usethis skill not only to develop new products or services but also to improve on your

200ACHIEVING EXCELLENCE in Your NGOcurrent products or services. Thus, you will convert your organization from just awell-intentioned organization to an innovative, market-driven enterprise with a strongsocial cause.Annex IT 6.1. Sample Sales and Revenue TemplateThe sample templates provided are meant to assist you in developing a five-year outlookfor your sales revenues and gross profit. You can use or modify these templates orcreate your own. In the Revenue Assumptions template, you are provided with spacefor three basic product lines. If you have more product lines, you will need to addsections to the template. This template is extremely basic and is meant to serve as astarting point for new businesses.1. Begin with your primary product line. Enter the name of the product line in theblue cell currently labeled “Product/Service A.” Then enter the name of the firstmonth that you will be projecting.2. Enter the price you will charge for this product or service in year one. Indicate inthe blue cell what units you are referring to.3. Estimate the sales volume per month for year one. The sample template showshow to calculate the monthly revenue from the product and will demonstrate theseasonality by showing what percent of total sales are generated each month.4. Estimate the cost per unit in direct materials and direct labor costs. The sampletemplate shows how to sum up the total the cost and the gross margin on eachunit sale.5. Now you will estimate future revenues. You will need to estimate increases in thethree major assumptions: price, sales volume, and cost of goods.The template allows you to enter three product lines and, at the bottom of theworksheet, shows how to calculate the total revenues, costs, gross profits, and grossmargins. If you have additional product lines, you will need to modify the template.

Business Planning: A Simplified Approach for Non-Government Organizations 201Example of Sales and Revenue AssumptionsProduct / Service APricingPrice per unit $30.00Units per piece (For example: per hour, per piece, per pound)Sale Volume (Units sold) Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 TotalNumber of units to be5 8 9 6 4 7 2 3 8 10 8 9 79sold each monthPercent of total units sold 6% 10% 11% 8% 5% 9% 3% 4% 10% 13% 10% 11%Sales Revenues(price x volume)$150 $240 $270 $180 $120 $210 $60 $90 $240 $300 $240 $270 $2,370Cost per unitDirect Material costper unit$5.00Direct Labor cost per unit $15.00 (Only include labor related to production of this unit. Usually this is only labor that is contracted per hour/per unit)Total cost per unit $20.00 (Cost per unit should be less than the price per unit)Gross Margin 33%One method of estimating increases in revenues is to think through changes in the price, sales volume andIncreases for Years 2-5 cost of foods that you will experience over the next few years. These cells allow you to look at how changesin these factors will affect your revenues, margin and profitsRate ofRate ofRate ofPriceNewvolumeNew SalespriceVolume RevenuesCOGSincreaseIncreaseincreaseNew GrossCOGS MarginYear 2 2% $30.60 10% 87 $2,659.14 2% $20.40 33%Year 3 1% $30.91 8% 94 $2,900.59 2% $20.81 33%Year 4 1% $31.22 5% 99 $3,076.08 2% $21.22 32%Year 5 1% $31.53 3% 102 $3,200.04 2% $21.65 31%Alternately, you might simplify theprojections by making an estimation onthe rate of growth of the total revenues.Rate ofRevenueIncreaseNewRevenues5% $ 2,488.505% $ 2,612.935% $ 2,743.575% $ 2,880.75

202ACHIEVING EXCELLENCE in Your NGOAnnex IT 6.2. Financial Projections Template5-Year ProjectionStart-up Year 1 Year 2 Year 3 Year 4 Year 5AnnualRevenuesOil change $ 60,795 $ 75,994 $ 88,267 $ 99,035 $ 106,067Brake repair $ 177,870 $ 204,551 $ 227,256 $ 250,345 $ 265,566Wiper fluid $ 3,080 $ 3,422 $ 3,733 $ 3,996 $ 4,198Total Revenues $ 241,745 $ 283,966 $ 319,255 $ 353,376 $ 375,830Cost of GoodsOil change $ 34,740 $ 43,859 $ 51,447 $ 57,158 $ 61,216Brake repair $ 29,400 $ 34,486 $ 38,694 $ 42,625 $ 45,216Wiper fluid $ 1,540 $ 1,711 $ 1,866 $ 1,998 $ 2,099Total Cost ofGoods $ 65,680 $ 80,056 $ 92,007 $ 101,780 $ 108,531Gross Profit $ 176,065 $ 203,910 $ 227,248 $ 251,596 $ 267,299Gross margin 73% 72% 71% 71% 71%Staffing Costs $ 158,663 $ 184,188 $ 194,361 $ 207,624 $ 221,275Fixed (Selling,General, andAdministrative)$ 58,200 $ 28,700 $ 29,561 $ 30,448 $ 31,361 $ 32,302CostsProfit FromBusiness $(58,200) $(11,298) $ (9,840) $ 2,440 $ 12,610 $ 13,722OperationsBreakeven? no no no yes yes yesGrant Subsidies 50,000 0 0 0Net Profit (NotIncluding Taxes $ (8,200) $ (11,298) $ (9,840) $ 2,440 $ 12,610 $ 13,722and Depreciation)Cumulative CashFlow$ (8,200) $ (19,498) $ (29,338) $ (26,898) $ (14,288) $ (566)Cash flow positive? no no no no no no

Business Planning: A Simplified Approach for Non-Government Organizations 203Staffing AssumptionsSalaried EmployeesSalaried Staff Year 1 Year 2 Year 3 Year 4 Year 5Positions Salary Salary Salary Salary SalaryBusiness manager $ 50,000 $ 51,500 $ 53,045 $ 54,636 $ 56,275Lead mechanic $ 40,000 $ 41,200 $ 42,436 $ 43,709 $ 45,020Chief financial officer $ 50,000 $ 51,500 $ 53,045 $ 54,636 $ 56,275Assistant manager $ - $ 30,000 $ 30,900 $ 31,827 $ 32,782Marketing director $ 45,000 $ 46,350 $ 47,741 $ 49,173 $ 50,648Human resources/payrollmanager$ 40,000 $ 41,200 $ 42,436 $ 43,709 $ 45,020Development officer $ 40,000 $ 41,200 $ 42,436 $ 43,709 $ 45,020Annual cost of livingincrease for salaried staff3%Salaried Staff Time(as % of FTE)Year 1 Year 2 Year 3 Year 4 Year 5Business manager 100% 100% 100% 100% 100%Lead mechanic 100% 100% 100% 100% 100%Chief financial officer 5% 0% 0% 0% 0%Assistant manager 0% 50% 50% 50% 50%Marketing director 5% 0% 0% 0% 0%Human resources/payrollmanager0% 0% 0% 0% 0%Development officer 5% 5% 0% 0% 0%

204ACHIEVING EXCELLENCE in Your NGOStaffing AssumptionsHourly EmployeesHourly Staff Year 1 Year 2 Year 3 Year 4 Year 5Positions Hourly Hourly Hourly Hourly Hourlyand Wages Wage Wage Wage Wage WageYouth mechanics $ 10.00 $ 10.15 $ 10.30 $ 100.46 $ 10.61None $ - $ - $ - $ - $ -None $ - $ - $ - $ - $ -None $ - $ - $ - $ - $ -Annual cost of living wageincrease for hourly staff 1.50%Hourly Staff Time Year 1 Year 2 Year 3 Year 4 Year 5(hrs/week/employee) Hours/Week Hours/Week Hours/Week Hours/Week Hours/WeekYouth mechanics 15 15 15 15 15NoneNoneNoneHourly Staff Time Year 1 Year 2 Year 3 Year 4 Year 5(hrs/week/employee) Hours/Week Hours/Week Hours/Week Hours/Week Hours/WeekYouth mechanics 4 5 6 7 8NoneNoneNone

Business Planning: A Simplified Approach for Non-Government Organizations 205Staffing Expenses:Payroll taxes 9.425% % of total wagesWorkers comp/other 2.32% % of total wagesFringe benefits 20.00% % of total wagesWeeks per year 52.00 weeks used to calculate annual wagesTotal Staffing Costs:Year 1 Year 2 Year 3 Year 4 Year 5Business manager $ 65,873 $ 67,849 $ 69,884 $ 71,981 $ 74,140Lead mechanic $ 52,698 $ 54,279 $ 55,907 $ 57,585 $ 59,312Chief financial officer $ 3,294 $ - $ - $ - $ -Assistant manager $ - $ 19,762 $ 20,355 $ 20,965 $ 21,594Marketing director $ 2,964 $ - $ - $ - $ -Human resources/payroll manager$ - $ - $ - $ - $ -Development officer $ 2,635 $ 2,714 $ - $ - $ -Subtotal SalariedEmployees$ 127,463 $ 144,603 $ 146,146 $ 150,530 $ 155,046Youth mechanics $ 31,200 $ 39,585 $ 48,215 $ 57,094 $ 66,229None $ - $ - $ - $ - $ -None $ - $ - $ - $ - $ -None $ - $ - $ - $ - $ -Subtotal HourlyEmployees$ 31,200 $ 39,585 $ 48,215 $ 57,094 $ 66,229Total Staffing Costs $ 158,663 $ 184,188 $ 194,361 $ 207,624 $ 221,275Start Up CostAssumptionsOutfitting/build outof space$ 25,000Furniture and fixtures $ 2,000Equipment $ 25,000Inventory $ 3,000Supplies $ 500Legal fees $ 1,000Marketing $ 1,500Licensing/registrationfees$ 200Total Start-up Cost $ 58,200

206ACHIEVING EXCELLENCE in Your NGOFixed Cost AssumptionsYear 1 Year 2 Year 3 Year 4 Year 5Annual Annual Annual Annual AnnualAmount Amount Amount Amount AmountFacilities ExpensesRent 12000 12360 12731 13113 13506Mortgage 0 0 0 0 0Utilities 2400 2472 2546 2623 2701Signage 0 0 0 0 0Office equipment (computers,copiers, and fax machine)Equipment repair andmaintenance services2400 2472 2546 2623 27011200 1236 1273 1311 1351Administrative ExpensesInsurance 2400 2472 2546 2623 2701Payroll fees 300 309 318 328 338Legal fees/retainer 0 0 0 0 0Accounting fees 0 0 0 0 0Office supplies 2400 2472 2546 2623 2701Association memberships 0 0 0 0 0Phone/cell phone/pager 0 0 0 0 0Computer software 500 515 530 546 563Parent nonprofit admin fee oroverhead charge0 0 0 0Travel and Conference ExpensesConferences 0 0 0 0 0Transportation 0 0 0 0 0

Business Planning: A Simplified Approach for Non-Government Organizations 207Year 1 Year 2 Year 3 Year 4 Year 5Annual Annual Annual Annual AnnualAmount Amount Amount Amount AmountMarketing and Sales ExpensesCredit card fees 0 0 0 0Advertising campaign 1200 1236 1273 1311 1351Fliers/coupons/other printing 2400 2472 2546 2623 2701Logo design/branding 0 0 0 0Training or other ProgramrelatedExpensesTraining curriculum 1500 1545 1591 1639 1688Program supplies 0 0 0 0Program overhead 0 0 0 0Other/Miscellaneous 0 0 0 0Total Fixed Expenses $ 28,700 $ 29,561 $ 30,448 $ 31,361 $ 32,302Fixed expense growth rate 3%

208ACHIEVING EXCELLENCE in Your NGOINTERVENTION TOOL 7Creating EnduringImpactAccording to the international health organization, Management Sciences forHealth, “enduring impact is the ability of the organization to empower its targetclients and engage them to feel being part of the organization” (http://erc.msh.org).Often, when an NGO completes a project or a program, impact is not easily observed;and if there is any, it does not last long enough to make a difference. Being unable tocreate a long-lasting impact is tantamount to not being able to accomplish theorganizational mission, making the very existence of an NGO questionable. TheNesST argues that impact “also involves the ability of the organization to generateadded value, create a social base and fulfill the organization’s mission according to itsvalues and establish legitimacy with its stakeholders.” As mentioned earlier, the ultimategoal of an NGO is to empower its constituencies—the clients and communities itworks with—including organizations and institutions within the community andother stakeholders. All NGOs, therefore, should aspire to ensure that their projectsand programs create meaningful impact.Ways to Create Enduring ImpactPromising practices in the field of NGO management reveal five ways to create enduringimpact, as follows: (1) empowerment of constituency; (2) integration of interventionsinto community institutions (schools, health centers, local government units, others);(3) empowerment of partner NGOs/CBOs; (4) empowerment of communities; and(5) generation of long-lasting stakeholder support.Empowerment of ConstituencyNGO work is generally aimed at fostering positive behavior in its constituency throughthe provision of an appropriate mix of services. What makes an NGO different from

