Helping Your Community Development Organization Survive The Economic Downturn

“Recently, I was meeting with a group of colleagues, and we were discussing the new economy, a term that generally refers to major changes that have impacted our nation in recent years, including globalization, widespread use of IT and broadband across the world and outsourcing of jobs,” says Dr. Mark Peterson of the University of Arkansas Division of Agriculture. “We then began discussing the impact of the economic downturn on our state, communities and individuals.”

The group determined that the impact has been dramatic.

Mark Peterson is one of my favorite community development experts. He gets it. He understands what the Great Recession and the slow recovery have meant for communities across the country.

“Starting with a real estate bubble with subprime mortgages in October of 2007, the economic crisis spread across the financial sector, then to the real economy and then to Main Street,” Peterson says. “Finally this economic crisis has geopolitical dimensions.”

Though we’re told the recession has ended, it doesn’t feel like it for many communities. Thus Peterson’s “five key points about how to survive in this economic environment” still resonate.

They are:

1. Understanding what is going on in our economy, our nation and the world is a prerequisite to effective action — to thinking and acting strategically, taking advantage of the opportunities in the present environment. Corollary: Realism is valuable; undue pessimism or optimism can lead us astray.
2. This economic downtown impacts but does not do away with the fundamental tenets of the new economy — globalization, widespread use of technology and seeking the lowest cost labor on the planet.
3. The need to fully utilize broadband and other technologies is even greater as increased competition favors communities, businesses and organizations that use technology to do things better and do better things.
4. To overcome barriers and move forward, communities, organizations and regions need to create breakthroughs — breakthrough solutions that make a leap forward.
5. An economic downturn also requires excellent leadership. In a recent interview, Tony Blair, former prime minister of Great Britain, stated: “Leadership in these tough economic times requires a very particular kind of leadership. You have to be honest with people and give people inspiration and confidence. You have to tell them that these are tough times, but we will come through it, and we will come through it together.”

Never has leadership in the community development realm been more important than it is now. Consider that almost 70 percent of the U.S. economy is driven by consumers. Beginning in 2000 and continuing until the recession, almost 40 percent of consumption was fed by home equity withdrawals as families refinanced their home mortgages to pull out money. Home equity withdrawals dried up three years ago, however.

The unemployment rate remains high in most areas of the country.

Are the leaders in your community giving people reason for hope? Are they coming up with breakthrough solutions?

— Rex Nelson

Defining Strategic Planning For Community Development

Hundreds of books, thousands of articles and millions of words have been written in an attempt to describe how strategic planning should be done.

Yet many community development organizations find themselves stuck. They know they need a strategic plan. They’re just not sure how to go about it.

The best place to start might be these simple explanations of words and terms that often are tossed about by strategic planners. These explanations are courtesy of the Alliance for Nonprofit Management, a professional association of individuals and organizations devoted to improving the management and governance of nonprofit groups.

1.  Strategic:

“In the dictionary, the word strategy has to do with war and deception of an enemy. In nonprofit management, strategy has to do with responding to a dynamic and often hostile environment in pursuit of a public service mission. Thinking strategically thus means being informed and consciously responsive to this dynamic environment.”

2. Planning:

“It involves intentionally setting goals (choosing a desired future) and developing an approach to achieving those goals.”

3. Fundamental:

“Because it is impossible to do everything, strategic planning implies that some decisions and actions are more important than others. The most important decisions have to do with what an organization is and why it exists; the most important actions have to do with what it does.”

4. Disciplined:

“Discipline highlights the relationship between the different steps in strategic planning. Mission depends on environment; which actions are most important are determined by assessing strengths and weaknesses, opportunities and threats. Strategic planning is also disciplined in that there is a sequence of questions typically raised to examine experience and test assumptions, gather and make use of information about the present and try to anticipate the future environment the organization will be working in.”

5. Decision making:

“Strategic planning is based on decision-making because in order to answer the questions raised in the structured planning process, choices must be made. The plan ultimately is no more, and no less, than a set of decisions about what to do, how to do it and why to do it.”

