The Curse of the Federal Reserve and the Federal Debt Explained and Delineated: Part I

When heuristically discussing the dire 21st Century status, and flagrant economic and financial practices, of the federal government, the 20th Century federal practitioners of the problematic socialist doctrines of economist John Maynard Keynes almost always say that there can be no viable comparison between federal economics and financial policy before 1913, and that which inexorably came after that pivotal year. How true it is that a purely polemic discussion about the state of austere economic flux in the United States after 1913 cannot be adequately pursued with any degree of success in determining official culpability for the awful economic and financial mess that has prevailed in the country. To pursue this properly, the sordidly unconstitutional processes and policies legislated by the federal government during, and after, 1913 have to be recalled and examined, the guilty people responsible for the legislation and its implementation have to be named, and the deceit and conspiracy that caused the awful economic calamities and conditions, described by sad, though correct, history, to prevail in the first three decades of the 20th Century have to be examined and analyzed for what they exactly were.Hence, if the reasons for the abject economic and financial problems of the 21st Century federal government may be properly attributed to their root causes, what would those causes be, and from whence did they come? The distinguished economic analyst Henry Hazlitt, in his books, “Economics in One Lesson,” and “The Failure of the New Economics: An Analysis of the Keynesian Fallacies,” summed up the faults of the Keynesian socialist economics imposed after 1913 by Woodrow Wilson and Franklin Roosevelt into three basic categories, 1) unconstitutional taxation, 2) rampant socialism, and 3) egregious federal deficit spending in the making of a, basically, unpayable federal debt. He points out that from U.S. Supreme Court Chief Justice John Marshall’s 1792 affirming vote in the Supreme Court case McCullough v. Maryland, which declared Alexander Hamilton’s First Bank of the United States as constitutional, and that it could not be taxed by a State entity, came the 1913 unconstitutional Federal Reserve Act, in which the Article 1, Section 8 power of Congress to coin money and determine its value was relinquished by the Legislative branch and given illicitly to a private cartel of private bankers known as the Federal Reserve Board. Hamilton, a monarchist of British tradition had persuaded President George Washington to sign the bill into law in 1791, and that the Banking Act was necessary in order for the execution of the powers of Congress in Article 1, Section 8. This, of course, was not true and constitutional, as was clearly asserted by Thomas Jefferson and James Madison, but Washington, a soldier and not a scholar, was putty in the hands of the persuasively sophistic Alexander Hamilton.So, therefore, let’s take Hazlitt’s categories, one by one, beginning with unconstitutional taxation, and examine the prior and present taxing status of the federal government. Prior to the year 1913, the federal government was funded exclusively by excise taxes or tariffs, and it fared very well on those tariffs. Before the dubious ratification of the 16th (income tax) Amendment in February 1913, the federal government had very few essential constitutional responsibilities, and funded those essential responsibilities without the use of an income tax. Why was this so? It was because an income tax was an un-apportioned indirect tax and, therefore, blatantly unconstitutional and illegal for the federal government to impose. During the American Civil War, Abraham Lincoln, with impunity, blatantly violated the U.S. Constitution by unilaterally imposing an un-apportioned indirect income tax to fund the war of Northern aggression. Since he had already unilaterally suspended federal habeas corpus, an egregiously unconstitutional act, he presumed to have absolute power to do anything to reach his illegal end objectives. At the end of the American Civil War, Lincoln’s income tax was, however, immediately repealed, and during the subsequent peacetime, the federal government managed to operate efficiently, and entirely, on import taxes called tariffs. Congress was fully able to run the federal government on tariffs alone because federal responsibilities did not include unconstitutional welfare programs, agricultural subsidies, or social insurance programs like Social Security or Medicare. After the Civil War, though tariff revenues sometimes suffered under a protectionist policy ushered in by the Republican Party, which supplemented federal income via excises on alcohol, tobacco, and inheritances, the federal government always managed to operate efficiently with a balanced budget. During periods of war throughout early American history, prior to the American Civil War, the Founding Fathers were always able to raise additional revenue employing different methods of direct taxation authorized by the U.S. Constitution prior to the 16th Amendment. These alternative taxing methods gave the young American nation embarrassing peacetime budget surpluses that several times came close to paying off the national debt.After the pivotal year 1913, when indirect un-apportioned income taxation was quasi-legitimized by ratification of the 16th Amendment (when 98 percent of the electorate opposed an income tax), rampant federal spending ensued marked specifically by military upgrading, turning the allowably defensive pre-1913 U.S. military into an offensive means for wartime intervention. That egregious spending done by Woodrow Wilson and his cronies was the beginning of an inexorable unending rise in the federal debt. The crux of this article essay focuses upon the irresponsible borrowing of money to create fictitious congressional appropriations of federal revenue for unconstitutional purposes. As was duly recorded in federal financial history, the federal debt began in 1791 with the presidential administration of George Washington and $75,463,476.52 of accrued debt based upon the debt owed to the Dutch for the gold that was borrowed to finance the Revolutionary War. This debt fluctuated, increased, and decreased to $67,475,043.87 by the end of John Q. Adams’ administration in 1928. From 1829 to 1836, the debt decreased substantially under the two term administrations of Andrew Jackson to $37,513 in 1837. This was the greatest period of astute financial management in Presidential history when the federal debt was reduced within eight years by 1,798 percent. Never again would this happen with the application of excise tariffs and other direct taxes as the only means for generating federal revenue. In 1837, just one year after the lowest federal debt in the history of the republic, the debt increased 900 percent to $336,957. Then it 1838, the debt rose 8,900 percent to $3,308,124. From 1838 to 1862 the debt went from hundreds of thousands of dollars to millions of dollars and stayed below the hundred million mark until 1861, when it increased to $524,176,412.00. This debt amount was incurred even with the imposition of an unconstitutional indirect un-apportioned income tax. This was a drastic negative 578 percent increase in federal debt during the war to stop secession. During the years of the American Civil War the federal debt climbed to above the billion dollar mark, to $2,680,647,869.00.