Creating Enduring Impact 209other sectors is that it does not stop at providing services. It ensures that the constituencyis empowered enough to be able to sustain any positive behavioral changes. Sustainingbehavioral changes entails the following:1. The client has the competency to practice the new behavior;2. The new behavior has become a habit for the client;3. Services to assist in the practice of the new behavior are available; and4. The client can access and utilize these services.Empowering clients to practice the new behavior involves changing their knowledge,attitudes, skills, and practices. They need to practice the acquired skills to becomecompetent in the new behavior, and if the practice of the new behavior requires someservices, these need to be institutionalized within the community.Let us take the example of microfinance. The new behavior is the use of one’s ownsavings and/or loans to engage in income-generating activity. The NGO helps theclient acquire the necessary competencies to practice this new behavior throughcounseling, training, a peer support system, and technical assistance. The resultantnew behavior becomes a pattern through time, and eventually a habit, as its benefitsreinforce the practice of the new behavior. Through its microfinance program, anNGO makes loans available to its clients. Over time, when clients have built upsufficient economic capital and competencies, they will be able to access neededfinancial resources from community institutions such as banks or governmentmicrofinance funds. In some instances, an NGO helps the clients organize their ownmicrofinance institution or group to serve their savings and credit needs. In time,when the clients’ access to services is assured, the NGO can withdraw its support andventure into other areas that need its services.Integration of Interventions Into Community InstitutionsCertain community institutions such as schools, health centers, local governmentunits, and faith-based organizations have endured over a long period of time. Oftenan NGO’s impact can endure if its activities are integrated into these institutions’routine operations. For instance, if an NGO is providing adolescent reproductivehealth education, empowering clients alone will not suffice because the adolescentswho are the clients will grow older and move out of this group. One way of sustainingthis intervention is by integrating it into school curricula and/or programs.Integrating the provision of such services into community institutions may requireadvocacy for policy change with higher authorities such as the departments of educationor health as well as empowering community-based institutions to provide such services.NGOs need to ensure that advocacy efforts and capacity development are part oftheir integration strategies.

210ACHIEVING EXCELLENCE in Your NGOEmpowerment of Partner NGOs or CBOsIn many cases, large NGOs establish partnerships with local NGOs or CBOs topromote behavior change and/or provide needed services. To ensure that these servicesare carried forward by these groups, it is necessary for the larger NGO to develop theircapacities to prepare them to continue the task, especially after the NGO phases outits support in a particular community. Building such capacities should go beyondprogrammatic competencies to include (1) governance and leadership—vision, mission,strategies, and alignment; (2) skills and systems of planning, budgeting, humanresources management, resource mobilization and monitoring; and (3) managementprocesses to establish decision-making style and participatory culture.Empowerment of CommunitiesCommunity mobilization, involvement, and participation have been buzzwords indevelopment literature for several decades. However, actual development practicesare often wanting in the empowerment of the communities that they serve. Thecommunities need to be empowered if the NGO’s impact is to endure. This mayrequire two processes: (1) ensuring the participation of the community; and (2)changing community norms, traditions, and customs so that they support the newbehavior.There are several degrees of community participation and a variety of names are usedto identify them, such as “community participation,” “community involvement,” and“community mobilization.” The degree of community participation depends on whoparticipates (community leaders, women’s groups, youth groups, all interest groups),in what (planning, implementation, maintenance, distribution) and how (sharinginformation, consulting, making decisions, contributing cash or in-kind resources).In increasing order, the levels of participant involvement are as follows:1. Co-option: Token involvement of local people; representatives are chosen buthave no real input or power2. Compliance: Tasks are assigned with incentives; outsiders decide agenda and directthe process3. Consultation: Local opinions are asked; professionals analyze and decide on acourse of action; community participates by accepting services provided4. Cooperation: Local people work together with organization to determinepriorities, but responsibility for implementation remains with the organization5. Co-learning: Local people and outsiders share their knowledge to create newunderstanding and work together to form action plans with organization6. Collective action: Local people set their own agenda and mobilize to carry it outTable IT 7.1 shows the nature of community involvement for different degrees ofparticipation.

Creating Enduring Impact 211You may wish to assess the degree of community participation in your programs usingthe following steps:1. Select a problem in your community;2. Assess the degree of involvement of the community using Table IT 7.1; and3. Make an action plan to increase the degree of participation.Table IT 7.1. Degrees of Community ParticipationCommunity Co-option Compliance Consultation Cooperation Co-learning Collectiveis involved in: On With With/For With With/By Action byNeedsassessmentX X X XEstablishingprioritiesSetting goalsand objectivesDevelopingstrategiesX X XX X XShort-and longtermplanning X XactivitiesMonitoringand evaluationX X XFinancing andresourceallocationImplementingprogramsXXXXGeneration of Long-lasting Stakeholder SupportBeyond the clients, communities, and community-based organizations, there may beother stakeholders whose support will be essential to ensure enduring impact. Thesegenerally include community leaders, members of local elected bodies, government,other donors, local businesses, and faith-based leaders. Efforts to involve relevantstakeholders (in activities indicated in Table IT 7.1) to generate and sustain theirsupport will assist in creating enduring impact. For instance, some norms in thecommunity may need to be changed for the new behavior on adolescent reproductivehealth education in the schools to endure; and such norms may be determined byleaders, often faith-based. It is thus necessary that their support also endures beyondthe project period.

212ACHIEVING EXCELLENCE in Your NGOFramework for CreatingEnduring ImpactA framework for creating enduringimpact is shown in Figure IT 7.1.It suggests that creating enduringimpact requires five actionstargeted at your constituency andother stakeholders as follows:1. Building constituency2. Empowering constituency3. Garnering stakeholder support4. Satisfying clients5. Creating demandThese actions are expected to resultin empowering clients, integratingNGO activities into communityinstitutions, empowering NGOs/CBOs, empowering communities,and generating enduring supportfrom stakeholders.Box IT 7.1. Teen CenterThe Teen Center in the central Philippines isconsidered a model youth center in the country.It owes its success to the support it continues togenerate from various stakeholders since itsinception in 2000. Initiated by Kabalaka(Concern) Foundation, it is being managed bythe youth themselves. At the outset, the youthled the process of engaging several communitybasedgroups and government agencies. Thelocal government provided the space whilevillage heads within the vicinity of the centercontributed furniture and fixtures for thebuilding. Now, doctors, dentists, and nursesfrom nearby schools and health centers taketurns providing health and dental services whileguidance counselors from different secondaryschools regularly hold counseling sessions for theyouth in the center. The center caters to between50 and 70 young people daily who come to enjoythe center’s facilities, such as its library, TV,games, and study sessions.Figure IT 7.1. Framework for Creating Enduring ImpactAction to CreateEnduring Impact1. Buildingconstituency2. Empoweringconstituency3. Garneringstakeholdersupport4. Satisfying clients5. Creating demandConstituencies• Clients• Communityinstitutions• Partner NGOs/CBOs• CommunitiesOther Stakeholders• Donors• Governmentagencies• Other NGOs• Philanthropists1. Empower clients2. Integrate activities intocommunity institutions3. Empower partnerNGOs/CBOs4. Empower communities5. Generate enduringstakeholder supportEnduring Impact

Creating Enduring Impact 213Building ConstituencyYou need to identify constituencies that will be instrumental in creating enduringimpact. These could be clients, community institutions, partner NGOs/CBOs, orcommunities; they could also be other stakeholders, such as donors, governmentagencies, other NGOs, or local philanthropists. Having identified the relevantconstituencies, your NGO needs to build your legitimacy and relationship with them.The higher your sense of accountability to the constituencies of your NGO, and thehigher the degree of trust between the constituency and your NGO, the higher thechances of creating enduring impact.NGOs should avoid the mistake of building their constituency near the end of aproject. It should begin right at the beginning of any initiative and should be anintegral part of the project or program.Empowering the ConstituencyIt is not enough to build a constituency base; the constituency needs to be empoweredso that it can sustain the impact of your NGO. This empowerment requires buildingyour constituency’s capacity and ensuring their participation in all aspects of yourprogram or project. Similar degrees of participation shown in Table IT 7.1 also applyto other constituencies. The higher the degree of a constituency’s participation, thehigher will be their empowerment and the likelihood of enduring impact.Garnering Stakeholder SupportThere may be other stakeholders who can support your constituency. These includedonors, other NGOs, government agencies, and local philanthropists. A carefullydeveloped strategy will need to be implemented to garner their support as well.Satisfying ClientsAlthough the above three actions will ensure impact for some time, it is not likely toendure if clients are not satisfied with the services. Clients are a very importantconstituency on their own. You will need to assess and improve the quality of servicesto your clients to ensure their ongoing satisfaction.Creating demandWhile your current clients may be satisfied, there may be others who have unmetneeds for the services your NGO provides but are still not utilizing them. Therefore,demand needs to be created among these unreached segments of the community.Often, these are marginalized groups who are difficult to reach, and special effortsmay be required to create demand.

214ACHIEVING EXCELLENCE in Your NGOINTERVENTION TOOL 8Making GovernanceWorkAs mentioned in Chapter 4, good governance includes the following elements:• A board that makes clear its expectations of the chief executive; understands whatthe chief executive needs from the board; recruits and orients its own members;sets meeting agendas; guides processes; and overseas the leadership style,responsibilities, and tasks of the chief executive.• A governance system that ensures optimum performance.• A mechanism for integrity and accountability; a knowledge of and adherence tothe legal and normative frameworks under which NGOs operate in your country;and mechanisms that ensure accountability and transparency to stakeholders.To achieve effective governance, therefore, these key elements need to be in place andimproved upon, if necessary.Enhancing Board EffectivenessBoard development is an ongoing process that engages members of the board in formal/informal education to ensure that they understand the organization well and remainat the forefront of the organization to serve it effectively. This may include providingboard members with relevant information, orientation, mentoring, skills training,etc. Effective board development should be planned, designed, developed, andimplemented on the basis of the gaps identified in board competencies through regularand objective assessments.Why Board Development?Until recently, the general impression people had of a board of directors was that theyare a collection of high-powered people engaged in low-level activities or “rubber-

Making Governance Work 215stamping,” that they seldom meet, and once they do, they automatically approve theproposals of their executive directors or committees.The departure from this stereotyped viewpoint may be related to a growing emphasison governance, whereby the board is a critical determinant in how the organization isguided, directed, and controlled at a strategic level. People have started to realize thatthe board, in fact, is a powerful asset of an NGO, if its talents are tapped.Working with boards is different from working with staff. Board members usually donot have the same motivation as staff for ongoing education and development. Boardmembers are unpaid and, while committed, are always busy, engaged in their ownwork or other preoccupations.The “Board” DefinedBoards are called by different names and understood by different people differently.To avoid confusion, this chapter introduces basic board concepts by defining the termand clarifying the different names used to refer to boards. The different players inboard functioning are identified in the process to create an understanding of howboards are organized and structured.Within the NGO context, the board is basically a group of volunteers that is legallyresponsible for making sure an organization remains true to its mission, safeguards itsassets, and operates on behalf of public interest. Some NGOs, such as family planningand reproductive health (FP/RH) NGOs, have special features that make them differentfrom other NGOs. Their services focus on influencing sexual and reproductive healthbehavior, which at times may be at odds with some sectors, such as the church andconservative groups. Some of their clients, such as sex workers, people living with HIVand AIDS (PLWHAs), and men having sex with men (MSM), have been made outcastsby society or carry stigmas. In most cases, FP/RH NGOs have to undertake a lot ofhard selling and advocacy to educate various stakeholders and influence policy decisions.As such, boards of FP/RH NGOs must clearly align their personal values with theorganizational values, be willing to advocate for the cause of the organization theyrepresent, and continue to educate themselves on developments in the FP/RH field.Typologies of BoardsVarious names are used to refer to the board or board members. Some of these are“board of directors,” “board of trustees,” “governing board,” “advisory board,” “exofficioboard member,” and “board member emeritus.” At this juncture, it is importantthat these various terms are distinguished from each other to avoid confusion. Theterm “trustee” refers to a person who has the fiduciary duty for a charitable trust orfoundation. Higher education institutions traditionally also tend to call their boardmembers “trustees.” Below are some of the terms used to refer to boards or bodieswithin boards:

216ACHIEVING EXCELLENCE in Your NGO• Governing Board: Every NGO must have a governing body. As the nameindicates, the role of the board is to govern as it creates the vision, mission, andpolicies of the organization. It is the same as the board of directors and someboards also have a governance committee.• Advisory Board: The advisory board functions like a committee of a board. It isusually created for a specific purpose to assist the entire board or the organizationin its work. Advisory boards can, for example, provide advice or technical assistance,assess the impact of clinic services or another service, or advocate for theorganization. They have no legal responsibilities, no vested right to serve, and noimmunity from removal. It is wise to limit their actions to makingrecommendations and providing background for board or organizational decisions.Former board members may be invited to stay on as non-voting members in anadvisory capacity.• Board Member Emeritus: This is an honorific title bestowed in recognition of aboard member’s active participation and contribution to the organization. Thetitle is usually given to a former board member who is invited to stay on withoutvoting rights. More often, this title is automatically given to former board chairs.• Honorary Board Member: This title is given to a distinguished person whoseaffiliation with the organization would be welcome and considered beneficial.• Ex-Officio Board Member: The term “ex-officio” means “by virtue of office.”An ex-officio board member, then, becomes part of the board by virtue of his/herofficial capacity. Usually, the executive director is a non-voting ex-officio memberof the board. The moment she/he resigns as executive director, he/she automaticallyrelinquishes membership in the board, and whoever takes the position of theexecutive director will become the ex-officio member of the board.Key Players in Board FunctioningThere are three important types of players in the board functioning process: the boardchair, the executive director, and individual board members. To avoid confusion andto lay the right foundation, it is very important to develop clearly defined and mutuallyagreed-upon position descriptions for the executive director, the board chair, and theentire board. These descriptions should be regularly reviewed and updated.• The Chair: The chair is the chief volunteer of the organization and must lead theentire board in fulfilling its responsibilities for the governance of the organization.He/she chairs the meetings of the board, ensures the effective performance ofcommittees, and links the entire board with the executive director to achieve themission of the organization (MCN, 2001).

