One common way to analyze the information you’ve collected for your nonprofit is to perform a SWOT analysis. SWOT is an acronym for strengths, weaknesses, opportunities, and threats. SWOT analysis is usually done in a facilitated meeting in which the participants have agreed-upon ground rules. If you prefer, however, stakeholders can complete their version of the analysis individually and then come together to discuss the results as a group.
We recommend using a professional meeting facilitator. A facilitator brings experience and a neutral viewpoint to the proceedings and can be effective in helping a group arrive at a consensus about organizational goals — even goals that may be unpopular with some staff or board members.
Be honest when looking at your organization’s strengths and weaknesses. It’s tempting, for example, to put the best face on the activities of the board of directors. They’re volunteers, after all. How much time do they really have to give to the organization? But if you avoid identifying important deficiencies because you don’t want to hurt someone’s feelings, your planning efforts will be handicapped by bad information.
For example, the results of a SWOT analysis for an organization providing counseling services to unemployed adults may look something like the following:
Strengths
The program staff is highly qualified and committed.
Clients give program services a high-quality rating.
The organization has an accumulated budget surplus equal to approximately five months of operating expenses.
Program costs are funded largely by government grants.
Weaknesses
The cost per client is higher than in similar programs.
Contributed income from individuals is low.
The programs aren’t well known in the general public.
Opportunities
Closure and shrinking of nearby industries indicate that the client base will increase over the next ten years.
The organization has a new website that has attracted additional visitors.
The organization has modest cash reserves to invest in growth.
Threats
Local government (the primary funding source) projects a budget deficit during the next three fiscal years.
Over the past five years, program costs have increased at a rate of 3 percent per year.
As this example shows, one or more items often can be listed as both strengths and weaknesses. Here, the fact that the organization is largely funded by the government is a strength, but it’s also a weakness because it creates a situation in which the organization relies on a single source of funding.
A review of this SWOT analysis reveals an organization that has been successful in providing quality services funded by government contracts. It has been financially prudent and developed modest cash reserves. However, the program’s future may be in jeopardy if organizational change doesn’t take place. Depending on one source of income for most revenue is a problem, especially because the primary funding entity will be making future budget cuts.
This organization has limited time and resources to begin to diversify revenues. If its government funding is cut completely, it will likely have to close, spending its cash reserve on connecting its clients to other services, meeting with its donors to thank them, telling stories of its clients’ successes on its website, providing modest severance packages to loyal employees, and taking necessary accounting and legal steps to close.
If its government funding declines but doesn’t cease, it has opportunities to develop an individual donor campaign led by the board of directors; meet with other nonprofits, local colleges, and business leaders about sharing job counseling and training services; and seeking coverage of its programs in the local media.
Yet another approach is to develop new products and services that may appeal to foundations or garner the support of local businesses. Such services may help the organization further its mission and better serve its clients while also diversifying its donor base — a win-win-win situation.
A SWOT analysis can be a powerful guide to developing a plan because it looks at both your organization’s inner workings and external environment. As your committee moves on to the next planning step, where you decide together on goals and strategies for coming years, it can refer to the SWOT analysis as a reminder to celebrate and further develop strengths, tackle weaknesses, and prepare for change.