6. Long-range plan:

“Long range is the longest time period for which it makes sense to make plans. The time period varies from organization to organization. … For most nonprofit organizations, a three- to five-year time frame is appropriate for meaningful long-range planning.”

7. Operating plan:

“Operating plans are the detailed action plans to accomplish the strategic goals laid out in the strategic plan. An organization should have operating plans for each major organizational unit.”

8. Strategic management:

“The concept of strategic planning implies managing, day-to-day and month to month, in a way that focuses on the most important decisions and actions. This requires the kind of longer-term perspective and priorities that result from a strategic plan. This concept also incorporates the assumption that the environment is always changing. Thus strategic management requires ongoing reassessment of current plans in light of long-term priorities.”

9. Inclusive process:

“An inclusive process means that people who have a stake in the work of your organization participate in the planning process in an appropriate way. This does not mean that every client, funder, volunteer and staff member must come to a joint consensus about what to do. It does mean that these interested individuals have a chance to be heard by the decision makers.”

— Rex Nelson

Doing Your Community Development Plan The Wrong Way

Before you embark on a strategic development plan for your community, it’s important to identify what strategic planning is not.

For one thing, it’s not a substitute for strong leadership.

According to the Alliance for Nonprofit Management, strategic planning should never be viewed as “a substitute for the exercise of judgment by leadership. Ultimately, the leaders of any enterprise need to sit back and ask, and answer, ‘what are the most important issues to respond to?’ and ‘how shall we respond?'”

“Just as the hammer does not create the bookshelf, so the data analysis and decision-making tools of strategic planning do not make the organization work — they can only support the intuition, reasoning skills and judgment that people bring to their organization.”

If you think a strategic plan is going to solve all of the problems for your community development organization, you’re sadly mistaken.

♦ There will always be challenges.

♦ There will always be the need to adjust on the fly.

♦ There will always be the need for strong leadership.

“Strategic planning, though described as disciplined, does not typically flow smoothly from one step to the next,” the alliance reports.

“It is a creative process, and the fresh insight arrived at today might very well alter the decision made yesterday. Inevitably the process moves forward and back several times before arriving at the final set of decisions.”

“Therefore, no one should be surprised if the process feels less like a comfortable trip on a commuter train but rather like a ride on a roller coaster. But even roller coaster cars arrive at their destination as long as they stay on track.”

It’s important to understand the difference between strategic planning and long-range planning.

Long-range planning is a plan of action designed to accomplish certain goals over a period of several years.

“The major assumption in long-range planning is that current knowledge about future conditions is sufficiently reliable to enable the development of these plans,” the alliance reports. “For example, in the late ’50s and early ’60s, the American economy was relatively stable and therefore predictable. Long-range planning was very much in fashion, and it was a useful exercise. Because the environment is assumed to be predictable, the emphasis is on the articulation of internally focused plans to accomplish agreed upon goals.”

Strategic planning, on the other hand, anticipates a constantly changing environment.

“Some would argue that this was always the case,” the alliance states. “Nonetheless, in the nonprofit sector a wide agreement has emerged that the environment is indeed changing in dynamic and often unpredictable ways.”

“Thus the emphasis in strategic planning is on understanding how the environment is changing and will change, and in developing organizational decisions which are responsive to these changes.”

Dr. Jagdish Sheth, an expert on marketing and strategic planning, said proper strategic management means always asking the question, “Are we doing the right thing?”

While asking this question, it’s important that you:

• Have a purpose and understand what it is you wish to accomplish
• Understand the environment in which you’re operating and be able to identify obstacles to progress
• Show creativity in developing responses to those obstacles

“Strategic management is adaptive and keeps an organization relevant,” the alliance states. “In these dynamic times it is more likely to succeed than the traditional approach of ‘it if ain’t broke, don’t fix it.”’

— Rex Nelson

Planning For Community Development Success

The Alliance for Nonprofit Management is a professional association of people and organizations devoted to improving the management of nonprofits. On the organization’s website is an excellent overview of strategic planning.

It’s common for those in community development organizations to proclaim, “We need a strategic plan.”

Unfortunately, far too many organizations go about the process all wrong.