Making Governance Work 217• Executive Director: Whilethe chair is responsible for howthe board functions, theexecutive director isresponsible for the effectivemanagement of theorganization. The executivedirector, representing theorganization’s staff, is obligedto seek advice and approvalfrom the board on theorganization’s strategic plan orother critical matters. He orshe will strive to achieve theperformance target agreedupon and will be assessed bythe board annually. Theboard, in turn, is obliged toseek self-improvementcontinuously through boarddevelopment and education inorder to fulfill its task,especially as a governor of andconsultant to the executive director.Box IT 8.1. Major Functions of Bylaws1. To determine an organization’s structure:• Does it have members?• What are the responsibilities ofofficers?• How are board members selected?2. To determine the rights of the peopleinvolved in the structure:• What are grounds for removal fromoffice?• Are board members entitled toindemnification?3. To determine the procedures by whichrights are exercised:• How will members be notified ofmeetings?• Can meetings be held via conferencecall?• Can elections be held by mail?• Individual Board Members: Every board member has a role to play in theorganization, and each of them has expectations about his/her role andresponsibilities. As part of the board, aside from the collective roles of the board,individual members are expected to participate in policymaking, attend meetings,engage in committee work, and contribute wisdom and expertise, among others.Structure and Composition of the BoardEvery NGO must have a policy on the composition and tenure of the board. This canbe incorporated in the bylaws of the organization. The policy must includecomposition, tenure, size, balance, diversity, committee structure, rotating plans, averageage, conflicts of interest, and geographic and demographic mix.• Bylaws: Bylaws are created to guide the operations of the organization. Bylawsserve three main functions, namely, to determine organizational structure, therights of the people involved in the structure, and the procedures by which rightsare to be exercised (see Box IT 8.1).

218ACHIEVING EXCELLENCE in Your NGO• The Size of the Board: There is no single formula to determine the size of aboard. Members in a small board may be overworked and unproductive. On theother hand, members in a large board may not have the opportunity to participateactively. In fact, the size of the board greatly depends on the organization’s structureand needs. Every board should have a sufficient range of expertise to accomplishthe organization’s mission.• Composition and Diversity: There is no single best way to achieve diversity inboard membership. Building diversity within the board must be undertaken assomething that will help the organization achieve its mission and fosterinclusiveness—not as tokenism. Diversity can be reflected through age, gender,socioeconomic status, sexual orientation, physical abilities, religion, skills, and race.For example, a reproductive health (RH) NGO engaged in sexual rights may requirethe representation of women, while those engaged in adolescent reproductive healthmay invite young people to be part of the board.• Officers: Aside from the board chair, a typical board is composed of the followingother officers: vice chair, secretary, and treasurer.• Committees: Tasks are distributed to committees to increase board efficiency. Bydelegating tasks to committees, a board can avoid long hours of inefficientdiscussions. Committees also serve to accomplish work that needs to be donebetween board meetings. The entire board will then exchange information andmake decisions based on the recommendations of the committees. Committeesalso provide opportunities for board-staff interaction and exchange. There is agrowing trend now towards having very few standing committees (Box IT 8.2).Instead, NGOs create ad-hoc committees or task forces that are outcome-orientedand disband when tasks are finished. They are sometime called “tissue paper”committees. For instance, recently, the RH landscape has been moving towards arights-based approach to sexuality. An RH NGO that is not yet conceptuallyprepared for this transition may set up a committee for the purpose of studyingthe concepts and underlying implications of moving towards a rights-basedapproach to sexuality and how best the organization can reorient and prepareitself.Many NGOs are asking how many committees a board should have. John Carver, aninternationally known creator of the Policy Governance model says “None.” Carver’sPolicy Governance model is the world’s only complete, universal theory of governance—a conceptually coherent paradigm of principles and concepts. Carver’s idea is that theboard should function as a whole and use committees only for special assignments(Edgar Stoesz and Chester Raber, Doing Good, Better, 1997).

Making Governance Work 219Box IT 8.2. Most Common Committees• Executive Committee: Usually composed of the board chair, some officers, andcommittee chairs, this committee has special responsibilities and authorities aboveall committees to facilitate decision making between board meetings or in urgentand crisis circumstances. This committee, however, should not take over functionsthat must be done by the board collectively, such as the amendment of bylaws,election or removal of board members, hiring and firing of an executive director,approval or adjustment of the budget, or making of structural decisions.• Finance/Audit Committee: Set up to provide fiscal oversight, grant the executiveexpenditure power within the budget, and make recommendations for the annualbudget.• Resource Mobilization Committee: Organized to plan, participate in, and guidethe executive director in the generation of required resources for the organization.• Governance Committee: Set up to recruit new board members; assure thateach board member is equipped with the proper tools and motivation to carryout his/her responsibilities; assess the board’s effectiveness, current composition,and representation; and develop and update the board’s roles and responsibilities.• Marketing Committee: Tasked to develop and undertake a public relationsstrategy to promote the organization to the public, donors, constituents, andother stakeholders.The ultimate objective of board development is to develop an effective board. It aimsto provide and enhance the board’s knowledge, change the board’s attitude from negativeto positive, and ensure that board members actually practice what they have learnedthroughout the development process. So, what is an effective board? Effectiveness isdefined as “doing the right thing.” In order to do the right thing, the board mustimprove its competencies.NGO Board RolesICOMP has developed a framework called the STARS Board Effectiveness Framework,originally for RH NGOs but applicable to any NGO. STARS stands for the roles ofthe board as follows: (1) Providing Strategic guidance and governance; (2) ProvidingTechnical support; (3) Acting as Ambassadors of the organization; (4) Ensuringorganizational Regeneration; and (5) Ensuring Sustainability (Box IT 8.3). Theframework serves as a tool for NGOs to examine the effectiveness of their boards,determine strengths and shortfalls, and develop strategies to address gaps (see FigureIT 8.1). As the framework indicates, board effectiveness involves two major processes,namely, self-assessment and competency enhancement, which must be applied to thefive key roles of the board.

220ACHIEVING EXCELLENCE in Your NGOBox IT 8.3. Key Roles of the Board: STARSStrategic Guidance and Governance: Defines the vision and mission of theorganization; determines how the organization can contribute to improvements inits field; ensures organizational planning; selects, supports, and evaluates theexecutive director; ensures accountability.Technical Support: Determines, monitors, evaluates, and strengthens programsand services in terms of updates, trends, programming, and organizationalmanagement.Ambassadorial: Enhances the organization’s public standing; promotes theorganization to the government, donors, and constituents; links the organizationto its counterparts internationally and globally.Regeneration: Continuously educates board members on developments in thefield; stays informed on organizational programs, achievements, issues, and concerns.Sustainability: Generates financial resources for the organization and assists theexecutive director in business planning and implementation.Board Self-Assessment ProcessBoard self-assessment is an educational process through which board members discusstheir strengths and weaknesses in carrying out their key board roles. It is a mechanismby which the board is provided an opportunity to reflect on its contributions to theorganization and determine how best it can strengthen its performance.The assessment process involves asking board members to complete a questionnaireassessing their satisfaction with the board’s effectiveness in performing its roles.ICOMP’s self-assessment questionnaire requires each board member to individuallyrank his/her satisfaction for each question using 1 through 4 as the range, with 4 beingthe highest. The board can hire an external consultant or assign a team to carry out thetask of collecting and analyzing the results of the assessment. Once the analysis isdone, the board effectiveness profile of the organization can then be plotted in theframework (Figure IT 8.1). Progressing from the center outward, the core pentagonrepresents the score of zero with the outermost pentagon representing the perfect scoreof four. A highly effective board will have a perfect score of four for each key role,forming a perfect pentagon (outermost pentagon), as shown in the figure. The figurealso shows an example of an actual board profile (imperfect pentagon), which performsvery high in terms of strategic guidance and direction but very poor in terms ofsustainability and regeneration.

Making Governance Work 221Competency EnhancementThe profile of the board, as indicated in the figure, gives the board an overview of theareas where they perform well or poorly, allowing them to strategically focus theirattention towards improving areas they feel are important to the welfare of theorganization. In the example, the NGO has to strategically focus its attention onoptimizing its strengths and leveraging them to increase the board’s effectiveness insustainability and regeneration. Gaps that exist in ambassadorial and technical supportroles should also be looked into and addressed, as appropriate. Competencydevelopment may require a mix of having in-house educational discussions (e.g., aspart of regular meetings), holding retreats, sending boards to training, hiring consultantsto facilitate discussions, conducting workshops, and providing advice. The next sectionprovides various tools, tips, and processes through which a board will be able to improvetheir effectiveness in the five key competency areas reflected in the board roles withinthe STARS framework. The effectiveness of the board should be continuously examinedand assessed to see if improvements have taken place. One way of doing this is to askthe same questions during each assessment process and plot them in the framework todetermine whether the scores have remained the same, increased (expansion ofpentagon), or decreased (contraction of pentagon). Once this is done, NGOs candetermine the facilitating and impeding factors and draw lessons from the experience.Competency development approaches can then be reviewed, improved, dropped, orrevised.Nurture the Board-Building ProcessThe board should be built, nurtured, educated, and revitalized to ensure its continuingperformance and effectiveness. The process of board building involves the following:• Determine Organization’s Governance Needs: Identify the needs of theorganization to build an effective board. A nominating committee can be set upto lead the process. Questions to ask: What characteristics and skills does thecurrent board bring? What gaps exist? What characteristics, skills, and experiencebackground does the board need now? What gaps does it need to fill in the future?• Identify Potential Candidates: Often, many board members of NGOs are friendsof the executive director. That should not be the case due to a potential conflict ofinterest. Careful identification of potential board members must be undertaken, aprocess that can be time consuming. This can be mitigated if each existing boardmember nominates at least one potential candidate. Potential candidates must begiven the chance to come to a deep understanding of the organization. It is usefulto send them materials about the organization and board functioning or invitethem to organizational activities.• Select New Board Member: The nominating committee should obtain thebiographical data on promising candidates, interview them, and make a shortlist

222ACHIEVING EXCELLENCE in Your NGOto present to the full board. The full board should select the new board member.An overarching question is: Why is the prospective board member needed andwanted?Figure IT 8.1. STARS NGO Board Effectiveness Framework• Orient the New Member: Once the prospective member has agreed to serve onthe board, it is vital to orient them to the organization. There are a number ofways to orient new board members, such as: providing them with backgroundinformation on the board and organization, giving them a tour of the facilities,having them meet with a senior staff officer, assigning a mentor to them from thecurrent board, and having them participate in important committee meetings orattend ongoing trainings.• Engage Board Members: There are a variety of ways to activate the board andmaximize their full potential. They must be involved in committees, assigned totask forces, consulted on important concerns, assigned oversight of particularprograms, and/or solicited for feedback. Accountability and responsibility vis-àvisthe organization’s welfare must be inculcated, and contributions appreciated.

