Balancing the Mission Checkbook

Can I have some more slack, please?

I had a great idea the other day, for a new project that could make a real difference in our work. Actually, I have a lot of ideas, all the time. What’s different this time is that I have some time available to work on this idea. I still have plenty to do - lots of commitments, deadlines, meetings, and projects - but I actually have some slack in my calendar. This is new for me. Like many of you, it’s easy for me to pile on the work and end up feeling like I’m running a step or two behind. About a year ago I recognized that my busyness made me less effective – that we were missing out on some opportunities that mattered. I needed to change my ways if I expected a different result.

The same thing happens at organizations. We try to create open time in bite-sized pieces with retreats and off-site meetings, but the need for slack is ongoing. If everyone is scheduled and committed to outputs every minute of their workday, when will staff be able to research and work through ideas to re-orient programs, to respond to a quickly emerging policy issue, or to build the next group of leaders? 

In the Nonprofit Quarterly article Organizational Slack (or Goldilocks and the Three Budgets), Woods Bowman offers this definition of slack from management literature:

“A cushion of potential resources which allow an organization to adapt to internal pressures for adjustment or to external pressures for change in policy, as well as to initiate changes in strategy with respect to the external environment” (Bourgeois 1981).

The cushion I’m enjoying right now is in time, a precious resource. Another important type of cushion, of course, is financial. Every nonprofit longs to have an ample operating reserve to manage delays, unexpected drops in revenue or emergency expenses. But real financial slack is more than a rainy day fund. Adapting to internal and external pressures for adjustment or change, as Bowman cites, requires financial resources that have been accumulated to prepare for these. Earlier this year I had the pleasure of working with staff and board members at Springboard for the Arts to think through their practices for financial reserves. What started with the simple question of “how much should we have in reserves?” morphed into a discussion about when and why reserves might be needed. The result is a nuanced policy with both a traditional rainy day-type operating reserve fund and an “opportunity reserve fund” that anticipates situations when Springboard might need some slack to quickly make internal adjustments or external, programmatic changes. Their new policy includes definitions, examples, sources, and goals for each type of reserve. It’s a model for building in slack.

Creating slack in my schedule has been a deliberate and incremental process for me and Nonprofits Assistance Fund that included adding a new staff position and letting go of some projects. Some of these were hard choices to make, but they were the right choices. Building organizational cushion – in capacity and finances – requires similar decisions, choices, and tradeoffs. The payoff is in the future, but you know the time will come when you’ll plead, “Can I have some more slack, please?”

Resource note: The reserve policies for Springboard for the Art were developed using NAF’s Reserves Policy and Template.

Kate Barr believes that every nonprofit financial question relates to strategy, structure and mission impact. She enjoys interpreting financial information to find stories numbers can tell. She loves writing, teaching, and talking with interesting people.