Leverage & Charities.
Jeffrey Golby
Intuitive entrepreneurial leader. Building Matchmaking for Major Giving. Relentless promoter of purpose.
For businesses, the pressure to leverage, to bet on tomorrow returning something greater than today, in order to grow must be incredible. This pandemic certainly seems to be highlighting just how many have been over extended, and now that tomorrow is no longer returning something greater than today, the un virtuous cycle is falling apart quickly.
But what about for charities? It seems that the pressure to leverage is even greater, and even more are extended beyond their means. It’s perhaps more subtle, we’re not taking loans out (generally). We’re betting on the next fundraiser, the next program or the next program innovation. The price we’re paying is often in human capital, but the upshot is also often measured in lives impacted, which is part of how it’s justified (if it’s noticed at all).
The morality attached to growth: in budget, in programming, in audience, is increased because the stakes feel higher than that of the local booming business. We are tackling some big problems. So we stretch. We we make bets that eventually things will level out. Eventually supply and demand will meet up. Just like in business, market forces push for more, but when you add to this a “moral market” and poor overall organizational health indicators, you get a potentially disastrous situation. All of a sudden the fundraiser that one time pulled in $50 000 now MUST pull in $50 000 or else the whole house of cards comes crashing down - and so on and so forth.
Leverage is inherently neither bad nor good. But when we do it, we are making bets on the type of world we believe will exist tomorrow, and our ability to respond to that world.
The challenge in charity is that the world that exists tomorrow, as we are finding out today, in our pandemic time is one where supply (money) and demand (need for our services) are vastly out of sync. In our current model at least. Until we change the model, demand will always be greater than the supply. So we are forced to make the hard call. Or we have to continue to leverage. To make bets, and to pray no one calls in the debt.
These times have forced us all, profit or not for profit to take stock of the bets we’ve made, the leverage we’ve extended. And now that we know, maybe we get the chance to ask, “could we do it differently next time?”