Making Governance Work 223• Evaluate Board’s Effectiveness: The board must assess and evaluate its ownperformance. This will give them the opportunity to learn from mistakes, leveragestrengths, and identify ways to improve. Individual board assessment should beencouraged.• Celebrate!: BoardSource suggests that victories and progress should be recognizedand celebrated. Such celebrations allow opportunities to appreciate the individualcontributions of board members, the organization, and the community and makesroom for humor and a good laugh.Promote TeamworkOften, a team composed of highlyintelligent people performs worse thanteams made up of “less able”members—the so-called ApolloSyndrome. Although it is mainly thechair’s responsibility to ensure that theboard functions as a team, it isimportant that everyone involvedconsider it a personal responsibility toact as a team member. Formed bypeople with divergent backgrounds, theboard as a team should operate in anatmosphere where each one iscomplemented by the others.There should be an opportunity forboard members to build relationshipswith each other, to get to know eachother’s opinions and personalities, todevelop trust, and to gain comfortthrough free conversation. The capacityfor team play will be enhanced if newmembers are incorporated into the newwork of the board as soon as possible.Mentoring that matches a new memberwith a seasoned member is also aneffective approach to engagingnewcomers faster (Box IT 8.4).Promote a Learning BoardFor the board to engage in enlighteneddecision making and optimize theirBox IT 8.4. Characteristics of a BoardThat Uses Teamwork• Priorities: Board members knowwhat needs to be done next, bywhom, and by when to achieve goals.• Roles: Board members know theirroles in getting tasks done and whento allow a more skillful member todo a certain task.• Decision: Authority and decisionmakinglines are clearly understood.• Conflict: Conflict is dealt with openlyand is considered important todecision making and personal growth.• Personal Traits: Board membersfeel that their unique personalitiesare appreciated and well utilized.• Norms: Group norms for workingtogether are set and seen asstandards for everyone in the group.• Effectiveness: Board members findteam meetings efficient andproductive and look forward to thistime together.• Success: Board members knowclearly when the board has metwith success and share in thisequally and proudly.• Training: Opportunities for feedbackand updating skills are provided andtaken advantage of by board members.

224ACHIEVING EXCELLENCE in Your NGOpotential towards achieving the organizational vision, they have to strive to become alearning board (Box IT 8.5). This means being able to learn continuously, makeinformed decisions, and act quickly amidst a changing and sometimes tumultuousenvironment. Being a learning board would mean:• Consciously creating opportunities for board education and development;• Regularly seeking information and feedback on its performance; and• Pausing periodically for self-reflection to diagnose its strengths, limitations, andmistakes.Box IT 8.5. Ways of Becoming a Learning Board• Encourage board members to tell each other what motivates them.• Infuse board meetings with more meaning.• Establish an effective in-house communication system for the board to generatetimely and relevant information.• Set aside some time at each board meeting for a seminar or workshop to learnabout an important matter of substance or process or to discuss a common reading.• Conduct annual retreats for the board to reflect on its operations, successes, andshortfalls.• Encourage board members to meet counterparts in other NGOs to learn howthey operate and share practices.• Rotate committee assignments so members come to know many aspects of theorganization.• Conduct regular board self-assessments.• Plan substantive discussions into meeting agendas.• Practice an inquiry-oriented and goal-based decision-making process.• Add some new members and graduate some existing ones.Plan for SuccessionPlanning for succession is a frequently neglected area of board responsibility. Theboard must insist that the organization has a process in place for identifying andgrowing talent now and for the future. It must take the lead and discuss succession atleast once a year.Well-thought-out succession planning adds value to the organization by linking thecriteria for the executive director to leadership development throughout theorganization. This will help develop a strong bench of capable managers at allorganization levels, not just at the very top.Certainly, the board has to continually refine the executive director selection based onthe changing needs of the organization. The positive way to handle succession decisionsis to look at the assignment and vision and what is the biggest challenge for the next

Making Governance Work 225few years. Then only look at the board and their proven performances and comparethose performances against the needs of the organization. The board should use theircollective judgment in picking a successor. The executive director can makerecommendations and be consulted but should not make decision. Otherwise, theorganization will end up with a carbon copy of the previous executive director sincepeople tend to choose candidates who are like them.The board must ensure that the outgoing executive director does not remain on theboard. Otherwise, the leadership transition will be postponed, which will weaken theorganization. Former executive directors may use their influence to indirectly attacktheir successors. (Although in organizations with a strong succession planning process,executive directors take the lead rather than impeding the process). Research shows thatno executive director wants his/her predecessor on the board, although he or she cannotsay so. The new executive director may tolerate this because he/she wants to appear tobe nice to the outgoing executive director whose past contribution is appreciated andwho may have powerful allies on the board. The board should recognize the awkwardnessof the new executive director’s situation.A System to Ensure Optimum PerformanceThe board of directors should define the mission and purpose of the organization anduse these as rallying points to encourage the board and members of the organizationto work together to accomplish them. Commitment to the mission and vision shoulddrive the board’s sense of public accountability.Box IT 8.6. Things To Consider in Defining/Reviewing the Vision and Mission• Do the vision and mission statement clearly articulate the aspirations andcommitments of the organization?• Are the vision and mission adequately communicated to be clearly understoodby all stakeholders? Are they written? Do they go beyond just mere files, wallplaques, and publicity brochures?• Does the board periodically review the adequacy, accuracy, and validity of themission and vision given the changing trends in the organizational landscapeand situation and the changing needs of constituents?• Does the board consult various stakeholders when revising the vision and missionin order to ensure input from program people and experts in the field?• Are the programs aligned to the vision and mission of the organization?The vision is what the organization wants to be, while the mission is the reason for theorganization’s existence. It is what the organization is committed to do today toachieve its vision. Both the mission and vision must reflect the aspirations andcommitments of the organization (see Box IT 8.6).

226ACHIEVING EXCELLENCE in Your NGOPolicymakingThere are two kinds of policies in organizations. The first are called board policies,which are guidelines for how the board can best work together, e.g., when they wantto meet, how many members should be on a committee, how they recruit and orientnew members, how they manage for consistent attendance, how the board will workwith the executive director, and so on. The second type of policy is a set of guidelinestelling the staff what they always do and what they never do so that they can makeautomatic decisions without having to check with the board.The following are three guidelines for writing policies:• Keep it as simple as possible.• Include your reasons for setting any given policy. Present not only the rule butalso the rationale.• If someone on your board particularly enjoys doing the first draft of a policy—andyou find that he does it exceptionally well—why not let him/her do it?Select, Nurture, and Evaluate theExecutive Director• Selection Process: The board shouldbe in charge of selecting the chiefexecutive, which is the decision that willcreate the greatest impact on theorganization. A carefully developedsearch process is essential (Box IT 8.7).In many cases, the board gets excitedabout a possible executive director anddoes not follow a process, only to findout later that the person is not suitedto the job.• Nurturing the Executive Director:The relationship between the board andexecutive director is very critical inNGO leadership. Ideally, there mustexist a respectful, caring, and supportiveattitude between the board andexecutive director. Showing supportto the executive director can be bothformal (planning, decision making,meetings) and informal (having lunchesor individual meetings together) (BoxIT 8.8).Box IT 8.7. Ten Steps TowardSelecting an Executive Director1. Establish a search committee.2. Develop a profile for theposition (review and update ifalready existing).3. Announce the opening of theposition and generateapplications and resumes.4. Shortlist candidates and sendbasic information packets tothem.5. Conduct interviews (a series ofup to three if needed).6. Create psychological profiles ofcandidates.7. Call references or other peoplewho can vouch for thecharacters and competence ofshortlisted candidates.8. Conduct search committeediscussions and make decision.9. Send a job offer in writing andobtain acceptance in writing.10. Orient the new executive director.

Making Governance Work 227Box IT 8.8. Ways a Board Can Nurture the Executive Director• Coaching: establish milestones to measure progress and listen to the executivedirector’s rationale for his/her decisions.• Show Trust: present a unified front and stand firmly behind the executive directorwhile also maintaining objectivity.• Breathing Space: avoid micromanagement; instead, give the executive directorenough authority to manage the affairs of the organization.• Feedback: communicate performance assessments in private in advance andonly later in a larger meeting of the board.• Motivate: Praise or admonish as appropriate.• Shoulder to Cry on: Provide emotional support when the executive director isexperiencing difficult circumstances.• Evaluating the ExecutiveDirector: The board needs toexamine and evaluate theperformance of the executivedirector at least once a year. Thisprocess allows the board to expressits praise or frustration in anappropriate and respectfulmanner. The evaluation mustbe objective, realistic, and honest,using clear and agreed-uponperformance indicators. Likewise,the board should establish anannual performance plan for theexecutive director against whichthe executive director’sperformance should be evaluated.This evaluation should identifyboth accomplishments and areasfor future growth. Highlysuccessful organizations uses thefollowing approaches inevaluating the executive director:• Establish an evaluationcommittee (many NGOs usethe executive committee).• Develop performanceindicators based on the rolesBox IT 8.9. Key Performance Questionsfor Evaluating the Executive Director• Is the executive director building forthe future? Is his/her strategicpositioning of the organization likelyto bring short- and long-termaccomplishments in terms of theorganization’s mission and goals?• Does the executive director put realityon the table? Are there realistic plansto deal with adversity such asopposition from outside entities ordeclining donor funding?• Does the executive director have ahandle on operations? Does he/sheunderstand the programs properly?Does he/she ensure that operations areanchored on the commitments of theorganization?• Is the executive director creating themanagement team of the future? Ishe/she building and retaining the rightkind of team?• Is the executive director buildingpositive links with externalconstituents?

228ACHIEVING EXCELLENCE in Your NGOand responsibilities of the executive director and the annual performanceplan.• Use a standard instrument containing performance indicators, as discussedabove (see Box IT 8.9 for guide questions).• Examine reports and records.• Have conversations with the executive director, staff members, and some keystakeholders.• Make extensive personal observations.• Hold discussions at the committee and board levels.• Provide feedback from the chair to the executive director in a private, nonthreatening,and constructive manner.• Show a vote of confidence, if due, and offer advice for performanceimprovement, if required.• Make salary adjustments based on performance.Guide Organizational and Programmatic PlanningPlanning helps NGOs translate their mission into objectives, strategies, and activitiesthat can be accomplished and evaluated. There are different ways the board can guideprogram planning, as indicated in Box IT 8.10. As the saying goes, “Failure to plan isplanning to fail.” The board’s involvement in the planning is essential for the followingreasons:• Board-Staff Work: This is an opportunity for the board and staff to work togetherin seriously examining and reflecting on the meaning of the NGO’s success andeffectiveness. It is a good chance to build higher levels of understanding andcommitment to the work of the organization among the staff and board.Box IT 8.10. Ways the Board Can Guide Programmatic Planning• Serve in Committee or Task Force: Many NGOs have a planning committeeand through this committee, the board can assist the NGO in planning processessuch as the development of background documents.• Facilitate the Process: Many board members have experience with planning inother settings. Having some board members facilitating the process demonstratescommitment and leadership and ensures that the planning takes place.• Participate in the Planning Process: Together with the staff, board memberscan be engaged in developing strategies or become resources in some aspects ofthe planning process.• Ask the Right Questions: Even if board cannot fully participate in the planningprocess, they can join some sessions and ask the right questions.• Examine and Approve the Plan: The board must deliberate on the soundness ofthe plan and approve it for implementation.

Making Governance Work 229• Objective Analysis: This offers a constructive moment to engage in internalevaluation and learn more about the external environment, with the board providingan objective assessment of the organization’s performance and an understandingof developments in the field.• Confidence Booster: This provides the staff a sense of confidence that comesfrom managing by intention and design rather than by emergency, with the boardextending guidance.Advice on Trends, Changes, and Developments in the NGO’s LandscapeMany NGOs are susceptible to competitive forces and changes in public policy, trends,and developments in their field. The organization needs to understand the economics,demographics, and politics of the field, especially when some of its elements are loadedwith controversy, such as in the RH field, where giving condoms to young adults,abortion and abortion care, sexual rights, and the use of emergency contraception,among others, are highly sensitive issues (see Box IT 8.11). One of an NGO’s resourcesto generate objective advice and guidance is the board itself. Expert trustees can alsoguide fellow board members in understanding the concerns and issues particular totheir organization. Going back to the example of an RH NGO, an HIV/AIDS expertwithin the board could guide others and help establish the credibility of the entireboard when it discusses the issue within and outside of the organization. Through thesharing of wisdom, knowledge, expertise, and experience, board members can learntogether and a collective wisdom will emerge, with management judgment improvingin the process. As such, the intellectual edge of the board emerges.Box IT 8.11. How the Board Can Support and Improve the Organization’s Services• Understand the Programs: Boards have to understand the key rationale behindthe organization’s programs and their implications for advancing the mission ofthe organization so that they can properly guide the organization. This will alsohelp them picture the services of the organization and how they contribute overallto the situation in the community or the country.• Know the Context: The board must consistently be knowledgeable about recentprogress in the organization’s field. For example, in the RH scenario, they mustunderstand public policies concerning RH, the adaptation of rights-basedapproaches, the integration of the Millennium Development Goals andInternational Conference on Population and Development (ICPD) plan of action,and developments and recent studies on HIV/AIDS management, among others.They must also understand the various threats and attacks against RH NGOs,the issues they face, and how to deal with opposition and conservative groups.• Learn from Promising Practices: Boards must be open to new approaches andavoid being influenced by conventional biases and prejudices that will impedeestablishing effective services to communities.

