Nonprofit organizations are continually faced with the challenge of where to allocate their limited funds and other resources across the diverse range of programs that they offer. Rather than examining each program separately, nonprofits should view their activities as a portfolio of programs. Mission, Money, and Merit are the three critical axes for strategic management of a nonprofit's portfolio.
The M3 portfolio approach developed here visually presents the size (typically cost) of each program, as well as the relationships among the programs relative to the nonprofit's mission, resource-cost coverage, and performance quality. The portfolio model then measures the center of gravity for the nonprofit on each axis and the overall balance of the organization's activities. By presenting the complexity of any organization visually and colorfully, management can better see and judge what programs may need enhancing, changing, or eliminating.
But this is not all the model offers. Through its participatory approach of asking managers to independently rate each of the programs on the three axes, hidden assumptions are illuminated, differences are highlighted, agreements are shared, and learning takes place. The enhanced communication among managers that occurs as a result of this process contributes enormously and directly to the quality of strategic and tactical decision-making by the nonprofit toward greater productivity, effectiveness, sustainability, balance, and success.