According to the alliance, successful strategic planning: 

• Leads to action
• Builds a shared vision that is values based
• Is an inclusive, participatory process in which board and staff take on a shared ownership
• Accepts accountability to the community
• Is externally focused and sensitive to the organization’s environment
• Is based on quality data
• Requires an openness to questioning the status quo

Is a key part of effective management

John Bryson’s book “Strategic Planning for Public and Nonprofit Organizations” tells us:

“Strategic planning is a management tool, period. As with any management tool, it is used for one purpose only: to help an organization do a better job — to focus its energy, to ensure that members of the organization are working toward the same goals, to assess and adjust the organization’s direction in response to a changing environment.”

“In short, strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does and why it does it, with a focus on the future.”

When it was published more than 15 years ago, Bryson’s book introduced a new strategic planning model. It has since become one of the standard references in the field.

The alliance notes that the process, when done correctly, is strategic because “it involves preparing the best way to respond to the circumstances of the organization’s environment, whether or not its circumstances are known in advance; nonprofits often must respond to dynamic and even hostile environments.”

“Being strategic, then, means being clear about the organization’s objectives, being aware of the organization’s resources and incorporating both into being consciously responsive to a dynamic environment.”

You would be amazed at how many leaders of community development organizations never ask themselves these questions:

• What are our objectives?
• What resources do we have to reach those objectives?
• Are we able to respond to change?

“The process is disciplined in that it calls for a certain order and pattern to keep it focused and productive,” according to the strategic planning section on the Alliance for Nonprofit Management website. “The process raises a sequence of questions that helps planners examine experience, test assumptions, gather and incorporate information about the present and anticipate the environment in which the organization will be working in the future.”

“Finally, the process is about fundamental decisions and actions because choices must be made in order to answer the sequence of questions mentioned above.”

“The plan is ultimately no more, and no less, than a set of decisions about what to do, why to do it and how to do it.”

“Because it is impossible to do everything that needs to be done in this world, strategic planning implies that some organizational decisions and actions are more important than others — and that much of the strategy lies in making the tough decisions about what is most important to achieving organizational success.”

If you think your community development organization is going about strategic planning all wrong, you should check out what the Alliance for Nonprofit Management has to say and buy a copy of Bryson’s book.

— Rex Nelson

There’s More Than You Think To Community Development

We’ve stated over and over on this blog that major education reforms are necessary to create a 21st century workforce.

Having a quality workforce, though, is about more than education and training.

We must also address the poor health of far too many Americans along with the other obstacles they’re forced to overcome on a daily basis.

While focusing on education and workforce training issues, your community development plan should simultaneously address issues such as these:

• Low birth-weight babies and infant mortality. In the area of the rural South where I worked for the Delta Regional Authority, the rate of low birth-weight babies exceeded the national average by almost 30 percent. Infant mortality was 25 percent higher.
• Family stability: Too many children in this country are being raised by single mothers, grandparents or even aunts and uncles. These single mothers tend to be young and lacking a proper education, putting their children at an immediate disadvantage. When it comes to families headed by a single female, the Delta region where I worked found itself almost 40 percent higher than the national average. No wonder economic and community development was a challenge.
• A lack of health insurance.
• The diabetes epidemic.
• Drug abuse: Whole communities in this country are being ruined by the scourge of drugs, whether it’s meth, crack or some other illegal substance. Our prisons are overflowing with people whose crimes are based on drug use or drug dealing.

Thousands of American communities now find themselves in a state of severe and chronic distress. The leaders of these communities must search for creative ways to establish a climate of opportunity for private investors.

It’s not enough to look to the government — whether at the municipal, county, state or federal levels — to bail out these communities.

The public and private sectors must be partners to address problems like those listed above.

When I was at the Delta Regional Authority, people would ask why an economic development agency was involved in a diabetes awareness program. The answer was simple: We knew we would never be able to fully develop the region’s economy without a healthy workforce.

If a person cannot go to work consistently five days in a row because of illness, it affects worker productivity and ultimately the economic prosperity of your entire community.

We know healthy economies are built with healthy workforces. For us, this wasn’t just a public health issue. It was an economic issue.