The fiscal year 1881 began with a federal debt of $2,069,013,569.00, which was decreased during that year with the juggling of excise taxes to $1,918,312,994.00 during the Garfield/Arthur presidential administrations. From 1882 until 1899, the debt fluctuated between $1.98 billion and 1.54 billion, its lowest point occurring in 1893. In 1900, the federal debt rose to the $2.13 billion dollar mark. Finally, in 1912, just before the income tax amendment, the federal debt was $2.87 billion. After 1913, even with the application of the revenue collected from graduated income taxation of all U.S. citizens, corporations, and company businesses, there was a sizable increase until 1920. From 1920 until the beginning of the Great Depression, in 1930, the federal debt decreased from $25.9 billion to $16.9 billion due to efforts by the Harding, Coolidge, and Hoover administrations to use a significant percentage of the collected income tax revenue to apply to the standing debt. From 1929 to 1931, the debt hovered between $16.2 and $16.9 billion, with several years of increase and decrease. From 1932-on, the debt only increased until the post-World War II years of 1947-48, when, as a result of war debts partially paid by several European nations, the debt decreased by $11 billion during the first Truman administration. Therefore, shooting forward 33 years to 1981, the cumulative federal debt from 1913 until 1981 increased from $2.9 billion to a record high of $997.9 billion. With the incoming Ronald Reagan administration, the debt increased to $1.14 trillion dollars. From 1982 until the present year, 2017, there was an inexorably staggering debt increase of over 1,900 percent. Therefore, between 1913 and 2017, or one-hundred four years, the general federal debt increase was a staggering 6,899 percent. Yet, this percentage of increase is valueless in meaning unless the devaluation of the American dollar is taken into consideration during this timeframe. One has to properly determine the decrease of value, due to political inflation imposed by the Federal Reserve, of the American dollar during this timeframe. This factor goes to show the actual value of the federal debt and its ever-increasing interest, for interest is compounded 24 hours per day, seven days per week. In 1912, the U.S. one dollar silver certificate was worth 95 percent of its intrinsic value based upon a determined amount of precious metal, silver. So 95 percent of each dollar paid to the federal debt went to pay merely the interest on the debt, while not decreasing the principal amount.This is why the debt only increased from 1932 until the present day in 2017, with only five instances of minor decrease, 1947, 1948, 1951, 1956, and 1957, as an exclusive result of several nations paying portions of their war debts to the USA. This payment, made in gold, was applied to the debt directly with little effect on the principal owed. Therefore, if the federal debt has increased at such a staggering rate with the value of the American dollar steadily decreasing as a result of Federal Reserve devaluation, the real amount of money that has actually been paid on the federal debt, to date, is much less than is purported by official federal finance records. The mythical figure appears as an illusory projection of federal solvency. A simplified practical example of this is as follows. A nation-state borrows $50,000 from another nation-state and negotiates a schedule for repayment at an established interest rate of 25 percent, compounded quarterly. The borrowing state begins making quarterly payments with a medium of exchange called a “dollar,” but which has an intrinsic buying value of 50 percent less than the unit of exchange that made up the $50,000 sum that was originally borrowed. The $50,000 sum borrowed was worth 98 percent of its intrinsic value based upon a standard amount of precious metal, gold. Yet, the borrower expects to repay the debt with a unit of currency worth 50 percent less than the basic unit of currency that was borrowed, a currency which is not backed-up by precious metal. Hence, the terms of the negotiated debt cannot ever be met by the borrower with the money that he is using to repay the debt. In effect, the borrower will never pay-off the loan debt, which will keep increasing as the interest compounds quarterly.According to the famed economist Milton Friedman, President Ronald Reagan’s chief economist during the 1980s, the Federal Reserve, between the years 1926 and 1929, deliberately and covertly withdrew one-third of the currency and coin from national circulation, which became the primary cause for the run on the banks that occurred in 1929, which put in motion the Great Depression. Since the Federal Reserve is a private banking cartel, controlled by private socialist bankers who endorse Keynesian socialist economics, the reason for this deliberate action might be self-explanatory. The Great Depression resulted in the severe redistribution of American wealth and the creation of an American middle-class, one of the objectives of the Marxian communist manifesto. As is reflected by its sad history, the Federal Reserve, established by the Federal Reserve Act of 1913, has languished miserably in its total unwillingness (not inability) to abide by its congressional mandate to forestall the numerous imminent financial disasters (recessions and depressions) with which the republic continually suffers. That Franklin D. Roosevelt, as an active component of the Federal Reserve, in New York City, had a hand in this clandestine process is a matter of fact. In 1932, the one dollar silver certificate was at 75 percent of its face value, based upon the value of silver during that particular year, when the Great Depression and national unemployment was at its highest point. This is why the federal debt began its unending rise from 1932-on, which gave FDR his motivation to introduce illusionary socialist Keynesian economics to the people, with when he began his bid for the presidency in 1933 (using collected income tax money as salaries for unemployed workers to build unnecessary federal projects). As Wilson’s entry into World War I had caused the debt to increase 300 percent from 1917 to 1918, FDR’s New Deal and manipulated entry into World War II caused the federal debt to increase 500 percent, from $43 billion to $269 billion, as wartime employment and war production mitigated his socialist programs to an insolvent end. The debt that was created during FDR’s sixteen years as U.S. President was $179 billion. Hence