My previous post dealt with the fact that non-profits had to bring the topic of money front and center within their organizations. This topic is so important that I wanted to continue my thought process in a second article around the issue. Again, non-profit leaders need to have serious and on-going discussions about money.
I don’t believe nor am I saying that money is the end goal. Of course it isn’t, but it is a means to an end. It is a necessary resource that is absolutely essential to successfully execute an organization’s strategy and mission. Why?
Cash Creates Margin
The more cash margin that a non-profit has, the better and greater it can fulfill its mission. Organizations and leaders within these non-profits do not need to make excuses for wanting to increase their financial bottom-line. No one is saying to not be fiscally responsible, transparent and adhere to best practice. But, what I am saying is that there need not be shame in growth, an expanding bank account, and more importantly, the ability to do more with increased financial resources.
Cash Comes with Accountability
The general public, and donors in particular, have a rightful expectation that non-profits and social enterprises are going to do what they say they are going to do with their donations or the money invested. They expect results and want to hear about successes because it tells them they made a good investment, which usually means they want to continue to support the organization. These expectations are important and they help good leaders become excellent leaders because everyone needs to be accountable for their actions.
Cash Forces Tough Decisions
No one wants to spend money foolishly. It is too important and typically too hard to come by. Money forces individuals and organizations to prioritize and make decisions, sometimes, tough decisions that involve staff and programs. Even when there is an excess of money, people who are making decisions about how to spend money are looking to make the right decision. Most non-profits do not have the luxury of spending money on losing propositions and mistakes can be very costly in terms of money, time and other resources.
Cash Forces You to Pay the Piper
Along these same lines, cash sometimes makes people and organizations end a project or program that no longer makes any financial sense. This is probably one of the hardest things individuals and organizations need to face around the subject of money. Sometimes business teams have thought through, completed due diligence and started implementation on a new project that, on paper, is expected to be successful by whatever criteria is being used to measure success. But, as we all know, failure is sometimes easier to achieve than success. Sometimes, we are called upon to pay the piper – no matter how much we want to succeed – and we have to make the painful decision to terminate a particular venture.
I have said it in the past and I have said it often, how we spend money is the best indicator of the work and legacy we are leaving for the future.