July 10, 2013

We Just Don’t Have the Money and Other Fibs We Tell Ourselves

Whenever I hear nonprofit executives say they cannot build capacity or make investments necessary for long-term sustainability because they “just don’t have the money,” I know they are not really telling the truth, even though they think they are.

What they are really saying is, “We don’t want to use the money that we do have” to make that investment because it is already allocated for important program costs.”

That’s very different from not having the money, and it gets to the heart of why nonprofits struggle to solve problems at the scale that they exist: They suffer a failure of imagination and a crisis of confidence when it comes to investments that won’t pay off until the long term.

But with the prospect of long-term federal and state budget austerity looming amidst growing social need, nonprofits are expected somehow to make up for gaps in social services. And that presents them with the challenge of doing what they do worst: making investments that won’t pay off for months or years. Whether it is a matter of investing in capacity, new talent, technology, or strategic planning, too many nonprofits are unwilling to accept the unpopular trade-offs

The hardest decision any nonprofit can make is to serve fewer people. The nature of human suffering and urgent need makes that a daunting challenge. Imagine turning away half of the mothers and infants lined up outside a maternal and child health clinic so you can instead invest in development, marketing, and information technology.  In the short-term, it might seem morally unacceptable. But what if it meant being able to reach, serve, and help 50 times as many families in the long-term? Then which decision is more morally fraught?

We’ve navigated just such a turning point at Share Our Strength over the past five years. We endured the pain of reducing our grant making in the short-term so we could make the investments necessary to triple it a few years later and align it more closely to our goal of ending childhood hunger. Those investments included significantly more experienced financial management, outside expertise on brand development and communication, and acquiring political and policy skills that were not previously part of the organization.  Our revenues grew from $26-million in 2010 to $49-million this year.  This enabled us to support additional grant partners, particularly local advocacy and policy organizations that were effective in getting state legislatures and school districts to adopt elements of our No Kid Hungry campaign.

In retrospect, it was something we should have done much earlier, but for too long it didn’t even occur to us that we could invest funds that were deployed elsewhere.

Few organizations in our sector have cash reserves sufficient to invest in capacity building or the ability to capitalize growth. But we all have the choice to make investments that may not pay off until the long-term.

Nothing truly great–whether a home, business, or a cathedral–is ever built any other way. John F. Kennedy said, “To govern is to choose.”  Nonprofits need to heed the spirit of that advice and make hard choices that serve long-term interests.