the actual amount of money that was used between 1912 and 1945 to pay on the federal debt was devalued almost 30 percent from its 95 percent value in 1912, which caused what was collected in taxation from the States (individual wage earners, corporations, and business interests) to be reduced in value 30 percent and paid only on the accruing interest of the federal debt. War production in the USA, from 1941-45, predominately armaments, caused the federal debt to increase by $209,720,743,874 as tax rate for individuals and businesses was actually increase nearly 30 percent. The money needed to operate the significantly smaller federal government from 1941-45 was borrowed money.Simply put, rampant socialism using income tax money began in the USA as a result of rampant taxation of individuals, corporations, and businesses by the federal government for that particular purpose. From the year 1913-on, most of the money collected by the federal government from un-apportioned income taxation immediately went to pay on the existing federal debt, while most uninformed Americans actually believed that their money, collected as taxes, would be used to operate the federal government. Very little of the actual tangible collected revenue was left to fund the operation of an expanded federal government; especially after 1934, when the unconstitutional New Deal and FDR’s unconstitutional administrative agencies were finally declared constitutional by U.S. Supreme Court justices nominated by FDR and confirmed by a Democrat-controlled U.S. Senate for that express illegal purpose. Yet, when the actual revenue used to support FDR’s rampant socialism was derived from purely borrowed money from 1934 to 1941, the federal debt increased horrendously. The last decrease, from one year to a succeeding year, in the amount of the federal debt was in 1956 under the administration of Dwight Eisenhower, when the total debt decreased by $1,623,409,153.30, from $274,374,222,802.62 to $272,750,813,649.32. From 1956 until the present day, the debt has only increased.Presently, in the second decade of the 21st Century, the federal debt is $20,244,900,016,053.51, and is increasing exponentially. That is $20.2 trillion dollars, in units, or dollars that are 95 percent less in value than the U.S. silver certificate dollar of 1912! Compared to a 1912 dollar, the 2017 Federal Reserve note is worth less than five cents. The great majority of the American electorate (the voting age U.S. population) is ignorant of the issues of federal finance, and don’t realize the staggering amount, and consequence, of this debt. Since 1981, when the federal debt first exceeded one trillion dollars, the total amount of annually collected income tax money, excise tax money, and all other forms of un-apportioned taxation collected by the IRS has been routinely paid entirely on, only, the compounded interest of the multi-trillion dollar debt. Moreover, the Federal Reserve note dollar is merely paper and is not based on any precious metal, but only on a specious void of debt, and has no value in and of itself; and while the compounded yearly interest accruing on the current $20.2 trillion federal debt exceeds the total amount of income and excise taxation collected every fiscal year by the federal government, the reasonable person wonders from where the yearly money required for the operation of the federal government is derived. This is a menacing question that no one, especially socialist economists, likes to answer; but the awful answer is, nonetheless, borrowed money, $2 million dollars per day, 365 days per year.For even though the Federal Reserve one-dollar, five-dollar, ten-dollar, twenty-dollar, fifty-dollar, and hundred-dollar paper bills can be “exchanged” for food, clothing, and other merchandise as, supposedly, legal tender (as stated on the paper money), they are, in and of themselves, worthless, and can be made to have “any” value that the Federal Reserve places on them at any time. As will be subsequently shown, Federal Reserve notes are not legal tender, per the requirements set by the U.S. Constitution. Take, for example, a simple Hershey candy bar, which costs today, in some stores, one-dollar-or-more. In the year 1912, that Hershey bar cost five-cents or less (based upon a standard of silver) in any store, and remained five-cents or less until around 1968; and when someone pulled a dime from their pocket to buy one Hershey bar, the dime was made of pure silver and possessed the full 100 percent value of ten-cents. Since there are still twenty nickels in a dollar, the price of an ordinary Hershey bar, which hasn’t increased in size or quality since it was created over a hundred years ago, has ” politically (not economically) inflated” in price since 1968 over 2,000 percent. From 1968 until 1970 it increased in price to ten-cents; from 1970 until 1974 it increased to twenty-five cents; from 1974 to 1982 it increased to fifty-cents; from 1982 until the present day it has increased another fifty cents when the dollar that is used to buy it is worth less than a 1912 dime. When the price of a Hershey remained stable for over eighty years, why did this inexorable inflation have to occur, as every other bit of merchandise manufactured in, or out, of the USA has, likewise, increased exorbitantly in price? The reason that it was politically inflated in price is because the medium of exchange, the dollar, which was used to buy it, became worthless in terms of its basic value, because it ceased to be based upon a standard unit of precious metal, gold or silver.The following is a presentation from the Internet Website “What Does the Constitution Say About Gold and Silver Money?”"The U.S. Constitution is a set of instructions, a rulebook for what the federal government may do, with ALL ELSE being DENIED to it by default. Therefore, when the Constitution is lacking of specific authorization for anything, it simply means that the federal government is denied/prohibited from that thing by default.Amendments 9 & 10 are probably the clearest examples to draw upon when determining that point:AMENDMENT IX
RIGHTS RETAINED BY THE PEOPLE
The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.AMENDMENT X
POWERS RETAINED BY THE STATES AND THE PEOPLE
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.Emphasis addedWhen we examine the Gold and Silver as currency issue, we read the following from the Constitution:
Article I, Section 8, Clause 5: The Congress shall have Power… To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.


