Here Comes SoCap

So it’s my favorite time of year again, well at least in the world of social innovation. The Social Capital Markets Conference in San Francisco starts Monday. There are a lot of social innovation conferences, in fact you can read a great rundown on many of this Fall’s best. But SoCap is by far my favorite. It is the one place where the disparate array of people who are interested in how to get more money flowing to social impact come together for 3 days. There are nonprofit, for-profit and hybrid social entrepreneurs; philanthropists; social investors; government bureaucrats and anyone in between. It seems this conference more than any other is a microcosm of the convergence that is happening in the world of social innovation between the public, private and government sectors.

I’ll be honest, the first two years of the conference were a little heavy on the for-profit social entrepreneurship side, leaving somewhat behind government and nonprofit. There were sessions and speakers from those worlds, to be sure, but the emphasis of the conference in the beginning was how to get money flowing more readily to double bottom-line businesses (for-profit businesses that are making money AND creating a social impact).

This year’s conference promises to open wide the doors of the social capital market. For starters, SoCap organizers have developed 6 “tracks” that each focus on a particular area of the social capital market. The track that interests me the most, of course, is the one focusing on nonprofit/philanthropy. Sean Stannard-Stockton of Tactical Philanthropy has put together a nice track with cutting-edge topics in the world of making money work better in the nonprofit sector:

• Decriminalizing Fundraising
• Scaling Social Impact
• Individual Donors Practicing Unconstrained Philanthropy
• The Lessons of Behavioral Finance
• When to Invest and When to Give
• Nonprofit Analysis: Beyond Metrics

In addition there are several other tracks that hold great appeal: Impact Investing, New Money, Metrics and System Thinking and so on. And then there are some fabulous speakers including Jacqueline Novogratz from Acumen Fund, Matt Flannery from Kiva, speakers from the Gates Foundation and Root Capital and many others. Add to that the side sessions, pitch events and more, and my head starts to spin. Three days is just not enough.

I’ll be blogging from the conference as I did last year (you can read my blogs from SoCap09 here, here and here).

What I love so much about SoCap is that it really challenges this burgeoning community/movement/space to do more, to ask harder questions, to push the momentum forward. You come out of a session with many more questions than you had going in. But also, so much more energy to break out of the normal way of thinking and envision a different path forward. Because at its essence, SoCap is about creating something completely new. It’s about creating a space where money and social impact meet and create a synergy that can, we hope, change the world. The old rules and constraints don’t apply. This conference and all the people attending it, in person or via social media networks, are writing the new rule book. And that’s exciting, challenging, exhausting and exhilarating all at the same time.

If you are attending SoCap too, let me know. See you there!

Tags: Acumen Fund, Convergence, Gates Foundation, Jacqueline Novogratz, Kiva, Matt Flannery, philanthropic equity, Root Capital, Sean Stannard-Stockton, SoCap10, Social Capital Markets conference, Social Entrepreneurship, social innovation, social investors, Tactical Philanthropy

The Controversy: Small Nonprofits and Growth Capital

The issue of whether small and medium size nonprofits can or should raise growth capital seems to be a controversial one. Steve Goldberg, author of Billions of Drops in Millions of Buckets: Why Philanthropy Doesn’t Advance Social Progress, speaker, and consultant to Charity Navigator, New Profit and other leading entities in the nonprofit and philanthropic sectors, took issue with my post Can’t Small Nonprofits Raise Capital Too? He believes that capacity capital, not growth capital, is right for smaller nonprofits. I, however, believe that capacity capital isn’t enough.

Steve argued:

Small nonprofits are no less deserving than larger ones, but only the larger ones can undertake the kinds of planning and demonstrate the capacity to make effective use of funding designed to enable organizations to grow by factors of 2, 3 or more over the course of several years.

Steve goes on to argue that capacity capital, not growth capital, is the way to go for smaller nonprofit organizations and that we need to expand the availability of capacity capital in the nonprofit market. While I definitely agree with that last statement, I still believe that small and medium nonprofits that have a great solution and a vision for growth should have access to growth capital to get them there, as I responded:

If there is a small organization that is providing a powerful and unique solution, shouldn’t they be able to expand that solution, not through incremental growth, which is the nonprofit norm, but by factoral growth, which growth capital allows?…Small nonprofits who have a great solution and a vision for growth don’t have the luxury of sitting around waiting for the nonprofit capital market to evolve to a place where the bottom 80% of nonprofits have access to growth capital. Second, creating a growth capital campaign doesn’t have to be prohibitively expensive for smaller nonprofits. Sure they can’t afford the larger fees that Nonprofit Finance Fund might charge, but they also don’t need that kind of money to be able to grow.

You can read the whole debate here, or on Steve’s blog here.

