How funders can use adaptive strategy

What’s the issue?

As funders emerged from the challenges of Covid-19 and the cost of living crisis, many felt that their previous strategies were no longer fit for purpose and began the work of developing a new one. Many funders paused their grant making while they did so.

At first glance, for each funder making this decision, it makes sense. Strategy should change with these seismic shifts in the external environment. Pausing grant making allows them to devote the capacity required to strategic conversations and creates a buffer period where new (potentially multi-year) grants do not continue to be made in line with a strategy that is on its way out.

But in aggregate, these closures can mean the reduction of funding flows to the sector and cause challenges for the work that funders support. In the context of the ‘perfect storm’ of rising costs, rising demands, and falling funding that charities have faced in recent years, this can cause significant challenges for charities, and can lead to gaps in services that reduce impact.

Service delivery charities do not have the luxury of pausing work while strategy is discussed. Instead, once a strategy is agreed, services are evolved, created, and wound down where needed.

And once a funder reopens its doors, they can see a surge in demand built up during the period of closure that creates challenges for staffing and capacity as the new strategy gets underway.

How can we fix this?

In recent years, we’ve seen charities adopt a more adaptive model of strategy, moving from fixed-term strategies with detailed objectives and planning to more agile models that allow ongoing decision making in pursuit of their goals as an organisation.

Done well, an adaptive strategy can reduce the need for large strategy review processes at the end of a strategy period. Adaptive strategy aims to embed systems, processes and ways of working that keep your strategy closely aligned with changing needs as the world evolves on an ongoing basis.

A widespread shift towards an adaptive strategy approach by funders would remove the need to pause grant making while strategy is developed. The process could become one of ongoing review and strategic decision making, with an evolving grants portfolio to match, rather than one of complete overhaul at the end of each strategy period or in response to a major context change.

An adaptive strategy can help shift the way we think about things. For example, in an adaptive strategy some elements are expected to be enduring, and others are expected to shift as the world shifts.

If funders could split their strategies up into chunks which are expected to endure for different lengths of time, we could begin to move away from the discontinuity of strategy cycles – where a funder spends the final year of any strategy re-doing the exercise for the next strategy period or has to cease grant-making completely.

For example, timelines could look like:

Issues	Timelines
Vision Mission Values	Set with a 50 year time horizon Expect to refresh in 10 years
Funding programmes Internal enablers	Set with a 10 year time horizon Expect to refresh in 3 years
Workplans for how to deliver on goals and enablers Specific funding criteria and budgets	Set on an annual basis Expect to adjust quarterly

How can funders become more adaptive?

Develop a core strategic framework that can act as your ‘north-star’

This should be a high level articulation of your organisational identity and the change you want to achieve in the long term, but that leaves enough flex for everything else to adapt as needed in the short term. Spend time making sure that this framework is based on clear insight about your resources and the external environment, and ensuring that key stakeholders – internal and external – are on board with this framework.

Invest in understanding data to inform decision-making

Investment in ‘insight architecture’ allows data on the external landscape and internal progress to inform regular decision making. This might require purchasing a digital platform or insight dashboard. It may also be an investment of time, in processes that support grantees and grantmaking staff to regularly share their learning with strategic decision makers. Think about how you can use the insight that informs your strategic framework as a baseline to routinely refresh.

Design flexible structures and processes that allow for change

Revisit your planning processes, staff structures, and governance systems to ensure they support iterative decision making and flexibility.

Getting Started

If you’re interested in looking at this approach, you can read our guide Five Steps to an Adaptive Strategy. We can also offer personalised support for your organisation – get in touch.

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Read our article for Civil Society: Why have so many funders closed to applications?