Article I, Section 10, Clause 1: No State shall… coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt.So, from these articles, we can determine that:
1. The federal government is authorized to coin money.
2. The States are prohibited from coining money.
3. States do have the authority of determining what can be used as a tender in payment of debts by default, because the federal government does not have that specific authorization.
4. States are prohibited by the Constitution from making “any Thing but gold or silver coin a tender in payment of debts” (Which also proves that #3 is correct.)The face that Federal Reserve Notes are called “legal tender” and are required to be accepted is what makes them unconstitutional. They are not backed by Gold or Silver, as evidenced by the fact that there really do exist some notes out there say plainly on them that they are “payable on demand” for Gold/Silver and our modern day “notes”, say “Backed by the full faith and credit of the United States Government.”If the Federal Reserve simply removed the “Legal Tender” statement, their currency would be fine, because people could then chose not to accept it, however it is unconstitutional when referred to as legal tender, because legal tender means it must be accepted as currency with value, when it has none but the “paper it’s not printed on”, as Gerald Celente would say, and it is clearly not backed by gold or silver, as is mandated by the Constitution.”The engagingly astute student of American eco-political history must realize the true facts about the American President Woodrow Wilson, elected in 1913 as the 28th President; that he had no regard, or respect, at all for the rules of the U.S. Constitution, as written and established by the Framers; and that, because of Wilson’s disregard for the Constitution, the second decade of the 20th Century was called the first era of “progressivism,” where the active root term “progress” was tantamount to a revised pragmatic application of constitutional law and rules. While Wilson had laid his hand on the Holy Bible and swore to preserve the Constitution of the United States, in text and application, and the electorate that placed him into office had believed that he was going to abide by Constitutional law and rules, the Princeton demagogue began his first administration in 1913 with the aberrational belief that, “the separation of powers established by the Constitution prevented truly democratic government.” Affected unnaturally by the advice and opinions of his unofficial counselor, Col. Edward House, his persuasive alter-ego, he began to render government more accountable to public opinion, and held that the business of politics-namely, elections-should be separated from the administration of government, which would be overseen by nonpartisan, and therefore neutral, experts. The president, as the only nationally elected public official, best embodies the will of the people, resulting in a legislative mandate. In other words, Wilson fully believed that the legislative, executive, and judicial powers of government should be fully vested into the one tight-fist of the Executive branch. In simpler terms, Wilson wrote his own working version of the Constitution and saw and fully accepted what Count Montesquieu had defined in the 17th Century as blatant tyranny, as a better form of American government. He would have gotten along famously with Alexander Hamilton, who would have definitely preferred a monarchy over a republican form of government.His thoroughly tyrannical mindset led Wilson, a leading pragmatic proponent of a British-style national bank, to fully accept the surreptitious and clandestine efforts of the, then, Chairman of the U.S. Senate Banking Committee, Nelson Aldrich, to covertly introduce the Federal Reserve Act in 1913. Three years earlier, in 1910, Aldrich had succeeded in conspiratorially blue-printing the bill outside of Congress on John D. Rockefeller’s Jekyll Island, located off the Georgia Coast, with five of his banking cronies. Later, during the late evening of December 29, 1929, Aldrich succeeded in getting the proposed legislation introduced and passed without any deliberative debate on the floors of the Senate and House of Representatives. While the great majority of the U.S. representatives and senators were on Christmas vacation that pivotal evening, a minuscule number of them, voting as pre-arranged quorums, passed the Federal Reserve Act. Later that night, the bill was signed into law by Wilson. Though it was as unconstitutional as a golden calf set in the midst of the U.S. Senate to be worshiped, the act created a quasi-governmental banking entity that was presided over, not by the U.S. Congress, but by a cartel of pragmatic private bankers, who, like Wilson had planned, were not a part of the U.S. government. This event in 1913 was the actual beginning of the chaotic economic/financial quagmire that now, in the second decade of the 21st Century, has exacerbated to such large and unmanageable proportions over the ensuing 104 years that return to a pre-1913 economic/financial status quo-ante is seemingly impossible.Currently the Office of Management and the Budget (OMB), the Congressional Budget Office (CBO), and the many federal economists, financial analysts, and mathematicians who currently preside financially in the 2,000-plus federal Executive branch administrative agencies, administrations, and departments over this melee are not, to any degree, seeking to rectify this convoluted problem. They are, in and of themselves, significant players in the continuation of the Keynesian socialist problem, and offer no hope in the making of a viable solution. Part II of this multi-part article will deal with the actual financial processes that have caused, and continue to cause, the ever-growing federal debt to increase exorbitantly each and every fiscal year, while the value of the American dollar inexorably decreases to a nadir of utter negligibility. The conspiratorial plan for the diminution of the American republic will be thoroughly explored.

