Financial instability and/or peril is distracting, demoralizing and debilitating. If all of your energy is absorbed on the issue of how to make your payroll and your budget, you will not have enough left over to devote to strategy, growth, and mission. Every unanticipated expenditure will become a crisis.
There were periods at Share Our Strength where we had so little margin for error that we spent countless hours debating $3000 decisions that felt like they were make-or-break, and that may well have been. But the opportunity costs of spending our time that way were both high and corrosive. For many organizations this is so ingrained as the norm that it is almost accepted without question.
But there is another way. I think of it as the difference between playing offense and defense in football.
Think of the football as financial stability. When you have possession you define the game, set the terms, and call your own shots. When you lose possession you find yourself in a defensive crouch, not playing to win, not playing to move things forward, simply playing not to lose, and to continue to survive. A good defense can keep you in the game for a long, long time. But it cannot win it for you. If you want to score big points against your mission, if there is a goal line you want to cross, you must put financial crisis and financial instability behind you and play an offensive game.
Obviously this is easier said than done. There are never sufficient revenues for doing all you want and need to do. And you can’t print money. We’ve found two “offensive tactics” particularly valuable:
1. Diversify your revenue stream. There is simply no way Share Our Strength would have grown without the diversified revenue stream represented by corporate contracts, cause-related marketing, and corporate partnerships that enabled us to get beyond the limitations of traditional philanthropy. We continue to believe that most nonprofits are worth more than they think they are, and that in the course of pursuing their mission create assets with a real marketplace value that can be leveraged into revenue generation.
2. Be mindful & strategic with expenditures. You can slow expenditures. It is fine to take risks and even to spend money you don’t have if done as a temporary measure that is part of a long term plan to financial security. Otherwise such spending is ultimately unsustainable. Defer and cut expenses, stretch plans and corresponding spending out over a longer time frame. But whatever tough decisions have to be made, make ‘em now. The odds are that they are inevitable anyway, so get on with it and to the other side.
Ultimately, the challenge for an organization’s leadership is to keep everyone’s eyes on the prize and ensure that they see financial discipline not as a frustrating or bureaucratic hindrance to achieving mission, but as a tool for pursuing that achievement more effectively.