230ACHIEVING EXCELLENCE in Your NGOEnsure Financial ViabilityOne of the most neglected tasks of the board, especially among NGOs in developingcountries, is resource mobilization. The board usually focuses on asking questions ofthe executive leadership on how funds are used but usually fails in its task of bringingin funds to the organization. To ensure that the organization has enough financialresources to sustain its operations and programs, the board must generate resourcesthemselves, or at least provide guidance and support to the executive director. Manyboards may not be aware of this responsibility as this is usually delegated to the executivedirector. Being unpaid volunteers, board members are credible fundraisers for thecause they believe in. Each person asking for financial support should go forth withpride and confidence in the work he/she is doing and in his/her dedication to servingthe public good. In many developed countries, board members contribute their ownfunds to the organization they serve to demonstrate their commitment to the cause.While this may not be possible in all parts of the world, the board can still perform itsfunction of ensuring financial viability by taking the actions listed below.Revisit the Goals of the Organization: Together with the executive director, theboard should review the strategic plan of the organization annually. During the review,the board should be able to prioritize the projects to be carried out during the durationset out by the strategic plan.Assess Current Resources: Within the context of the strategic plan, the board shouldassess the current available resources of the organization and determine how muchwill be needed to carry it out. A financial projection of expected receivables andexpenditures must be made within the duration of the strategic plan and reviewed onan annual basis. The assessment must also include the revenue sources of theorganization. Most NGOs have a mix of revenue sources, such as: donor grants,government grants, earned income from services, money raised at fundraising events,and contributions from individuals. As a rule of thumb, an NGO must not get morethan one-third of its total budget from a single source in order to ensure financialviability.Organize Human Resources: It is important that a resource mobilization team beorganized within the organization to identify who will do what.Map Out Potential Sources of Funds: The board can lead the process of mappingout sources of revenue for the organization. This involves the following:• Develop a matrix listing the different sources of revenue for the organization (seeexample for an RH NGO in Table IT 8.1 below).• Quick research must then be undertaken to understand donor priorities, feasibilityof earned income, and potential for different sources.

Making Governance Work 231Table IT 8.1. Typology of Revenue SourcesSources ofRevenueInternationalOrganizationsGovernmentsMultilateral ChannelsEarned IncomeFundraising EventsExamplesThe David and Lucile Packard Foundation, Gates Foundation, HewlettFoundation, Ford Foundation, Population Council, PlannedParenthood InternationalLocal government units; government agencies; bilateral channels ofofficial development agencies (ODAs): USAID, CIDA, JICA, SIDAUN agencies: UNDP, UNFPA; multilateral agencies: World Bank, ADBFees for services and consulting services; sales of medicines, contraceptives,and other productsDinner for a cause, raffle tickets, shows, individual contributionsCultivate and Test the Waters: Once the organization has identified various promisingsources of revenue, the board can begin cultivating potential donors by taking thefollowing actions:• Sending information packets to donors to educate them on the organization’s worth;• Meeting with donors and government officials and introducing the organizationto them;• Hosting public events;• Presenting the organization’s services to potential clients; and• Visiting communities to promote services and products.Develop and Implement Strategies: The board can now assign key staff members todevelop project proposals within the context of the organization’s goals and consideringthe donors’ priorities and processes. The board can write introductory and supportingletters to the donors on behalf of organization. For fundraising events, the board cansend out invitation letters to potential supporters of the cause, while for earned income,the board can personally promote the services to clients.Acknowledge Support: The board’s role does not end when funds are alreadygenerated. Their participation in sustaining sources of revenue is also needed. Theboard should not forget to thank donors and communities for the support they giveto the organization. This can be done by sending personal letters, telephone calls,putting an ad in newspapers, community visits, and public expression of gratitudethrough the media.Mechanisms for Integrity and AccountabilityBoard members perform dual roles. On the one hand, they represent society withinthe organization to ensure that the NGO stays true to its missions and operates within

232ACHIEVING EXCELLENCE in Your NGOthe ethical, moral, and legal standards of society. On the other hand, as protectors ofthe organization, boards must ensure the well-being of the organization and protect itfrom external threats. For example, in the RH sector, the board may need to look atthe legal implications of RH programs, which may contradict local laws such asabortion.Legal and Accountability ResponsibilitiesBoard members carry with them legal and accountability responsibilities that are derivedfrom the laws that govern the organization and the society in general. According toGreatBoards, NGO boards have three major legal and accountability obligations:• Duty of Obedience: Every NGO is created with a public purpose, defined in thearticles of incorporation. Because of the expected benefits society will generatefrom the NGO’s services, NGOs are given tax exemptions. Hence, board membersmust make decisions in accordance with the mission and vision of the organizationthat will contribute to societal development. Deviations from the mission constitutea breach of trust.• Duty of Due Care: The board of directors is expected to make decisions with duediligence and in good faith. While the board can delegate some of its responsibilitiesto experts and others, it must conduct reasonable inquiry, provide guidance, andensure due diligence in making decisions. Legally, if a board’s decisions turn outbadly, it can be protected if it can demonstrate that it acted in good faith, consideredall relevant facts, and delegated decision making to qualified and unconflictedindividuals.• Duty of Loyalty: This duty requires boards to ensure that the assets of theirorganizations are protected and do not enrich any individual. This precludes theboard from taking advantage of their positions for the benefit of themselves ortheir families, businesses, or friends. Board policies concerning self-dealing shouldbe clear and broadly disseminated, and full disclosure of potential conflicts mustbe made.Ethical and Moral StandardsThe boards of some NGOs, such as RH NGOs, must realize that many of theirdecisions have ethical and moral implications that may impinge on cultural and religiousstandards in the areas where they operate. Thus, board members must be alert to anyinconsistencies that might emerge between the organization’s mission and its activities.They must be fully aware of and take into consideration the existing political, cultural,and religious environment as they make decisions. For example in many countries,contraceptive use and abortion are controversial issues. Hence, the board must beclear on its stand and align it with that of the organization.

Making Governance Work 233Oversee Performance EvaluationThe board is not only responsible for defining the mission and vision of the organizationbut also for guiding the process of developing and achieving plans. Board membersmust ensure that the intended results are achieved. The expertise of the board in lookingat the overall picture and tracking the progress of the organization is very important.The only way to ensure that the organization achieves its mission is to evaluate its progress;although staff members often carry this responsibility, the board must set out theparameters and provide objective analysis (Box IT 8.12). Successful evaluation is drivenby goals rather than by rules and regulations. Performance evaluations of the organizationand its programs can be undertaken at three levels, as follows:Box IT 8.12. Questions a Board Must Ask During Performance Evaluation• What does success for the organization look like?• What indicators are being used to evaluate the organization’s performance? Arethey based on the strategic plan, mission, and vision of the organization?• At what level is the performance evaluated?• How often is the evaluation performed? What evaluation processes will beundertaken? Should a consultant be engaged?• Does the board use outcome data in decision making?• Is the evaluation result presented to the board?• Output Level: At the output level, evaluation looks at quantifiable products,services, or people served by an organization. For example, an RH NGO mightlook at the number of meetings, group sessions, or counseling sessions held; thenumber of sex workers and pregnant women served; or the number of condomsdistributed. Output evaluation, however tells very little about succeeding in mission.• Outcome Level: Outcome level evaluation looks at the immediate changes observedamong clients of the project or among members of the target population. Going backto the RH example, this evaluation would include looking at changes in behavior orskills, especially on RH issues, and increased ability to cope with these issues. Outcomesshould occur through the provision of good quality, economical, accessible, andwidespread services that are more directly related to the mission. For example, in orderto prevent HIV/AIDs, sex workers need to be equipped with negotiation skills topersuade their clients to use condoms. Therefore, an HIV/AIDs program that aims toincrease the awareness of sex workers must measure negotiation skills as well as thenumber of sex workers that participate in the program through the use of indicatorssuch as usage of condoms, higher pay for services, or number of engagement hours.• Impact Level: This level is measured by looking at the longer-term changes thatoccur at the community level as a result of a given program. In the RH example,this might include changes that occur over a period of five years in fertility,morbidity, or mortality.

234ACHIEVING EXCELLENCE in Your NGOEnhance Public ImageBoards serve not only as a link betweenthe organization’s staff and volunteersand its members, constituents, andcommunity but also as theorganization’s advocates. Hence, apublic relations program must be inplace to ensure a healthy and accuratepublic image for the organization.Boards, especially, command publicattention and respect because theypromote a cause without financialremuneration. Building a public imageinvolves a two-sided communication.The meetings of the board with variousstakeholders will not only promote theorganization’s public image but will alsogive the board an opportunity tounderstand their constituents’ needsand concerns. The board should be intouch with the community (Box IT8.13). The board’s role in enhancingpublic image is important for thefollowing reasons:• It offers opportunities for theorganization to further its missionby educating the public and donorsabout what the organization doesand what it stands for;• It helps NGOs further their clients’cause, especially marginalizedgroups such as the disabled, migrantworkers, HIV/AIDS victims, or sexworkers; and• It educates the board on the needs,expectations, and aspirations of thevarious stakeholders in thecommunity. This will also groundthe board to the reality andsituation of their stakeholders,allowing them to better emphasize these with the executive director.Box IT 8.13. What Boards Can Do toEnhance Public Image• Establish a public relationscommittee with an appointedspokesperson. The committee mustensure that the following areregularly done: timely press releasesand annual reports with clearlyarticulated achievements,contributions to the public good, andexplanations of how grants areallocated and used.• Develop a written policy on howdecisions will be made on publicpronouncements and representation,especially on thorny issues.• Develop IEC and advocacy plans.This is an opportunity for an NGOto advocate its cause and amplify thevoices of its constituency. Boards cantestify before legislature and courtprogram officers, speak tocommunity groups, represent theorganization in forums, or talk to themedia.• Go to the ground. Boards can visitvarious field programs and talk toclients, observe operations, conductinformal exit interviews with clients,or meet field staff.• Make mission a platform foradvocacy. Boards need to ensure themission is communicated to thecommunity properly to educate thepublic and generate their support.• Meet elected officials to discusspolicy issues concerning the NGOand the sector.

Making Governance Work 235Form CollaborationsBoard members, who are usually distinguished and respected members of society, areessential assets to the organization when it comes to building and maintainingrelationships with various stakeholders. They can help the organization formpartnerships and alliances with other NGOs, nurture donors, or work with government.The role of the board in establishing and nurturing relationships with key stakeholdersoffers the following benefits to the organization:• It allows collaborative efforts to enhance programmatic objectives and prevent orreduce duplication of services.• It offers opportunities for the organization to further its mission through suchactivities as cultivating donors.• It educates the board on the needs, expectations, and aspirations of the variousstakeholders of the organization.Promote Effective In-house CommunicationBoard members should not only ensure the effective flow of communication to thepublic but also promote effective internal communication—among board membersthemselves and between the board and the executive director and staff members (BoxIT 8.14). For boards to work effectively as ambassadors of the NGO they represent,they need to be knowledgeable about the organization’s status and needs. In mostcases however, boards don’t get enough information, receive materials too late to devoteserious attention to them, or are overwhelmed with large quantities of irrelevantinformation. Carver (Boards That Make A Difference, 2006) identifies three types ofinformation needed by the board:Box IT 8.14. Things to Consider in Enhancing In-house Communication• Appoint a point person within the board to coordinate the exchange ofinformation. The executive director, being an ex-officio member, can do thisjob.• Agree on the kind of information the board needs to perform its job well.• Determine the frequency of exchanges of information.• Develop a form in which the information will be relayed.• Set up a process by which the information will flow to avoid confusion.• Use ICT to facilitate an efficient exchange of information.• Provide time for board members to interact beyond the boardroom.• Give staff members the chance to interact with the board.• Hold regular conversational dialogues between the board and the executivedirector.• Encourage individual dialogues between the executive director and other membersof the board.