The creation of permanent, private-sector jobs is the most cost-effective method of eliminating poverty. Those who aren’t healthy cannot support their families.

We need our community development leaders to step outside the traditional economic development model and focus on the types of issues listed above.

Yes, it’s probably outside your comfort zone. Without this shift in focus, however, your community will never achieve its full potential.

— Rex Nelson

Asking The Right Community Development Questions

From the end of World War II well into the 1980s, leaders in my area of the rural South emphasized better roads, cheap labor and a non-union work environment in an attempt to draw businesses from the Northeast and the Upper Midwest. You know the rest of the story.

There was some success in attracting jobs. But the jobs that were brought in from the Northeast and the Upper Midwest later left for other countries. In town after town, there are empty industrial facilities that once housed textile mills, shirt factories, shoe factories and the like.

If you’re a leader in your community, these are the questions you should be asking yourself:

Has your community properly shifted its economic and community development focus to reflect the reality of the knowledge-based economy?

Rather than just seeking more jobs, are you working smartly to attract higher-wage jobs?

Will your community have the quality of workforce needed to truly compete in the global economy of the 21st century?

One thing we know for a fact is that the workforce training programs of the past are no longer adequate to meet the needs of a 21st century economy. We cannot continue training our young people for jobs that likely won’t be there once their training is complete. 

Since 1970, the number of service-related jobs in our country has increased almost 300 percent while the number of manufacturing jobs has declined. Our population is aging. That means there will be job shortages in key areas of the 21st century economy. But we’re not training people to fill those jobs.

Yes, rural Americans are a resilient lot. They’ve overcome countless obstacles through the decades. But the small communities of this country will never achieve their full potential if they aren’t training people properly.

Having a quality workforce, of course, is about more than just education and training.

We must also address the poor health of our people and the other social obstacles they’re forced to overcome on a daily basis.

Far too many people in rural America have missed out on past economic expansions. The U.S. economic expansion of the 1990s, for instance, was the largest expansion in world history, but hundreds of thousands of rural Americans didn’t reap the benefits.

These communities must find systematic ways to improve their public schools while at the same time improving health care. 

Without doing those two things, they will never turn the tide and be able to take advantage of the next economic expansion.

It won’t be easy. It won’t happen quickly. It can, however, take place over time with the right leaders in the right places, coupled with a sincere willingness to change. We all know that those in positions of power in rural America are sometimes slow to embrace change.

We also must vow that everyone in the community — not just a few — should have the opportunity to become self-sufficient. Once people achieve self-sufficiency, they begin to invest in their families and pass on wealth to their children.

• As a result, those children are smarter and healthier than they otherwise would have been.
• More people own their homes.
• Opportunities for advancement increase.

And your community finds itself in a positive rather than a negative economic cycle.

— Rex Nelson

Finding Leaders For Your Community Development Efforts

One of the most important things you can do in your community is to establish a solid program to train future leaders.

In too many of the communities in which I’ve worked through the years, I’ve watched civic organizations wither and die. I’ve seen community dialogue end as people simply retreat to their homes after work.

Too often these days when I’m invited to speak to the weekly meeting of a Rotary Club or Lions Club, I find that the average age of those attending the meeting is above 70. What does this say?

It says that our social capital is diminishing.

We simply must have more people who will step up and decide the time has come for them to be the leaders in their communities. They must be willing to say, “We’re losing the people who built this place. Now, it’s my turn to lead.”  Unfortunately, these people can be hard to find.

Too many Americans prefer sitting in front of a television or computer screen rather than having face-to-face interactions.

We’re not going to change this situation overnight. No one believes otherwise. But we can at least start the process with well-organized training programs. Your community’s leadership program should also have a strong alumni organization so the members of previous leadership classes can stay in touch with each other and serve as mentors for new classes.

With each group of new leaders taking on the task of training additional residents of the community, there hopefully will be an exponential increase in the number of people ready to step into leadership roles.

When a community has a strong base of young leaders working together to achieve common goals, other people in that community begin to feel as if they’re part of something special.