Are Non-Profits Prepared For Strategic Planning?

I wish I could count the number of times I have attended a non-profit strategic planning session, or discussed the need to have (or update) one in a board meeting, or been invited to serve as the facilitator. It has always – always – struck me that the strategic planning session should just be starting about the time that it is actually ending (e.g., too much time is wasted at the beginning and then a frenzy results at the end). The purpose of this article is to outline some observations over 30 years of strategic planning experience and to share suggestions that will improve the chances for a successful outcome.

Holding a Strategic Planning Session
At some point in time, every member of a non-profit board is going to hear the suggestion: “let’s hold a strategic planning session!” from a fellow board member or staff member. It’s not a bad idea but, unfortunately, it’s often a waste of time and produces no measurable outcomes. I want to share some observations and thoughts about strategic planning – invite debate – and see if we can come up with some guidelines that make the investment of time worthwhile. I have often said that strategic planning is a ‘process’ and not an ‘event’ – and I still very much believe that statement is true. However, maybe I should also add the caveat that a successful ‘process’ does indeed require an ‘event’ – or series of events – which is precisely the point. If you agree with my belief that the event often ends about the time it should be starting, then you would have to agree that additional follow-up after the event is required in order to create a meaningful strategic plan because the plan stopped short of completion during the original event. And a lot of time was used inefficiently, which also makes people reluctant to participate in the future.
 
A Working Document
Without a doubt, the primary way that I judge a successful strategic plan is by seeing a copy of it a year after the ‘event.’ If it’s a bit too dusty (which is often said in jest, but is true!) and if the pages are in pristine condition, then the event that created the plan was obviously not successful in motivating action. However, if the copy is dog-eared, marked up, added to, pages tagged, and otherwise well-used; then the event was super successful because a ‘process’ was indeed born and the need for ongoing action was instilled. In my opinion, successful outcomes are too rare in the strategic planning ‘implementation’ phase. The copy of the strategic plan that I described as a success is one that has become a working document, which is what planning is all about.
 
Defining ‘Strategic’
From an analytical standpoint, one way to define something is to determine what it is not. Strategy is different from ‘tactical’ or ‘operational’ (which is actually performing a task). Strategy is more subjective and cerebral; it involves thinking about an issue in broader terms than usual; thinking about circumstances that do not currently exist (i.e., future oriented) and determining how to adapt the organization to benefit from those predicted opportunities or avoid anticipated threats. Often, it involves thinking about an issue totally differently than ever before (which is VERY hard to do). Strategy development is not the same as operations implementation. For example, when I have been invited to ‘do’ strategic planning for an organization, I always ask if there is an Operating Plan; i.e., if you don’t know how to perform your core business every day (Operating Plan), why would you want to spend time working on a future-oriented process (Strategic Plan)? Strategy (highly subjective) is the opposite of operational (highly objective/defined/specific). Objective is ‘cut and dried’ – there is a procedure/process/outcome that arises from certain actions, done at certain times, in a certain way to produce known/certain outcomes. We already know if we do these certain things what we will get. Most people can adequately perform what they are taught/instructed. However, developing strategy – even the process of thinking about it – is very different. A strategic planning session led by a ‘doer’ instead of a ‘strategist’ and ‘critical thinker’ will yield disappointing results; however, ‘doers’ can be very helpful in participating in the development of strategy if they are properly guided. A couple of very simple examples of strategic vs. operational issues will make the point:

Funding
Operational – How are we going to make payroll next month?
Strategic – How do we need to adapt our operations to comply/excel with the recent changes for non-profits by Congress?