236ACHIEVING EXCELLENCE in Your NGO• Decision-making information such as the different options to choose from andthe criteria to be used for making the decision. This information must be forwardlookingrather than performance-measuring.• Monitoring information to assess the effectiveness of policies, programs, or theorganization in general against verifiable and established criteria.• Incidental information, which is general information not necessarily related toboard function, such as internal dynamics or activities of other NGOs.Fiscal OversightGenerally, NGO boards put emphasis on their financial oversight role. Performingsuch a role, however, does not just involve signing or approving financial reports.Board members, especially those serving on critical committees, should know how toread a financial statement and should be able to understand the finances and economicsof the organization (Harvard Business Review, March-April, 1995). The financialoversight tasks of an NGO board involve the following:• Effective Financial Planning: The board must ensure that the strategic plan ofthe organization is supported by a realistic financial plan. A financial plan mustshow a realistic budget, projection of costs and revenue, and strategies for generatingrevenue.• Proper Accounting and Auditing: The board must ensure that the organizationhas written policies and procedures governing how it does business. One veryimportant document that an organization must have is an accounting manual.This document must contain guidelines for the process of recording, summarizing,and reporting the financial activities of the organization, which are governed byGenerally Accepted Accounting Principles (GAAP).The basic purpose of accounting is to provide updated and correct information aboutthe economic activities of an organization. It may cover all operational activities or aparticular project for a specific time period. It enables the board to analyze the presentsituation and make plans for the future, specifically:• To organize financial details;• To identify financial transitions;• To organize financial data into useful information;• To measure the value of the information in terms of money; and• To analyze, interpret, and communicate the information to persons or groupsboth inside and outside the organization.Reports Needed: Depending on the size and type of an NGO, it must choose adifferent set of financial reports to prepare and analyze. At different times, an NGOmay need different reports to provide information to support its decision making.The board should ensure that the following financial statements are prepared andexternally audited:

Making Governance Work 237• Balance Sheet: This is designed to show the financial position of the organizationat a particular point in time. It shows assets, liabilities, and reserves (also known asequity). It is called a balance sheet because it must “balance,” that is, the liabilitiessubtracted from the assets must equal the reserves. A balance sheet is used to assessthe financial structure and stability of an organization, to see whether liabilitiescan be met, for example. Reserves can be defined as the financial value of theorganization after the liabilities are settled.• Statement of Revenue and Expenditure: This is a statement of the financialactivities of the organization, showing revenues and expenditures as well as netincome or deficit.• Statement of Activities: This is designed to show the budget with actualexpenditure performance; it is usually done monthly.• Cash Flow Statement: This reflects the inflow and outflow of cash within theorganization. It reports on several categories: cash flow from operating activities,cash flow from investing activities, and cash flow from financial activities. It is acritical report since its helps the financial manager assess whether there will beenough cash on hand to meet expenditures.• Income Statement: Many NGOs are engaged in income-generating activitiessuch as clinics; youth development activities; and other services such as youthinternet centers, etc. Hence, an income statement must be prepared to reflect theincome and deficit of an organization during a specific period of time. For NGOsfunded by donors, this would mean that if the program produces income, therewould be a savings for donors. But if the program is a cost-sharing endeavor, thenthe organization saves. Usually, there are two kinds of accounts that can befollowed; one is receipt and the other is payment. Receipt includes all cash receivedeither from grants, donations, or other income. In payment, all the expensesincurred during the month or period are included. (Receipts – Payment = Surplus/Deficit.) Surplus is when there is cash in hand, and deficit is when cash is short.The latter is normally referred to as being “over budget.”Financial Analysis: Aside from understanding the financial statements of theorganization, the board should also learn to analyze the financial efficiency andeffectiveness of the organization (Box IT 8.15). Some useful tools are as follows:variance analysis, couple of years protection, cost and revenue analysis tool, the supplydemandhealthcare financing model, and client per capita expenditure.

238ACHIEVING EXCELLENCE in Your NGOBox IT 8.15. What the Board Should Know About MoneyUtilization of Funds: Funds must be spent to further the mission of theorganization. Failing to do so is an injustice to the very reason of the NGO’s existenceand to donors.Building of Reserves: As much as possible, an organization must build its cashreserve in order to continue the operation of its programs should there beunanticipated financial woes such as economic downturn or shifting of donorsupport to other development programs. Reserves are those unrestricted assets ofthe organization that are liquid, less current liabilities. As a rule of thumb, NGOsmust have enough cash reserves to support the core programs and core staff for atleast a year.Investment: Some NGOs who have built reasonable reserves opt to invest some ofthis money. The organization must seek advice from bankers or experts and anyinvestment must be approved by the board. As a rule of thumb, investments shouldnot go beyond one-third of the organization’s total reserves.Meeting Reporting Requirements: The board should ensure that the organizationcomplies with the financial reporting requirements of its donors, the government,and clients. NGOs who received grants from foundations, multilateral agencies, thegovernment, and other entities must follow the appropriate formats, rules, andguidelines. Some of these entities are lenient but most are rigid and could suspend orretract funding support if rules are not complied with. Governments also requireNGOs to submit annual financial reports, while some community-based NGOs arerequired to display in public places or report to communities the financial positionand activities of the organization.Avoid Conflicts of Interest: Board members must not use their position to usurppowers and enrich themselves; hence, they must remain transparent. Being volunteersand guardians of public welfare, board members should not enrich themselves as aresult of their association with the organization. Some conflict of interest issues thatboards must avoid are as follows:• Receiving financial compensation for their work with the organization• Offering services or products to the NGO they serve beyond fair market value

Governance Best Practices 239INTERVENTION TOOL 9GovernanceBest PracticesThe following matrix outlines the best practices of effective governance drawnfrom the experiences of corporate entities and NGOs from around the world.These practices are organized according to the three key dimensions of governanceand their corresponding elements, as discussed in Chapter 4. The matrix serves asguide to NGOs in the development of interventions to improve specific elements ofgovernance.1. The Board’s Functions• The board regularly reviews and updates the articles of association/bylaws onthe board’s functions and authority.• Board members are briefed on their roles and responsibilities during therecruitment process and are given orientation when they first join the board.• The board collectively works on board policies during a board retreat/meeting,facilitated by the chair.2. The Board’s Structure and Composition• A nominating committee is established to define the selection criteria, updatejob descriptions, and report to the board as a whole.• Selection criteria are defined after taking into consideration diversity of ethnicbackground, gender, economic status, culture, disabilities, age, skills andexpertise, and employment experience.• New members are recruited not only to fill in the skill gaps of the current boardbut also for their belief in the organizational mission and values.• Board members are recruited in a staggered manner to prevent a board with allnew members and no continuity.

240ACHIEVING EXCELLENCE in Your NGO• The board works as a whole and uses committees only for special assignments.These committees are dissolved after the special assignment has ended. Atmost, the board allows only three permanent committees (e.g., nominating,audit, and governance).• An executive committee is established only if the entire board cannot meetregularly due to geographical constraint or if the size of the board is large.3. Board Development• New members are oriented in the organization’s functioning (including theorganization’s history, vision, mission, values, bylaws, policies, practices, andprograms); governance roles and responsibilities; and on conflicts of interest.• There are ongoing training opportunities and resources for board members inareas such as strategic planning, team building, communication skills,fundraising, advocacy, networking, public relations, etc.• Boards are regularly updated with development trends and issues and are givenfrequent knowledge and technology updates.• Under the leadership of the chair, the board conducts annual self-assessments,develops its own plan for self-development and education, implements it, andrepeats the process.4. The Board and Staff• The board and staff interact with the knowledge of the executive director (ED).Staff are routinely consulted in board’s meetings.• Notice boards, newsletters to disseminate information, and plan for theorganization are used.• The board and staff interact during planning retreats, field visits, seminars,workshops, or even at informal functions.• There are staff representatives on the board committee.• Teamwork exists between the board and staff.• The board expresses special appreciation publicly to staff, awards staff who servedbehind-the-scenes and never expected recognition or appreciation from anyone,and presents belated awards for contributors not properly thanked in the past.5. The Board and ED• The ED manages the operational activities and the chair leads the board. Bothcommunicate openly, clearly, and regularly.• The board acknowledges the ED as a partner and recognizes his/her leadership.Together they act as stewards of the mission of the organization.• The ED is clear about the board’s expectations, and the board understandswhat the ED needs from them.

Governance Best Practices 241• The board understands and takes full responsibility for the roles of boardmembers and supports the ED with ongoing coaching and affirmation. Theboard does not hire an ED and expect him/her to fix all problems quickly.• There is unity of command and reporting. The ED receives orders from theboard and reports to them as a whole.6. The Board’s Meeting Management• The board focuses on strategic issues rather than trivial, administrative tasks inmeetings.• The board evaluates the productivity of meetings at least occasionally.• The chair ensures that discussions at meetings are participatory. Everybody isgiven a chance to voice his/her opinion. Decisions are made based on consensus.• Conflicts are resolved/managed, not avoided.• The board develops an annual meeting calendar or annual work plan and followsthe plan accordingly. Even so, there are policies and procedures for handlingurgent matters between regularly scheduled meetings.• The chair develops the agenda in consultation with the ED. The agenda andsupporting documents are distributed in advance to all concerned.• The policies include the obligation of each board member to disclose all materialfacts and relationships and refrain from voting on any matter when there is aconflict of interest.• The board speaks in one voice once a decision is made.• Minutes of meetings are recorded and kept in a safe place.7. Direction Setting• The needs of men and women and people of different ages and backgroundsare recognized in programs.• The vision, mission, strategies, and values align strategically and are expressedand advanced in all the organization’s work.• The strategies match the environment, vision and mission, and capacity and resources.• The board exercises strategic leadership and participation, i.e., ensures thatplanning and evaluation occur regularly and that the board is involved in theprocess. There is a careful planning of at least the next 12 months.• The board reviews the vision and mission on a periodical basis and makes surethey are owned by all key players (particularly the community and staff) in theorganization.• There is a good balance between stability and flexible responses to environmentalchanges. The board is provided with sufficient information needed to steer theorganization towards stability.• The board’s and its committees’ current agendas relate to and resonate wellwith the organization’s strategic plan.

242ACHIEVING EXCELLENCE in Your NGO8. Sustainability• A financial plan that ensures financial stability for three to five years and isconsistent with the organizational mission and vision is in place. Diversificationof sources of income is one of its main targets.• Sustainability is always discussed during strategic planning and in terms ofdifferent aspects of the organization (including financial, human resources, andtechnical).• The board makes sure that necessary resources are available to pursue the strategiesand achieve the objectives of the organization.• Policies and procedures for risk management are in place.• The board ensures the continuity of leadership by linking the criteria for hiringthe ED to leadership development throughout the organization.• There are ongoing capacity-building activities in fundraising for the board,staff, and volunteers.• The staff maintains and regularly updates a database of funding agencies.• Program development and delivery must be result-based to avoid wastingresources.• Community members are mobilized/empowered to carry out project activitiesbecause they feel responsible for their own well being.9. The ED’s Function• The recruitment of the ED is preceded with a thorough needs assessment. Thejob description of the ED is then updated based on the results of the assessment.• The ED is not recruited only for his/her skills. His/her personal values arealigned with the organizational values, and he/she is committed to improvingthe situation of the community: men and women, poor and rich, young andold.• Expectations of the ED are clearly stated during the recruitment process.• The new ED is oriented in the organization’s functioning (including theorganization’s history, vision, mission, values, bylaws, policies, practices, andprograms); expectations of him/her; and on conflicts of interest.• Power and authority are shared between the board and the ED. The ED acceptshis/her accountability to the board, and the board accepts this accountabilityrole. The board clearly retains its governance role and its ultimate legal authority.10. Organizational Culture/Enabling Environment• Teamwork is promoted, relationships are built on trust, and there is respect fororganizational norms.• The concept of being a “learning organization” is introduced and installed atevery level of the organization.

Governance Best Practices 243• The board and ED exercise leadership to effectively establish organizationalmission, create shared vision and values, and develop community acceptability.The mission, vision, and values are communicated throughout the program,with appropriate goals set.• The board examines the organizational values on a regular basis and thenevaluates the organizational mission to make sure the values are evident.• Staff and community members are encouraged to participate in the decisionmakingprocess and in project planning, design, implementation, monitoring,and evaluation, and the value added by them is recognized.11. Organizational Monitoring• The board reviews programs and services regularly and makes sure they are tiedto specific outcomes.• Parameters to evaluate the performance of the organization are defined andexpressed at every level of the organization.• Results-based approaches in program planning and development are installed.• An information system that generates and captures project/program performancedata is established.• The board reviews the ED’s performance annually and makes sure the ED’scompensation bears a reasonable relation to services performed for the organization.• The board develops action plans on what to do if the ED does not perform well.• The board evaluates its own performance annually.• The board monitors and manages the risks to which the organization and eachboard member or officer is subject.12. Conformance to Laws and Regulations• Every board member is aware of the body that regulates NGOs, and each memberreceives an updated copy of the rules and regulations issued by that regulatory body.• The board reviews the bylaws on a periodical basis.• The bylaws include the following: the organization’s purpose, service area, definedmembers, board of directors, officers and committees, specific meetingguidelines, guidelines for amending bylaws, and guidelines for financial andlegal procedures.• There are conditions in the articles for expelling non-compliant board members.• The board sets and reviews organizational policies regularly and makes sure thepolicies are in compliance with laws and regulations and continue to meet theneeds of the organization. A code of ethics document is developed to guideethical practices among staff members and the board.• Updated bylaws and NGO rules and regulations are referred to at meetings toensure all decisions made do not violate these laws.

