Using SWOT Analysis to Improve a Not for Profit’s Operations

The important work done by Not for Profit organisations needn’t be compromised as environments change and using a simple SWOT analysis can be a very useful tool when dealing with change, says Matthew Muller, Head of the Davidson Institute and Social Sector Banking at Westpac.

The work done by the many Not for Profit organisations across the country can create significant social change, and lead to improved conditions for future generations in the Australian community.

However, there is an ever-present shadow that accompanies any Not for Profit organisation that it can be achieved at all. The ongoing challenge of managing the budget is made even tougher when the economic environment itself is constantly changing.

Whether it is changes to taxes or superannuation, the introduction of new guidelines for dealing with volunteers, or simply prices increasing due to inflation, the operating environment continues to change.

Most people tend to react to change from a defensive mindset. That is, they view any change as a threat, and look for ways to shore up our current position, and minimise the impact.

However with any change also comes new opportunities.

A SWOT analysis is a common technique for analysing and exploring an organisation’s current situation. The simplicity and ease of using this model makes it particularly useful
for an organisation when dealing with any change in its environment.

A SWOT analysis focuses on the ‘Strengths’, ‘Weaknesses’, ‘Opportunities’, and ‘Threats’ of an organisation.

There are many different circumstances when completing a SWOT analysis that can be useful so before you start a SWOT analysis, you should have a clear purpose of why you are doing so.

It may be that there is a specific change to the operating environment or simply a regular “check-up” for the organisation. Identifying the purpose upfront will keep you
focused on addressing the issues at hand, and ensure a much more thorough and beneficial outcome.

Once you start the SWOT analysis, it is important to list and evaluate the core elements of your organisation in a completely unbiased manner. This is important, because you
cannot make effective decisions if the information contains blind-spots or is not one hundred percent factually correct.

With this in mind it may be useful to have the analysis completed by more than one person and then combine the findings.

Things that you should consider include:

Strengths:
A strength is any factor that makes your organisation more effective in the marketplace. This can include skills and capabilities that you have, either through your staff, technology or processes, and how effectively resources are used to achieve your purpose and goals.

Weaknesses:
A weakness is a limitation or fault that exists within your organisation. It prevents you from achieving your purpose and goals. Examples include inefficient resources or poorly defined and executed processes.

Opportunities:
An opportunity is any favourable situation, trend or change that can help you to convert a weakness into a strength, increase your operational strength, improve your market reputation, or protect your resources.

Threats:
A threat is any unfavourable situation, trend or change that impedes your ability to meet your strategic objectives, and potentially damages or threatens your capabilities.

Once you have listed these key elements of the SWOT analysis, you will have a clearer idea of how any change might impact your organisation. However, the process does not end there.

It is important to interpret this information by ranking how important it is, and exploring your capacity to effect any strategic change as a result of it.

For example, consider the introduction of the Carbon Price into the Australian economy on 1 July 2012. There is no immediate impact to Not for Profit organisations, but there is a definite flow-through effect that needs to be dealt with.

The most immediate issue that many organisations are faced with is potential increases in energy costs. This could have a significant impact for organisations already managing tight budgets.

By doing the SWOT analysis this organisation has identified that it can take advantage of grants to purchase more energy efficient assets. This will help to minimise the threat
of increasing costs and actually turn it into an opportunity to become more energy efficient and reduce costs.

The analysis has immediately identified an effective course of action to take advantage of a change instead of simply accepting the threat to its operation.

As you can see, in our constantly changing environment the SWOT analysis is a very useful tool to have.

For more information on SWOT analysis, and other strategic tools and tips for planning, visit www.davidsoninstitute.edu.au where you will find a number of useful articles or you may even consider attending a short course.

The important work done by our Not for Profit organisations needn’t be compromised as environments change. Let’s change our mindset and look for the opportunity to improve operations and achievement of our goals or objectives.

About The Davidson Institute: It is Australia's First School of Money backed by banking giant- Westpac.

It provides an extensive range of financial education from free seminars to facilitated sessions on Cash Flow to Superannuation, and accredited Certificate IV and Diploma courses in Business and Retail Management.

Westpac Social Sector Banking provides a customised range of banking solutions to suit Not for Profit organisations, charities, associations as well as single-interest and community groups.