New Program
Operational – We need to add a new program to our existing series.
Strategic – We need to add a new series to cover new topics that will take our organization in a new direction.

Operating Plans Are Important
Let me be quick to tout the benefits of an Operating Plan. Properly executed, an Operating Planning Session can provide or refine specific guidance/clarification/policy on any number of day-to-day issues that really can be a big help when running the organization. The primary difference between strategic and operating (which is a huge difference) is that operating plans deal with the ‘here and now’ – with processes and policies that will improve the current business function – strategic plans, simply put, engage the participants in thought processes meant to challenge the current business function by looking into the future and assessing opportunities, threats, weaknesses, and strengths. A good Operating Plan can minimize daily confusion/questions about the manner in which specific job functions should be conducted. The ‘event’ of operations planning – getting the appropriate team together to discuss, debate, and decide the issues – is, in-of-itself, a very worthwhile team-building and clarifying session (if properly planned and executed). While Operating Plans are beyond the scope of this article, I wanted to make sure they were mentioned in a positive context.
 
The Mission Statement and The SWOT Analysis
Unfortunately, most strategic planning sessions seem to begin with either a review of the mission statement or a SWOT analysis. Both are usually ‘deal-busters’ in that they bog down the process of innovative thinking for strategic planning. For example, unless the core business of the organization has been totally disrupted (e.g., by lack of funding or policy, political, social, or technology changes), then the existing mission statement should be in reasonably good condition. To delve into the mission statement – and debate specific words and placement within the text – sucks the life out of the planning session and can often pit individuals against each other right from the start over silly things like wordsmithing. Not only is this unfortunate, but I would suggest that it is totally unnecessary. How can you revise a mission statement until you go through the rigors of the strategic planning process and determine whether or not there are bona-fide strategic issues worth pursuing? My preference is to hold the mission statement for a separate planning meeting after the strategic plan has at least been through an initial rough draft process. Perhaps a good analogy is to look at the mission statement from the back end – maybe it should be thought of as more of an executive summary?
 
Preparation For The Planning Session Is Critical
There is probably no exercise that requires more preparation than strategic planning. Why? Because the participants must be the right ones (those with authority and accountability), the purpose of the exercise must be made very clear (to stay ‘on point’ and eliminate confusion and fear), and the process must be known and engaging in advance (so participants can be prepared to contribute their very best). The most obvious difference between a private-sector strategic planning session and one for a non-profit organization is the inclusion of volunteers, namely the board of directors. The good news is that the planning session will include a diversity of opinion; the bad news is that most board members have probably been through some type of strategic planning before and have preconceived notions about the process based on their previous experiences (hence, the importance of preparing for the session in advance). I will discuss the dynamics of the volunteer participants in a later section.
 
I strongly recommend using an experienced professional outside facilitator (not a staff member, a board member, or a friend of a friend…) for at least three reasons:
 
(1) It is important to have 100% involvement of the entire board and staff members, so using participants to lead sessions or write on flip charts takes them out of the game.
 
(2) The selected facilitator must fully understand the main points presented in this article and have familiarity with applying them in actual planning sessions. (I will discuss some thoughts on selecting a facilitator in a later section.)
 
(3) You cannot be a prophet in your own land – your fellow board members and/or staff will resent you for being the strategic planning leader (even if you are experienced). Obtaining outside help eliminates this problem.
 
If possible, share copies of previous strategic plans (with the participants and the facilitator) as part of the preparation process that takes place well in advance of the event. Successful planning takes more time in preparation than it does in execution; this is a good rule of thumb to remember. If very little (or no) planning goes into the preparation, the participants will show up without direction and without having pondered creative solutions to some known issues to get their juices flowing; the event will likely be a disaster (and a waste of a lot of precious time).
 
Conducting The Advanced Preparation
Plenty of lead time is important; six months is not too long. Start by regularly discussing the need/desire of a strategic planning session at board and staff meetings. A letter to the board from the chair is a good way to officially announce that a strategic planning session is necessary. That letter should include a few examples of issues that are pressing the organization for strategic solutions. The board may wish to name a committee responsible for the planning (or, the board may already have a Strategic Planning Committee). Remembering that the plan is intended to be forward looking, it is important to involve up-and-coming board and staff members; their participation will be critical to the future implementation of the plan, so it is imperative they be involved in the development of it. Newer participants are often more reluctant to engage during the planning session because they conclude, perhaps rightly so, that there is a lot of history that they do not know. Remembering that strategic planning is forward looking, the facilitator must work hard to bring everybody into the dialogue because past history is less important than future strategy.
 