244ACHIEVING EXCELLENCE in Your NGO13. Transparency and Accountability• Periodic reports of the organization’s functioning, board’s decisions, and organization’sperformance are prepared and circulated to key stakeholders in a timely manner.• Community members have easy access to annual reports.• Capacity of the board, staff, and volunteers in stakeholders’ needs identificationand volunteer management is built.• Benefits to current and future generations are taken into account when developingstrategic plans.• Community members are involved in program planning, design,implementation, monitoring, and evaluation in an ongoing manner.• The board reviews its policies and practices on accountability to variousstakeholders and ensures that those in positions of authority are accountable fortheir performance.• Policies and practices on equal opportunities and gender sensitivity are in place.14. Public Relations• Key stakeholders of the organization are identified and their needs recognized.• There are regular meetings with key stakeholders to give and get feedback. Areasof collaboration are explored, especially with local government units and peerNGOs whose expertise and knowledge can be tapped.• Relationships with various stakeholders are built around shared values, commonvision, and a common understanding of mission.• The board represents the organization in the public arena by attending meetings,seminars, or conferences.• The board is immersed regularly in feedback from the community. Boardmembers are accessible to stakeholders in a structured manner.• Board members are given training on advocacy and building external relationships.15. Financial Integrity• The board understands the annual budget before approving it by assisting inthe development of the annual budget.• The board is educated about the organization’s fundraising activities and avoidsdriving out philanthropic initiatives when exploring new possibilities for incomegeneration.• The board receives regular and complete financial reports and audit reports,reviews them in a timely manner, and strengthens the organization’s financialpolicies based on the output of the financial and audit reports.• There is a procedure for confidential reporting of suspected improprieties.• Auditing is performed by the entire board; or if the size of the board is too large,an audit committee that reports to the entire board is established to do the auditing.

Building a Brand for Your Organization 245INTERVENTION TOOL 10Building a Brandfor Your OrganizationIn recent years, charities and NGOsare as ardent to project the brandvalue of their work as their corporatecounterparts. Most of these NGOshave carefully built their brandsthrough the years. Red Cross, forinstance, is widely known for its reliefand humanitarian programs whileWorld Vision is almost synonymouswith child sponsorship. While manyNGOs advocate for human rights,Amnesty International is almostalways associated with this cause. Andthe organization that comes to mindimmediately in a discourse onwomen’s empowerment is none otherthan The Center for Development andPopulation Activities (CEDPA).Why are NGOs increasingly buildingtheir institutional brands? Perhaps itis because most of them do not have aproduct to sell and basically rely ontheir image and reputation to generatesupport from stakeholders. In otherwords, NGOs depend on their goodBox IT 10.1. New Social InnovationPodcast: Creating Strong BrandsThe YMCA, Red Cross, and Goodwillrepresent a few of the nonprofits that havecreated an effective “brand” image togarner public support and funding. Buthow exactly does a nonprofit develop anidentity, communicate it effectively to staffand clients, and get people on board withthe organization’s mission?Jennifer Aaker, Stanford Business Schoolprofessor, addressed some of thesequestions in a talk on branding deliveredat the Stanford Social Innovation Review’s2007 Nonprofit Management Institute.There she discussed the psychology ofrelationships and outlined the basics ofwhat it takes to build strong relationshipsbetween companies and consumers. Shealso shared insights into global brandbuilding, how to develop your brand’spersonality, and how to manage consumerexpectations.

246ACHIEVING EXCELLENCE in Your NGOwork to engage their stakeholders, more often aided by emotional attachment to theircauses.Branding StrategyBasically, branding is about two critical factors: (1) how to project the organization’simage through the right message, and (2) how the NGO should be perceived by itsstakeholders. It is imperative to align these factors with the NGO’s vision, mission,and strategy for a brand to emerge. Your strategy for building a brand image willdepend upon your target stakeholders and the level of coverage you wish to reach(local, regional, national, and international).The impact of a branding strategy is determined by the following: (1) recognition—the level of awareness of the NGO; (2) reputation—the degree to which stakeholdersare confident that the NGO will live up to its mission and vision; (3) affinity—theextent to which the NGO’s activities are in the stakeholders’ interest; and (4) domain—the breadth of the NGO’s activities.Steps in Building an Organizational BrandStep 1: Acquire Organizational Buy-in. Because branding is a long and intensiveprocess, not to mention time consuming and expensive, it is important that the entireorganization lends its commitment and support to the process. The board andmanagement need to believe in the value of branding and bring the staff into theprocess. The branding process should be attractive and exciting for the organization.Generating support may include demonstrating the effects of branding by citing NGOswho have benefitted from branding as well as clearly showing the benefits of brandingin terms of reputation, image, and resources. It is at this stage that the organizationshould allocate dedicated staff and establish an adequate but reasonable budget forthe branding process.Step 2: Do an Internal and External Assessment. In order to develop a soundbranding strategy, an NGO needs to assess its internal and external environment.Internal assessment involves looking at organizational capacities and aspirations. Sincethe goal of branding is to engage stakeholders with an intellectual and emotionalconnection, a clear understanding of audience perspectives, habits, and preferences isan important aspect of external assessment.Internal Assessment. Paul Temporal suggests the following assessment questions(adapted from Paul Temporal, www.brandingasia.com/columns/tempral8.htm, accessedon April 6, 2008) that NGOs can reflect on to assess their internal environments:1. What is the vision behind building your profile?2. What values does your NGO subscribe to (see Box IT 10.2)?

Building a Brand for Your Organization 2473. What are the good and bad features/attributes of your profile (NGO, services,products)?4. How can you dispose of any bad aspects ofyour profile?5. What are the benefits associated with eachof the good features/attributes?6. Can you extend those features and benefitsto form the emotional characteristics ofyour profile for the stakeholder?7. What are the emotional reasons why eachof your stakeholders (clients, community,donors, government, peers) might supportyou?8. What are the rational and emotionalcharacteristics of your profile?9. What can you do to bring thesecharacteristics to life?10. How can you use your profile to attract andretain stakeholders?11. How can you deliver on the promise of yourprofile?12. How are you going to generate more trustin your NGO-stakeholder relationship?Box IT 10.2. ValuesValues that an NGO subscribes tocan also be a potential anchor forprofile building. The followingwere cited as NGO care values bythe World Congress of NGOs(www.wango.org) at its Torontomeeting in 2007:1. Service beyond self2. Respect for human rights3. Maintenance of vision4. Responsibility5. Cooperation beyond borders6. Public mindedness7. Accountability8. Truthfulness9. Transparency10. Non-profit integrity11. Comprehensive viewpoint12. VoluntarismExternal Assessment. The following assessment questions used by the Sonoma CommunityFoundation (http://www.sonomacf.org/) can be used for external assessments:1. How is your environment changing?2. Who are your major “competitors” today? Is the list changing?3. For what are you known?4. How well are you known? Perceived? By whom?5. How do you define your market? Your “market share?” Is it increasing or declining?Why?6. List your top three stakeholders and identify their motivations and attributes.Step 3: Develop Your Brand Strategy. After you are clear with the above, you candevelop your branding strategy, which comprises three elements, as follows:1. What—What is the image you wish to create? Present your cause and your impactin a simple catchy phrase.2. With Whom—Who do you wish to reach? For example, local community,government, donors, etc.3. How—Which media will you use? For example, e-mails, newsletters, brochures,conferences, mass media, etc.

248ACHIEVING EXCELLENCE in Your NGOStep 4: Execute Brand Strategy. Implementing the brand strategy of your organizationmay take some time. Branding experts suggest the following processes:1. Convey consistent messages2. Communicate with all important audiences3. Assign right roles to right people4. Ensure compliance with desired brand identity5. Network (see Box IT 10.3)6. Select employees consistent with brand identity7. Educate employees about desired brand identityBox IT 10.3. Networking(Adapted from Liebler, Chaudia, and Mavisa Ferri (2004), “NGO Networks: BuildingCapacity in a Changing World,” www.usaid.gov/our-work/cross-cutting-programs/private_voluntary_corporation/conf_leibler.pdf (accessed on April 6, 2008).Becoming a member of relevant networks also provides an opportunity for NGOs tobuild their profiles. Belonging to a successful network that plays a prominent role ina sector can increase the profile or legitimacy of NGO members by conferring statusand creating a platform on which members can be seen or heard. A variety of networksexist—social change or advocacy networks, service delivery networks, sectoral networks,professional associations, and communities of practice. Most networks involve membercollaboration and sometimes engage in mutual or joint activities.There are both benefits and significant risks to membership in a network. NGOs thatare contemplating participation in a network should undertake a cost/benefit analysisto determine whether or not network participation will meet their particular needs andwhether those benefits are worth the risks. Some of the most commonly cited benefitsfor network members are: increased access to information, expertise, and financialresources; increased efficiency; a multiplier effect, which increases the reach and impactavailable to member organizations; solidarity and support; and increased visibility ofissues, best practices, and under-represented groups. However, there are costs and risksto network membership as well. The costs include time and effort involved. The risksare in sharing experiences that may be confidential in nature as well as having yourNGO’s profile impinged upon by the profile of the network.Sometimes networks can be dominated by a few members. Hence, NGOsconsidering network membership must also be honest and realistic with themselvesabout the degree of interdependence that they are willing to accept.Step 5: Monitor Results and Make Adjustments in the Process. Building anorganizational brand is a phased process that must be tracked on a regular basis todetermine its effectiveness and results. It is an evolving and learning process that offersspace for innovation along the way.

Leveraging Intellectual Capital 249INTERVENTION TOOL 11LeveragingIntellectual Capital“We will have to learn, before understanding any task, to first ask the question, ‘Whatinformation do I need and in what form and when?’ … The next question people shouldask is, ‘To whom do I owe which information and when and where?’”S~Peter Druckertephen R. Covey, in his book, The 8 th Habit (2004), argues that civilization hasevolved over the years through the hunter/gatherer age, agricultural age, andindustrial age to the current knowledge worker age. In other words, we are movingfrom an era that valued things, like machines, for what they produced into an era thatvalues knowledge and, more specifically, the application of knowledge that comes inthe form of skills. The overflow of information and knowledge, however, is of novalue if it is not transformed into intellectual capital.According to Thomas A. Stewart (The Wealth of Knowledge: Intellectual Capital andthe Twenty-First Century Organization, 2001), intellectual capital is knowledge thattransforms raw materials or services and makes them more valuable. In other words,it is knowledge that can be converted into value. Laurence Prusak and D.A. Klein(“Characterizing Intellectual Capital,” 1994) define it as intellectual material that hasbeen formalized, captured, and leveraged to produce a higher-value asset.Initially, the term “intellectual capital” was used to describe the dynamic effects ofindividuals’ intellect. Later on, Tom Stewart (“Brain Power: How Intellectual CapitalIs Becoming America’s Most Valuable Asset,” 1991) describes intellectual capital as anattribute of an organization. Patrick H. Sullivan, Gordon Petrash and Leif Edvinssonecho this assertion in their book, Profiting from Intellectual Capital: Extracting Value

250ACHIEVING EXCELLENCE in Your NGOfrom Innovation (2001), saying, “it is clearly to the advantage of the knowledge firm totransform the innovations produced by its human resources into intellectual assets, towhich the firm can assert rights of ownership.”Framework on Intellectual CapitalLike their counterparts in the business world, NGOs need to leverage their intellectualcapital to achieve optimum performance and realize their mission. ICOMP’s frameworkshows that intellectual capital is derived from learning processes at the individual,team, and organizational levels, which are closely connected with the organization’sstakeholders and the knowledge marketplace (see Figure IT 11.1).Building organizational intellectual capital involves gathering, structuring, storing, andaccessing information to build knowledge. It relies on knowledgeable people and involvesknowledge sharing among them. Organizational learnings are then codified, structured,documented, and stored in a systematic fashion for institutional use.Approaches to Leveraging Intellectual CapitalSince intellectual capital is a sum of human, team, and organizational learning, it isimportant that these different parts are enhanced. The literature is awash with methodsto improve learning.Figure IT 11.1. Enhancing Intellectual Capital

