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From Excel to AI: Futureproof your Nonprofit with AI-Powered Scenario Planning.

PUBLISHED ON - 26.07.2023.

From Excel to AI: Futureproof your Nonprofit with AI-Powered Scenario Planning

Scenario planning is the art of turning “what ifs” into “even ifs.” What if the next grant doesn’t come through? What if the market crashes (again)? What if our donor pulls out last minute? What if a natural disaster strikes—or strikes earlier than predicted?

Often referred to as “what-if analysis,” scenario planning is a strategic planning methodology used to anticipate future situations and rehearse plausible responses to them. When done right, scenario planning helps organizations navigate uncertainty, allocate resources effectively, mitigate risk, engage stakeholders in forward-thinking ways, and guide decision-making in a complex, dynamic environment.

In this post, we’ll compare the pros and cons of manual and AI-assisted scenario planning, and help you determine which one is right for your organization.

Scenario planning vs forecasting analysis

Oftentimes people get the concepts of scenario planning and what-if analysis mixed up with forecasting. They’re certainly related, but are two distinct processes. Forecasting is the process of making predictions about future events and how likely they are to occur based on historical data, trends, and other patterns, while scenario planning (what-if analysis) is the act of actually charting possible courses of action in response.

Forecasting is something your organization should do regularly, as your efforts will inform your what-if analysis down the line, and ensure your scenario plans are data-driven instead of just a guessing game.

Scenario planning as a 4-step process

Before we get into the pros and cons, let’s take a look at what scenario planning involves. No matter what tool you use for scenario planning and what-if analysis, the process remains the same:

1. Identify your organization’s key drivers and risks associated with each

Your key drivers are the things that impact your nonprofit’s economic and operational standing. Think funding sources, active programs, potential programs and client demand, and the like.

2. For each, identify a best, moderate, and worst-case scenario

For each key driver, there are associated risks. For each risk, a company identifies three plausible scenarios where the risk plays out in different ways: best case, moderate case, and worst case. (This is where your forecasting data will come in handy.)

3. Identify actions you would undertake for each scenario

For each of the three scenarios, you’ll identify an appropriate course of action. These might look like increasing or reducing salaries, reallocating funds from one program or project to another, layoffs or hiring, expanding or shrinking project scopes, et cetera.

4. Monitor, adapt, and implement as the future unfolds

Scenario planning isn’t a one-and-done task. It’s an interactive process that requires adjustment and tailoring as new information becomes available or as circumstances change.

An employee planning out scenarios on a whiteboard.
Whiteboards are great place to start – but not much more than that.

Manual scenario planning – where spreadsheets and whiteboards fall short

Traditionally, what-if analysis has been done by hand, usually starting on a whiteboard before making its way into a spreadsheet. This method is a great place to start if you haven’t done much scenario planning before, if you’re a small organization with a straightforward set of drivers and risk factors, or if you have limited data sets to work with.

As helpful as it is, doing what-if analysis by hand has its limitations. Let’s take a look at each one in turn.

Prone to manual errors

When doing manual scenario planning in Excel, you have to modify your data set itself in order to view scenarios. This puts you at risk of errors like forgetting to return to the current scenario, giving you a distorted view of your current finances. This is a common mistake that can easily happen if you're juggling multiple scenarios and have limited time or resources to devote to analysis.

Time-consuming learning curve

The learning curve for manual scenario planning can be steep, especially if you're new to the process or working with a large set of data. This can lead to frustration and errors that can affect the accuracy of your analysis.

Limited to financial data

Manual scenario planning is often limited to financial data, which can be a problem if you need to factor in operational, logistical, or other domains. This can make it difficult to get a holistic view of your organization's risks and opportunities.

Not powerful enough to scale

Manual scenario planning can be effective for small organizations or simple scenarios, but it can quickly become unwieldy and impractical for larger organizations or more complex scenarios.

Regardless of its limitations, manual scenario planning for nonprofits is still better than no scenario planning—but AI is better than both. Especially when it comes to large organizations with complex data sets.

An employee planning out scenarios on a computer with custom software.
AI-based planning software is much more user friendly – and much more accurate– than manual planning.

Breaking Down the Benefits of AI-Powered Scenario Planning for Nonprofits

Recent advancements in AI and automation technology have completely changed what’s possible with scenario planning.

Gone are the days of endless YouTube tutorials, error messages, and guessing games. With AI-powered software, large nonprofit organizations can apply the immense capabilities of machines to human perceptions and experience, granting more long-term clarity, accuracy, and confidence in their decision-making. Let’s take a look at the key benefits in more detail.

Accurate predictions

AI-driven scenario planning software can provide more accurate predictions by analyzing large sets of data and accounting for multiple contingencies. This can help you make more informed decisions and avoid costly mistakes.

Faster simulations

AI-driven scenario planning software can generate predictions and simulations much faster than manual methods, allowing you to respond more quickly to changing circumstances.

User-friendliness

AI-driven scenario planning software is designed to be more user-friendly than manual methods, complete with intuitive interfaces, easy input methods, and data visualizations. This can make it easier for non-technical staff to participate in the process, and better understand the impact of different decisions.

Powerful enough to scale

AI-driven software can handle enormous amounts of data and complex scenarios with multiple contingencies, making it ideal for large nonprofit organizations with scenarios that require a more holistic view of risks and opportunities.

Comprehensive scenarios

With the help of custom development, automated software can go beyond financial predictions to include operational, logistical, and other domains of possible future scenarios, providing a more comprehensive view of your organization's risks and opportunities.

AI can uncover insights humans might miss

AI algorithms can uncover insights that humans using spreadsheets may easily miss, providing new opportunities for innovation and growth.

Recap: spreadsheets vs. AI-powered planning software

The key takeaway? If you’re a large nonprofit with multiple drivers and risk factors to account for, you should seriously consider investing in automated planning software with AI-powered scenario planning capabilities. That said, if you’re a small nonprofit with simple data sets and a straightforward set of drivers and risks, you might not need all the bells and whistles automation can provide.

Feature Spreadsheets AI-powered
Learning curve
Accuracy
Speed
Scalability
Visualizations
User-friendliness
Flexibility
Complex data sets
Beyond just finance

Scale up your nonprofit’s scenario planning with Poslovna Inteligencija

When it comes to NGO’s of considerable size, not only does scenario planning become more important—it becomes immensely more difficult to do by hand. The data experts at Poslovna Inteligencija have developed automated planning software tailored specifically to the needs of large nonprofits, including key features like AI-powered scenario planning and a suite of other capabilities to help boost every aspect of your organization:

  • Scenario planning and what-if analysis
  • Resource allocations
  • Forecasting analysis
  • Financial data consolidation and organization
  • Organizing grant terms and conditions

The best part? It’s fully customizable to your organization’s needs, regardless of size, industry, or location. So don’t leave your future up to chance—plan for it.

Curious about how to implement AI-assisted scenario planning in your NGO? Contact an expert at Poslovna Inteligencija.

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