While some nonprofits have been dealing with cash deficits over the last few years, others have experienced the opposite – too much cash! Granted, this “problem” is a much better one to have! However, it still poses a question that needs to be answered strategically to ensure a healthy future for the organization: “What do we do with the cash we’re sitting on?”
Of course, nonprofit leaders can choose to do nothing and just hold onto that cash until their hand is forced and they need to use it. Unfortunately, this approach poses two threats:
- Not utilizing available cash to make strategic moves can cause an organization to miss out on key opportunities for growth, reducing its long-term effectiveness.
- Sitting on cash gives the impression that the organization does not really need the money, which can diminish future giving from donors. Afterall, if an organization already has more than they need, why would donors keep writing the big checks?