Leveraging Intellectual Capital 251Individual LearningIt is the ability of individuals to experience personal growth in their interactions withthe world around them. When tapped optimally, individual learning results in higherorganizational returns.There are a few ways to improve individual learning, as follows:1. Job Rotation. This is a strategy that allows the employee to temporarily movelaterally into an established or “shadow” position. An employee may complete aseries of job rotations to experience multiple types of responsibilities. This strategyof learning is effective if properly linked to organizational goals and individuallearning needs. The following processes could be used for this strategy: (a) establishexpectations and learning goals with the individual before the job rotation; (b)check with the individual periodically to ensure expectations are being met; and(c) at the end of the job rotation, meet with the individual to discuss lessonslearned and how these lessons can be applied to the individual’s current job.2. Special Assignment. This is a learning approach in which the individual performstemporary duties on a full-time or part-time basis. These temporary duties maybe performed within the individual’s current organization or outside theorganizational structure. An example of a special assignment is being assigned tochair an ad hoc cross-functional team. The process for special assignments, similarto that for job rotation, is as follows: (a) establish expectations and learning goalswith the individual prior to the special assignment; (b) check with the individualperiodically to ensure expectations are being met; and (c) at the end of the specialassignment, meet with the individual to discuss lessons learned, how these lessonscan be applied to the individual’s current duties, and how the individual caneducate others about what was learned.3. Individual Development Plan (IDP). This is a formal document that identifiesan individual’s learning and developmental goals. The manager and the individualjointly develop the IDP. This plan contains training, education, and developmentactivities (formal and informal) to acquire the competencies needed to meet IDPgoals. The IDP is normally used to help the organization with an assessment ofthe individual’s current skill levels, strengths, and developmental needs. It canalso be used to compare an individual’s current ability with the required jobcompetencies. The following are the processes involved in creating an IDP: (a)mutually determine developmental activities to be included in the IDP; (b) conductan IDP meeting. The IDP can be developed after a formal performance appraisalcycle, and it should be a separate discussion; and (c) review and update the IDPregularly (once a quarter or twice a year).

252ACHIEVING EXCELLENCE in Your NGO4. Self-Development. This process allows an individual to take personalresponsibility for his or her own learning and development through a process ofassessment, reflection, and action. There are different ways to approach selfdevelopment,some of which are: (a) maintaining a learning log or diary to helpyou analyze what you are learning from work experiences; (b) writing a personalvision and mission statement; (c) developing a personal development plan thatidentifies your learning needs and goals; (d) finding a mentor who can providesupport, advice, and assistance in career direction; (e) becoming involved inprofessional organizations; and (f) reading professional journals and trademagazines to keep current on the latest developments in your field.5. Mentoring. Mentoring can be a formal or informal relationship between seniorand junior employees for the purpose of supporting learning and development.The mentor provides ongoing support, advice, and career direction to an individual.A mentor holds a higher position in the organization and is usually outside of thementee’s chain of supervision. Some steps in the mentoring process are: (a) clarifywhat will be achieved through the mentoring relationship; (b) use training andeducation to promote and explain mentoring; (c) listen, coach, counsel, andmotivate; and (d) allow mentors and mentees to select each other.Team LearningTeam learning is the process of aligning and developing the capacity of a team tocreate results its members truly desire. It builds on shared vision as well personalmastery, but that is not enough. Teams must continue to learn.These days, teams and groups form the core work units in many organizations.However, while teams themselves are widespread, examples of effective group practicesare less so. The literature is filled with stories of dysfunctional group working practices(Curtis, Krasner et al., “A Field Study of the Software Design Process for Large Systems,”1988). Studies reveal that effective groups are good at “perspective making” (Bolandand Tenkasi, “Perspective Making and Perspective Taking in Communities ofKnowing,” Organization Science, July-August 1995), i.e., they share customs,conventions, and standard practices that help to get the job done more effectively(Brown, Collins et al., “Cognitive Apprenticeship: Teaching the Crafts of Reading,Writing, and Mathematics, 1989). It is precisely these often tacit customs andconventions that form “best practices.”Often performance depends both on individual excellence and on how well a teamworks together. This is obvious in a sport such as football but applies to organizationsas well. The fundamental characteristic of a relatively unaligned team is wasted energy.Individuals may work extraordinarily hard, but their efforts do not efficiently translateto a team effort. In fact, alignment is the necessary condition before ‘empowering theindividual’ will ‘empower the whole team.’

Leveraging Intellectual Capital 253Within organizations, team learning has three critical dimensions:1. The need to think insightfully about complex issues: teams must learn how to tapthe potential for many minds to be more intelligent than one.2. The need for innovative coordinated action: each team member remains consciousof other team members and can be counted on to act in a way that complementsthe others’ actions.3. The role of team members on other teams: a learning team continually fostersother learning teams.Though it involves individual skills and areas of understanding, team learning is acollective discipline. Therefore, team learning involves the following:1. Mastering the practice of dialogue and discussion. In dialogue, there is free andcreative exploration of complex and subtle issues, a deep listening to one another,and a suspending of one’s views. By contrast, in discussion different views arepresented and defended and there is a search for the best view to support thedecision.2. Learning how to deal creatively with the powerful forces opposing productivedialogue and discussion as working teams. Teams need to practice team learningso that the team IQ will be more than sum of individual IQs.Organizational LearningOrganizational learning occurs when the entire organization addresses and solvesproblems, builds repositories of lessons learned, and creates core competencies thatrepresent the collective learning of employees, past and present. Peter Senge popularizedthe concept of the learning organization in his book, The Fifth Discipline (1990).What does learning mean? According to Senge, learning means accumulatingknowledge and using this knowledge in organizational activities. Building on Senge’stheory, Garvin et al., explains that a learning organization is an organization whereemployees excel at creating, acquiring, and transferring knowledge (Garvin et al.,Harvard Business Review March 2008). For them, there are three dimensions thatfoster learning in organizations: (1) a supportive learning environment, (2) concretelearning processes and practices, and (3) leadership behavior that reinforces learning.It is therefore important that NGOs ensure the nurturing of these dimensions.1. Create A Supportive Learning Environment• Create and communicate a shared vision for the organization.• Make information in the organization accessible to all.• Help employees manage change by anticipating change and creating the typesof change desired by the organization.• Empower employees to act.• Acknowledge and support the need to take risks.• Encourage different points of view.

254ACHIEVING EXCELLENCE in Your NGO• Provide time for reflection.• Allocate necessary infrastructure for knowledge gathering, storing, codification,and sharing.• Demonstrate capabilities in producing knowledge.2. Develop Concrete Learning Processes• Consciously experiment with alternative ways of doing tasks.• Continuously test organizational experiences both in terms of positive andnegative information.• Systematize a process of data collection and analysis.• Integrate problem solving across departmental boundaries.• Integrate know-how from the outside.• Implement new methodologies or processes.• Favor continuous learning strategies.• Establish regular knowledge sharing during meetings.• Seek learning from experts.3. Reinforce Learning Through Leadership• Develop leaders intentionally across different levels.• Invest in capacity development.• Mentor staff.Stakeholder RelationshipsStakeholder relationships require building and maintaining a one-to-one or uniquerelationship with each key stakeholder. The most indispensable element in thisrelationship is dialogue and feedback. The nature of this relationship may becollaborative. Key concepts in stakeholder-relationship management are:1. Retention of stakeholder interest is the key to NGO success.2. Stakeholder satisfaction does not ensure stakeholder loyalty.3. All stakeholders are not equal.4. Stakeholders must grant permission for building and maintaining a relationship.Steps in stakeholder-relationship management are:1. Identify your stakeholders.2. Differentiate your stakeholders.3. Interact with your stakeholders.4. Customize some aspect of your organization’s behavior with respect to each keystakeholder.

Leveraging Intellectual Capital 255Interaction in the Knowledge MarketplaceTypically, organizations are composed of multiple interacting communities, each withhighly specialized knowledge, skills, and technologies. Important tasks like productdesign and innovation in knowledge-intensive organizations require these diversecommunities to bridge their differences and integrate their knowledge and skills tocreate a new, shared perspective (Boland and Tenkasi, “Right Questions to CaptureKnowledge,” Electronic Journal of Knowledge Management, 1995). Some researchersargue that this social sharing is the crucial first step towards knowledge creation (Nonakaand Takeucji, The Knowledge-Creating Company, 1995).An organization must learn so that it can adapt to a changing environment. Historically,the life cycles of organizations span both stable environments and major socioeconomicchanges. Blacksmiths who didn’t become mechanics simply fell by the wayside. Morerecently, many Fortune 500 companies of two decades ago no longer exist. Given theever-accelerating rate of global-scale change, learning and adaptation has become evenmore critical for organization’s relevance, success, and ultimate survival.Knowledge management is typically viewed as something you do inside a company.Looking at the flow of knowledge and understanding where knowledge is bottled upand unavailable are issues companies examine as they develop internal knowledgeaudits.But knowledge has real, often calculable value outside the company in the marketplace.With the rapid increase in business-to-business Internet use, the outside marketplaceis where knowledge management meets e-commerce. The intersection combines theadaptive nature of networks and the tendency of markets to create exchanges whereverthere are “haves” and “have nots.” The result is a different kind of knowledge flow andknowledge management that has a real impact on a company’s performance in themarketplace. Examples of ways to interact with the knowledge marketplace are asfollows:1. Forums of Exchange: The flow of knowledge becomes more meaningful andefficient if there are avenues for exchange and interaction. Organizations cancreate or expand their current forums of exchange both virtually or physically toinclude chat rooms, knowledge fairs, electronic forums, internet, intranet,workshops, exchanges through visual media, and face-to-face meetings, amongothers.2. Peer-to-Peer Working Relationship: Sometimes, the value of knowledge isignored, misused, or treated with suspicion, especially if it is readily available. Toaddress the devaluation of knowledge or its inappropriate application, organizationsmay create peer assistance groups to address agreed-upon topics in strategic physicalor virtual locations. The peer group will ensure that knowledge is properly applied

256ACHIEVING EXCELLENCE in Your NGOconsidering the experience and expertise of peers who are readily available. Thepeers will come from the very source of knowledge or will be those who haveexpertise, experience, and competence in the subject, such as gender specialists,reproductive health practitioners, researchers, donor staff, or managers. Themembers of peer-assistance groups should be willing to provide assistance shouldan organization wish to adopt or adapt a specific promising practice. A variety ofmechanisms can be utilized for this purpose including organizational training,internships, exchanges of protocols and guidelines, and technical assistance visits.

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264ACHIEVING EXCELLENCE in Your NGO

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ICOMP’s comprehensive sustainability framework helped us redefine our strategies, diversifyour donor base and create more impact in urban poor communities that we have been servingfor over 38 years.Butch AblirExecutive Director, Zone One Tondo Organization(ZOTO), PhilippinesUsing pragmatic systems of strategic building blocks, ICOMP’s dedicated, encouraging andknowledgeable staff assisted YAKITA to improve its management systems both on financeand programming fronts. As a result, the organization has now a better and clearer view of itslong term direction and more efficient systems and processes.Joyce and David Djaelani GordonCo-founders and Directors, Yayasan Kita, IndonesiaThe process towards Organizational Excellence (OE) spearheaded by ICOMP in general andProf. Satia and Elmer Lighid in particular, was an eye-opener for all of us in DRDF on howto run the organization more effectively and efficiently. We have since applied improvedgovernance procedures, have become more proactive in resource generation activities, andhave realized the need to harness our strengths in research and training, in order to movetowards our vision of excellence.Dr. Midea M. Kabamalan, Executive DirectorDr. Grace T. Cruz, ChairpersonDemographic Research and DevelopmentFoundation, PhilippinesThrough various projects in a span of about ten years, ICOMP’s technical support to ourorganization utilizing user-friendly tools and techniques has enabled us to improve ourcompetencies in strategy formulation, monitoring and evaluation and eventually strengthenedour institutional capacity to become the resource center on gender-sensitive reproductivehealth programming and service delivery in Pakistan.Mrs. Fauzia MatloobManager OperationsPakistan Voluntary Health and Nutrition AssociationELMER HERRADURA LIGHIDElmer Herradura Lighid is formerly a SeniorProgram Officer of ICOMP. He is currently basedin Toronto, Canada working for an internationalhumanitarian and development organization. Hecan be contacted at elmerlighid@gmail.com.JAY SATIAJay Satia is the former Executive Director ofICOMP and can be contacted atjksatia@hotmail.com