You should understand that this isn’t the first time our country has found itself in this situation. Social capital was low a century ago due to urbanization, industrialization and immigration that had uprooted familes and social institutions. But the leaders of the early 20th century worked hard to change the status quo. They started many of the civic organizations that still exist today — the Red Cross, the Boy Scouts, the Girl Scouts, the League of Women Voters and more.

Now, it’s time for a similar rebirth of civic engagement.

We must have a new generation of community leaders who know how to commuicate effectively and build consensus on tough issues. This new breed of leaders must be able to motivate others, deal with conflict, interact with the media, set goals and handle stress.

Contrary to popular belief, there’s no such thing as a born leader. Through effective leadership training, these skills can be developed.

Are you growing the next generation of leaders in your community?

— Rex Nelson

Building Social Capital In Community Development

I want to reiterate something I wrote in an earlier post:

Government programs alone will never revive a struggling community.

It takes private investors.

Attracting these private investors will be the key to your success or lack thereof in the knowledge-based economy of the 21st century.

During the 13 years I spent in government at the state and federal levels, I frankly grew tired of those “community leaders” who would simply show up with their hands out.

“Give us this grant and everything will be OK,” they would say.

Yet in far too many communities, there were no local matching funds in place and there wasn’t a strategic plan. There was no direction, no realistic road map for the future.

There were simply those outstretched hands and an entitlement mentality.

It has become increasingly difficult for many communities — especially rural communities — to attract private investments. As I’ve stated on this blog until I’m blue in the face, you can no longer rely on the promise of low wages and low operating costs to bring in businesses.

The U.S. economy in the years ahead will reward those communities that can attract professional, technically skilled workers.

The communities that succeed will be the ones with the quality public schools and other amenities that are now demanded by workers with college degrees.

To put it simply, you must see to it that your community is an attractive place for talented people to live and raise their families.

Just like financial capital, social capital adds value to a community. People build networks among themselves and work together to get things done that would not be accomplished otherwise. The decline in social capital is everywhere. Nationwide, church attendance is down 33 percent and involvement in community life is down 35 percent since the 1960s.

In his book “Bowling Alone: The Collapse and Revival of American Community,” the scholar Robert Putnam notes that civic club participation is down by 50 percent while 45 percent fewer Americans than in the 1960s have friends over to the house on a regular basis.

Building social capital isn’t one of those things you can expect the government to do for you. It’s something you must do from within.

One of the biggest hurdles I find in many of the communities I visit is a simple lack of communication.

People from different races, schools, churches and neighborhoods simply don’t interact.

When we interact on a regular basis, something amazing happens: We begin to trust each other.

Before long, the schools are improved, the parks are cleaner and the town is doing better economically.

Putnam also points out the relationship between social capital and better health. Those who attend church, volunteer and join clubs are happier. Acording to Putnam, civic connections rival marriage and wealth as predictors of happiness.

How deep is the supply of social capital in your community?

— Rex Nelson

When The Progress Stops In Community Development

When I worked for the Delta Regional Authority, one of our key partners was the Southern Growth Policies Board. During my DRA tenure, the board released a report that contained sobering news for those of us in the South.

It noted that the South’s per capita income historically had been below the national average. If we were gaining ground, that wouldn’t have been so bad. The bad news came when the report also pointed out that the region had failed to close the gap during the previous decade.

What happened?  Why did the progress stop?

During the New Deal period and in the years following World War II, the South made tremendous strides in closing the income gap. We began to pave our dirt roads. We began to provide electricity to even the most rural areas of the region. That electricity allowed us to add air conditioning. We got out of the mud, out of the dark and out of the heat. Suddenly, the South was an attractive place for manufacturers to set up operations.

As the industrial age changed over to the information age, however, the region failed to keep pace. Too many areas lacked widespread broadband access. Meanwhile, the education system was failing to adequately train people for the types of jobs available in this century. To put it bluntly, rural areas in the region failed to make the transition to the information age.

The story is the same in much of rural America.

In the words of Gov. Haley Barbour of Mississippi:

“The fiercely competitive nature of doing business in a global economy mandates that we commit to long-range financial and political support for sustainable educational initiatives that produce a quality workforce. It’s as simple — and as complicated — as that.”

