Answer to Question #169303 in Management for Eugene

Question

How might planning in a not for profit organisation differ from planning in a for profit organisation 

Answer 1

In terms of long term planning, the key difference between these two organizational structures is that the non-profit organization is guided by its mission and its purpose, where the for-profit entity is (often, but not always) guided by its vision and seeks to achieve a better version of themselves within a competitive external environment. 

Target setting for each type of business is only the first of several differences that dictate one’s planning and execution approach. Regarding operations, for-profits are much more free-flowing in how they allocate resources across teams and how they structure their workflows and future revenue. While money may not come easily, for-profit businesses have access to capital either from the free market in the form of sales or from investors, allowing them to operate as long as their product or service is desired and the market is relatively stable. This is not to say that formalized strategic planning isn't important for the for-profit company, but it may not be as essential for day-to-day survival for the non-profit organization. 

Non-profits, on the other hand, often have fairly fixed budgets based on their expected revenues and donations. They typically have to stretch their operating budgets to have the greatest impact. When it comes to the strategic planning process, non-profit organizations can create their strategic plan at fairly fixed intervals and operate from there without too much interference from external forces or market changes. 

That said, they have to put a bigger emphasis on executing the programs that align with their mission; otherwise, they risk not having the same amount of funding to operate in the future. They have to make their plan and carry it out as close to perfection as possible because they don’t have many other options or alternatives to make up for a cash flow shortage. 

Long-range planning is important to create alignment and vision that will guide your organization. Still, it’s also the day-to-day and operations planning in a dynamic environment that will determine an organization's success. Regardless of whether you’re a non-profit or for-profit organization, having measurements for your strategic plan (Goals, Objectives, and KPIs) is key to measuring your progress towards achieving your mission or vision and implementing your overall strategic plan.