Certified Nonprofit Professional Practice Exam

When conducting an environmental scan, what should organizations primarily focus on?

1. Internal staff performance

2. External factors affecting the organization

3. Increased fundraising strategies

4. Legal compliance

The correct answer is: External factors affecting the organization

Organizations conducting an environmental scan should primarily focus on external factors affecting the organization because these factors provide critical insight into the context in which they operate. An environmental scan involves analyzing trends, challenges, opportunities, and threats that exist outside the organization. This may include political, economic, social, technological, environmental, and legal influences, often referred to as the PESTEL framework. Understanding external factors helps nonprofits to identify potential risks and opportunities that could impact their mission and effectiveness. By being aware of changes and trends in the external environment, such as shifts in donor behavior, regulatory changes, or emerging community needs, organizations can position themselves strategically and adapt their strategies accordingly. While internal staff performance, fundraising strategies, and legal compliance are important aspects of an organization's operations, they are not the primary focus of an environmental scan. These elements are often assessed through different evaluation processes that focus on internal capabilities and operational effectiveness rather than the broader external landscape that influences the organization as a whole.