The Southern Growth Policies Board put it this way:

“Under the weight of the global knowledge economy, the Southern economic engine has sputtered. Both economically and educationally, the South’s achievements are below that of the nation as a whole. Worse, the South is not making significant, sustained progress at closing these gaps. Worse still, the nation is seeing its global knowledge and economic leadership challenged.”

As noted, these problems aren’t limited to the South.

Numerous reports show that the American workforce is increasingly uncompetitive with that of other nations. These reports show that teachers need substantially more professional development while the U.S. economy needs workers with stronger math and science skills.

We have some good public school systems. We also have some excellent colleges and universities. We have world-class corporations. Too often, though, these various entities don’t communicate with each other. The Southern Growth Policies Board report put it this way:

“To use an information systems analogy, they are not connected to the same server. And, ultimately, that means no one is in charge.”

♦ Eighty percent of the nation’s 30 fastest-growing jobs — everything from computer software engineers to forensic science technicians — require at least some post-secondary education.

♦ The fastest percentage growth in new jobs will be for those jobs requiring a bachelor’s degree or higher.

♦ More than 50 percent of job openings in the new decade are expected to be filled by those with at least some college experience.

♦ Even entry-level skills have become more sophisticated in traditional industries such as manufacturing.

The director of workforce initiatives at the National Association of Manufacturers put it this way:

“We’ve lost the labor-intensive jobs. What’s left is the brain work.”

Ask yourself these questions:

1. Have you created a culture of learning in your community?
2. Are parents heavily involved in their children’s education?
3. What’s your community’s work ethic?

Economic competition is no longer bound by state or national borders. You are playing on a global stage.

— Rex Nelson

The Key Word In Community Development: Talent

One of my favorite development consultants is Jon Roberts of Austin.

Jon is among the nation’s foremost advocates of building community development plans around the concept of attracting and retaining talent.

“Making talent a part of every economic development strategy has become a necessity,” he writes.

“It is on the minds of every business and is among the largest barriers faced by expanding companies. This will play out in communities throughout the United States and the world for years to come. Strategies for dealing with talent retention and attraction will need to address these points in creative and aggressive ways.”

In the global economy of the 21st century, a healthy and technically skilled workforce is indeed a necessity for economic competitiveness.

How do you keep from losing the brightest young people in your community?

How do you at the same time attract new talent?

One way to achieve your goals is to focus on entrepreneurship.

“When we think about economic development, what comes to mind is business attraction,” Jon Roberts says. “The literature and the data and the debates all support this view. Only recently has the economic development profession begun to focus on entrepreneurship and new business development. This focus is long overdue.

“It is becoming abundantly clear that entrepreneurship is a key element in community and regional economic growth. Unfortunately, most of us are still a bit uncertain how to fit entrepreneurship into our economic development programs.

Does new business formation really benefit from public involvement?

Does it yield measurable results?

Do we think about entrepreneurship as a subset of small business? These are not trivial questions.”

Research conducted by the U.S. Small Business Administration in recent decades confirms that much of the job growth in this country stems from business startups. In growing metropolitan areas such as Dallas and Atlanta, as many as 20 percent of the jobs are with companies started during the previous five years.

In addition to the focus on entrepreneurship, your community must also make technology a priority.

• The Milken Institute found that two-thirds of the economic growth in this country during the 1990s was from the growth of the technology industry.

• High technology still drives much of the employment growth, though not at the rates seen in the late 1990s prior to the dot-com bust.

It goes without saying that technology companies must have pools of engineering and computer science talent.

Patents are a key indicator of technology growth.

• A study by the Federal Reserve Bank of Cleveland found that the number of patents per 100,000 workers was a better predictor of economic growth in Ohio than any other metric.

• Communities with a strong capacity for commercial innovation have higher per capita incomes and faster job growth. But our rural areas trail badly in the number of patents produced and the amount of money devoted to research and development.

Increased efforts to encourage entrepreneurship and technology advancements must be a major part of your community development strategy.

— Rex Nelson