Let’s cover a few aspects of the advanced preparation checklist:
 
Participation
Remember that inviting the participants is easier than getting them to attend the session! This is one of the best reasons for beginning the discussions about the planning session six months in advance. My suggestion (this is a bit radical) is that it be made clear that if a participant cannot arrive on time and stay for the entire event, then they should not attend. This rule will make clear the importance of full participation. Reiterating this for several months prior to the session will make it less likely to have a misunderstanding on the day of the event. (If the organization is extremely proactive, then it already has a policy on board attendance and what is considered an excused absence.)
 
The Venue
How important is the selection of the place to hold the planning session? I would argue that it is more important than most people think (i.e., it is very important). I would strongly suggest that the venue be away from the normal meeting places. In addition, distractions like golf courses should be avoided; and, selecting a location where there is no cell phone reception takes care of a whole host of problems. Included in the selection of the venue are a number of other seemingly mundane issues, but planning in advance can make the difference between success and failure. A few examples:

  • Make sure the primary meeting room is extraordinary. It must be comfortable in every way, from the chairs to the location of the restrooms. If possible, select a meeting room with full technology tools; you want the session to be impressive.
  • Do not expect the attendees to bunk together. Secure enough rooms in advance to accommodate all of those who plan to attend. Private bathrooms are a must.
  • Food selections should be made in advance, particularly taking into account vegetarian preferences. Avoid caffeine and sugar as much as possible because studies have found that while both spike attention, there is ultimately an attention crash.
  • Decisions about alcohol, smoking, group recreation activities, etc. should all be made in advance. To keep things simple, I suggest avoiding all of the above.
  • Regular breaks – where some exercise is suggested and some quiet/alone time is provided – will increase the productivity of the output in the sessions. Make sure there is a printed agenda – distributed well in advance of the session – and spell out all events to the minute. Do not deviate from the schedule.

Length of the Planning Session
Determining the proper length of the session is important. I continue to believe that planning sessions end about the time they should be starting/continuing. Why? Because without a lot of advanced planning and attention to detail, the event begins sluggishly and does not naturally find a participative course until too late. However, I have never been to a multi-day ‘seminar’ that I thought was worth my time because I do not play golf and am not looking at seminars or planning sessions for my recreation and social outings. I feel strongly that the importance of the planning session should be kept paramount in the minds of the participants. There is no reason to draw things out just for the sake of having a lengthy planning session. How short is too short? A strategic planning session cannot be successfully held in one morning. How long is too long? Anything longer than a couple of days will cause a negative impact on the operations of the organization, given that the entire leadership team is at the strategic planning event. However, the best session I ever attended lasted the better part of three days. And, it was a Friday, Saturday, and Sunday (intentionally selected so as not to interfere with normal operations).
 
Planning Session Case Study
An appropriately sized inn was selected – in a rural area and about 90 minutes out of town – and the organization rented the entire facility. It was extremely well planned, in advance, and all contingencies were considered (private rooms, meals, walking trails, multiple meeting rooms, no cell service, personal time built into the agenda, etc.) Written materials had been distributed weeks in advance. The facilitating team (outside consultants) had met individually with each participant prior to the event; the five-person consulting team arrived Friday morning to set up. There were 24 participants (ranging from the CEO to new managers), who arrived after lunch on Friday, checked into their rooms, and were in place for the afternoon (opening) session at 3 p.m. on Friday. Another session was conducted after dinner on Friday evening and multiple sessions were conducted on Saturday. The event concluded at 2 p.m. on Sunday. Of special note is that every participant left the session with a copy of the draft strategic plan that commemorated the first session in the planning process. Updates were added as they became available in the days, weeks, and months to come. Goals and objectives were established to produce measurable outcomes and revised as necessary. Organization-wide communications were important, so assignments were made to brief the entire employee population on the plan and its iterative changes. This strategic planning event remains the best I have ever attended. Contrast this brief description with the planning events you have attended and you will see the difference that commitment can make. And, important to mention: the resulting strategic plan completely transformed the organization, as was intended (the organization reduced its service territory and its product offerings, opting to focus on its core strengths). A better outcome could not be imagined.
 