I believe this debate is really important because it is not enough to help the largest, most successful nonprofits to reach scale. There are countless smaller nonprofit organizations whose solutions are just as critical, but lack the expertise and capital to bring them to scale. We can’t just have a top down approach. To truly transform the nonprofit capital market we have to create access to growth and capacity capital throughout the sector, wherever great ideas and strong leaders exist. Because, really, do we have time for the trickle down approach?

Photo Credit: Michael

Tags: Billions of Drops in Millions of Buckets, Charity Navigator, New Profit, nonprofit capacity building, nonprofit capital market, nonprofit growth capital, Philanthropy, Steve Goldberg

The Power of Philanthropic Equity

Philanthropic equity, or “growth capital”, is just a fancy way to say money that nonprofits desperately need. The idea behind philanthropic equity is that nonprofits are only allowed to raise money for programs, when what they really need to make their programs bigger and better is money to build a stronger organization. These dollars that build a stronger organization (technology, systems, non-program staff, etc) are called philanthropic equity. It’s a new concept for the sector and one that the Nonprofit Finance Fund has helped to pioneer. It’s also a concept that we’ve been talking about on this blog recently here, here and here.  Today NFF released a report on how their work to help nonprofits raise philanthropic equity has affected those nonprofits. The results are pretty impressive.

NFF has helped nonprofits like Year Up, Donors Choose and Volunteer Match raise philanthropic equity investments, totaling $312 million since 2006. The report analyzes the role of philanthropic equity in the nonprofit sector based on these engagements – detailing results-to-date, the characteristics that have helped spur success, and challenges that remain in building a nonprofit growth capital marketplace. The initial results are promising: NFF found that  philanthropic equity has, on average, more than tripled program delivery, and doubled revenue for nonprofit organizations that have conducted comprehensive campaigns (and some results were even greater.) Some specific results include:

• Annual program delivery has grown on average by a factor of 3.1x, with a compound annual growth rate of 57%.
• Annual business model revenue for these nine organizations has grown on average by a factor of 2.0x, with a compound annual growth rate of 36%. In aggregate, business model revenues have expanded by $30 million compared to pre-campaign baselines
• Three of the portfolio members – GlobalGiving, Ashoka’s Changemakers, and VisionSpring – accomplished five-fold growth in their program areas.

Why does all of this matter? Because if nonprofits can demonstrate that philanthropic equity can dramatically increase their ability to create social change, then more donors will be willing to make those extremely necessary kinds of investments. And if more philanthropic equity investments are made in the nonprofit sector, the sector will become stronger and better able to create social change. Philanthropic equity is such an important concept because it could dramatically shift the sector from one that lives hand to mouth, to one that grows increasingly sophisticated and capable of solving our greatest social problems.

If you are a nonprofit leader, encourage your board and donors to read the report. The results clearly make the case for philanthropic equity. And once nonprofits and their donors are convinced about the power of philanthropic equity, the sky’s the limit.

Photo Credit: Mr. T in DC

Tags: Ashoka's Changemakers, Donors Choose, GlobalGiving, Nonprofit Finance Fund, nonprofit growth capital, philanthropic equity, VisionSpring, Volunteer Match, Year Up

Can’t Small Nonprofits Raise Capital Too?

In our two part interview with George Overholser of the Nonprofit Finance Fund, George made an argument that gave me and some of my readers pause. He argued that only the largest nonprofits can really benefit from his “radical” idea of using a capital campaign to build their organization (instead of a building). But with Social Velocity I have seen small and medium-sized nonprofits raise capital to grow their impact or  build a stronger, more sustainable organization, albeit on a smaller scale.

George believes that raising capital for building an organization is currently only feasible for the largest nonprofits, as he argued:

Only a small percentage of nonprofit organizations actually aspire to undergo major growth, or any of the other disruptive transformations that are inextricably linked to a capital investment…Still, what about the small organizations that DO aspire to undergo a big transformation?…I believe that it is absolutely vital that we come up with a way to better capitalize these smaller organizations. Sadly, though, at this stage of capital market evolution, it is still quite expensive to prepare for a successful nonprofit equity campaign. Unless several million is being raised [the costs are] prohibitively high. This constrains us to campaigns of $5 million or more, which, in turn, constrains us to organizations that are already pretty large.

This argument got me and some of my readers thinking. As one reader wrote:

As the ED for a very small nonprofit (<300K) I am greatly disheartened to essentially read “yes, we can cure the large guys, but for the rest of you -80% – well good luck! No answers for you yet.” WOW…Really is education and awareness for buyers to support the whole organization vs. its programs enough? (Although I agree wholeheartedly, a needed step) I believe there has to be a way to “create compelling ‘asks’ for equity capital” that is less expensive. There has to be way to finance a small organization’s desire to meet the needs of the community which could mean doubling their impact. We are asked to relearn, redo, change our practices to support (finance) the organization’s mission to change the world, but is no one considering the relearning, redoing or changing the expensive processes/methods so all nonprofits can benefit?

