For those awash in uncertainty, scenario planning can help
- What if, with a vaccine for COVID, the economy returns to normal, but leaves us scrambling to reconnect with donors and constituents?
- What if the economy continues to suffer and landlords in the area—including ours—pull the plug?
- What if a deep economic recession weakens our donor base, our pipeline for goods and services, and our constituents?
This is scenario planning—proposing scary but possible situations and answering them. And now’s a good time for nonprofits to engage, according to Brenda Asare, President and CEO of The Alford Group, a national consultancy.
With McGowan grantees facing spikes in demand for services, changes in longstanding processes, and shifts in funding, the Fund delved into scenario planning with Asare as a guide.
She starts with biases. “In times of uncertainty, we tend to be overconfident,” she says. “There’s a bias toward optimism. We disregard risk, ignore threats.” This is not incompetence so much as human instinct—since 1980, sparked by a seminal study conducted by a chemist, psychologists have confirmed the so-called optimism bias across cultures, and even animals.
Scenario planning pushes the optimism bias aside. “It’s saying, ‘Let’s plan for a variety of scenarios,’” says Asare. Typically, planners identify scenarios that cover a range of possibilities for the unfolding future: the best circumstances; the most likely; and the worst case. When Monitor Institute by Deloitte published a practice guide for nonprofits in 2020, the strategists used four possibilities: return to “normal”; social fabric unraveled; a nation on the brink; and rising from the ashes (which sounds more optimistic than it is).
Alongside looking at outside forces—such as a recession or another surge of COVID—organizations should look inside as well. “Look at your own operating environment,” says Asare. “Find the blind spots.” One typical blind spot: what’s been done in the past. “This is an opportunity to get rid of the barnacles,” she says. Honing in on who you are and what you can do is especially important for small organizations with fewer reserves to fall back on. You may discover, “We don’t really have to do this or that.”
It’s also an opportunity to re-engage with the core values and principles of the organization. Planners can evaluate tactics and strategies and ask, “What do our core values tell us about this tactic or that one?”
What does planning look like? In Asare’s practice, leaders research and develop the scenarios and then bring front-line directors and others together to identify tactics and strategies. Interim steps offered by Deloitte and Forbes magazine offer tools, like simple matrices and axes, for analyzing scenarios.
While all of this may sound like a dangerously high-contact exercise and an inconvenient pause, Asare argues that scenario planning can be done with Zoom and other technologies, and it’s necessary. “Organizations cannot afford to ignore scenario planning,” she says. “This is about surviving.”