The Cost of Strategic Planning
I do not believe in the old saying, “you get what you pay for.” Instead, I believe you will get no more than you pay for and you might not even get that much if you are not fully engaged with the service provider. Good strategic planning is not cheap. Many for-profit organizations cannot afford it, so it is no surprise that the non-profit organizations struggle mightily with the cost. A common practice is to have a friend-of-a-friend conduct a 10 a.m. to 3 p.m. (with lunch!) planning session for free (or for a few hundred dollars). How successful is this approach? I would suggest not successful at all – and, potentially giving a negative impression to strategic planning because the session was so grossly inadequate. If this is true, then it is literally better not to have a strategic planning session that to have a bad one. Fees vary all over the board but, for example, the case study presented above cost $50,000 (negotiated down from $75,000 in conjunction with the experimentation of producing the draft plan during the session) – and that was over 15 years ago. I am familiar with a recent strategic plan for a non-profit organization – conducted by a national consulting firm specializing in the operations of that specific non-profit industry – and the cost was $75,000 about two years ago. However, take note: a donor sponsored 100% of the cost under the belief that without a strategic plan, the organization was in trouble. So, my suggestion would be to seek donor funding for the strategic planning costs. Also, I would suggest that the organization tout the existence of its strategic plan in its printed material and on its web site, thereby demonstrating that it is proactive and performs in a business-like manner, which can provide a competitive advantage during fundraising.

 
Selecting a Strategic Planning Consultant
The case study above mentions a five-person consulting team. This was part of an experiment that required that number of consultants because the end product, as explained above, was a draft copy of the strategic plan in the hands of every participant. This required the appropriate technology to be on hand (PC, projector, screen, copiers, etc.) and a typist who was the fastest I have ever seen. Part of the experiment was to enable the participants to be fully engaged in the conversation by not taking notes; instead, everything that was said was typed on the PC and projected on the screen. During breaks, the consulting team would group suggestions into logical sections. One consultant handled all contingencies. The other three took turns facilitating the various sessions to offer a distinct change of pace. During lunch on the closing day, copies were made for all participants and reviewed in the final session before adjournment. Admittedly, this was extreme; however, it certainly was effective. Generally speaking, however, find a consultant from a reference, meet with the person (or persons) to determine if you have a good personality fit (important), discuss the specific scope of work, ask for references (and check them), and ask to review copies of other strategic plans the consultant has led (these may be proprietary, but a reference can provide you with a copy – or at least let you look at a copy – so you can see the actual work product and evaluate it). Make sure that the consulting fee includes preliminary work and follow-up work. Also, make sure that the consultant’s background is a good fit for the type of organization (some people believe that a good facilitator can facilitate anything, but I disagree; there are always strengths and weaknesses in a person’s knowledge base).
 
The Dynamics of the Planning Session
The biggest challenge for any planning session is to keep the group ‘on point’ (i.e., on the subject) and to involve, ideally, everybody in the group in the dialogue. Speaking of ‘dialogue,’ the word is not interchangeable with ‘discussion’ – you want a dialogue not a discussion – the word discussion is derived from percussion which indicates ‘banging, striking, scraping, etc.’ (precisely the wrong connotation) and is usually an informal debate (also the wrong connotation). Dialogue, on the other hand, is a conversation and an exchange of ideas (not a debate). Managing personality differences, tenure differences (who knows what because of how long they have been associated with the organization), starting on time (even if everybody is not present!), ending on time (i.e., following the agenda), and recording the comments of the participants are rightful expectations for the client to have of the facilitator/consultant. Basic issues of respect (we are all adults) is the responsibility of each participant. I have never attended a strategic planning session where there was not at least one person who did not want to be there – and, unfortunately, it was obvious through words and body language – which projected a certain amount of negativity on the entire group. In cases such as this, it is up to the CEO to determine how the situation should best be handled; I recommend removing the negativity from the session.
 
Next Steps for Successful Implementation
Too often (if not the majority of the time!) “what happens at the strategic planning retreat stays at the strategic planning retreat…” While this may work in Vegas, it is a sorry outcome for serious strategic planning! Information must be shared after the retreat. My experience indicates that success comes from follow-up, follow-up, and more follow-up. I suggest a “champion” – an individual (or very small team) that will manage the implementation of the strategic plan – with unimpeded, direct access to the CEO. (If the CEO is not fully supportive then the strategic plan is doomed to failure.) Most importantly, I suggest that everyone involved understand, accept, and embrace the unequivocal fact that additional changes will be needed during the implementation phase. This is as it should be. Documenting these changes (and why), revising goals and objectives, timelines, assignments and providing printed copies to be inserted into all the individual strategic planning notebooks is the best way I know to keep the entire team involved in the process. (Remember, we are striving for a process, not an event…)
 
Conclusions/Recommendations
The purpose of this article was to share some observations over 30 years of strategic planning experience and to share suggestions for pre-planning that will improve the chances for a successful outcome. I remain concerned that the non-profit sector (more so than the government sector or the private sector) is typically not ready for strategic planning because they don’t have the funds to do an adequate job and the pre-planning is not thorough. A successful outcome from this article would be to get non-profit leaders to think about the subject of strategic planning more seriously – and to halt any existing plans until key elements of this article are at least considered. Entire books are written on the subject of strategic planning, so this article does not portend to be conclusive, only to make clear the importance of strategic planning and doing it right. Feedback and comments are invited.