Balancing the Mission Checkbook

Can operating reserves be fun and games?

Anyone with a smart phone has likely struggled with the constant pleas from social media sites to turn your everyday life into a game. Check in here and earn a badge! Help us get to 1,000 Likes! Retweet this for a chance to win!

The notifications can be overwhelming, but the message behind the madness is the emerging practice of gamification, or applying game principles to non-game activities in order to increase engagement. Applying game mechanics to non-game problems can stimulate reward centers in the brain, and help prioritize the new element for participants. This has been going on in personal fitness, for example, with tools like FitBit allowing people to not only share their personal “wins” with others via social media, but also to engage in competition with friends even if they aren’t in the same country.

The quest to engage boards of directors and other key organizational stakeholders in building operating reserves seems like a natural target to make more… well… fun. Determining the right operating reserve for your organization and how to achieve it is really anything but a game in terms of the importance to the nonprofit in the long run (Pro tip: No, a 3 or 6 months operating reserve is not automatically the right answer). Getting all the players to actually stick to a slow and steady plan to build the right level of cash can be even more difficult than agreeing on the reserve level in the first place. It takes patience and discipline. After all, those reward centers are more easily triggered by adding a new staff person or program hours than by just saving cash in a reserve for the inevitable rainy day.

Perhaps everyone needs short-term rewards on the way to the long-term win. Maybe game mechanics can teach nonprofits something about incremental steps, and then help us communicate the importance of those interim steps to outside stakeholders.

Imagine a nonprofit has determined it needs 120 days cash on hand for an operating reserve. This year, they have 20. It’s not reasonable to assume they are going to earn an extra fiscal quarter of revenue in one year to fund a reserve. It’s possible, but it is like getting three-stars on every level of Angry Birds on your first try. Instead, let’s have our fictional example look at building 15 days of cash each year. At this rate, it’s going to take over six years to get to the right balance. Most of the original board members who set that goal will be gone by then. How do they keep focus?

Gamification would tell us we need to celebrate the “levels” on the way to the win. Each year the board adds another 15 days of cash, they get a reward. The reward can be determined when setting the goal – special mention in the annual report about the long-term stewardship project, a pizza party paid for by the board chair, or a staff dunk tank at the annual picnic. The prize element isn’t as important as the anticipation, the success, and the known goal at an achievable, not-too-distant next “level.” Any new incentive to help us on a long road to financial health is just one more feather in our cap.

Feathers in caps, after all, are just visible rewards.