I agree wholeheartedly, and that need–to strengthen and grow smaller nonprofits–is why I launched Social Velocity. There is a category of capital that smaller nonprofits, who aren’t interested in or able to achieve major growth, can access. It can be capital to grow a successful program to other clients, other cities, other regions. Or it can be capital to strengthen and make more sustainable the organization.  For example, as any small nonprofit will tell you, it is nearly impossible to get a funder to pay for a Development Director, a donor database, marketing collateral, a new website and so on. These are the tools that will allow the “sales team” to raise the income necessary to run programs. What if these smaller nonprofits could hold a mini-capital campaign to raise the capital necessary to increase the enterprise’s ability to raise income. Or to purchase technology to increase operational effectiveness?  Or to grow, not to scale, but significantly?

True, a $5 million equity capital campaign is beyond all but the largest, most sophisticated nonprofits. But there is still the vast majority of organizations that are struggling within the vicious starvation cycle of not having the right elements of their built enterprise necessary to effectively deliver or grow programs. Yet money can be raised to build out that enterprise.

Social Velocity has worked with a number of small to medium sized nonprofits to create a pitch for capital to help the organizations strengthen their revenue function, grow programs, and so on (read about this here, here and here). The idea is the same as George’s, but on a smaller scale. With a good plan and the right pitch, any nonprofit can raise the capital required to achieve more social impact through a strong, sustainable, bigger enterprise. A nonprofit equity campaign is not just for the largest and wealthiest nonprofits. The principle can be applied to even the smallest nonprofit, and in that way, George’s radical idea could become revolutionary.

Photo Credit: Stuart Conner

Tags: capacity capital, George Overholser, growth capital, nonprofit capital campaign, Nonprofit Finance Fund, small nonprofits, Social Velocity

My Favorite Blogs

I just updated the blogroll on the Social Velocity website. You can see the brand new list under “My Favorite Blogs” on the right hand side of the Blog page, and I’m also including it below for those of you on the RSS feed.

These blogs are my favorite in the social/entrepreneurship/financing worlds. By my “favorite” I mean that these blogs:

• Consistently create pithy posts that make me think, as opposed to just regurgitate a press release or old argument
• Include new ideas and arguments
• Cover the social entrepreneurship, nonprofit, philanthropy, start up, social finance, and/or social business worlds
• Seed or contribute to larger, interesting discussions in the blogosphere

So here is my list of favorite blogs:

• A Smart Bear: Startups & Marketing for Geeks
• About.com Nonprofit Charitable Orgs
• Beth’s Blog: How Nonprofits are Using Social Media to Power Change
• Change Charity
• Change.org’s Social Entrepreneurship Blog
• Dan Pallotta: Harvard Business Review
• Doing Good Better
• Dowser
• GuideStar: Bob Ottenhoff Blog
• Money and Mission
• New Philanthropy Capital’s Blog
• Philanthropy 2173
• PhilanTopic
• Social Citizens Blog
• SSIR Opinion Blog: Nonprofit Management
• SSIR Opinion Blog: Social Entrepreneurship
• Tactical Philanthropy
• Umair Haque: Harvard Business Review

But I always love to be introduced to new blogs, so please tell me your favorite blogs in the comments. If your favorite blogs become mine, I’ll add them to my list.

Photo Credit: Don Cheps

Tags: blogs, nonprofit, Philanthropy, social business, Social Entrepreneurship, Social Finance, social innovation, Social Investing, Social Velocity

A Radical Spin on Capital Campaigns: An Interview with George Overholser, Part 2

As promised, today we are bringing you Part 2 of our interview with George Overholser from the Nonprofit Finance Fund. You can read Part 1 here.

Nell: You have argued before that to transform the nonprofit capital market we need a few capital deals at the top of nonprofit market. How do you think the bottom 80% of nonprofits (those with budgets under $1M) fit into a transformed nonprofit capital market?

George: I absolutely believe that the nonprofit capital market needs to extend everywhere, not to just the high profile “darlings” that seem to get all of the attention, but also the millions (!) of smaller nonprofits that truly make up the lion’s share of our vital nonprofit sector.

So why focus first on multi-million dollar growth plans? This is an excellent question!

One part of my response comes in the form of a reminder. Remember: MONEY AND CAPITAL ARE NOT THE SAME THING. Every nonprofit needs money to operate. But quite appropriately, only a small percentage of nonprofit organizations actually aspire to undergo major growth, or any of the other disruptive transformations that are inextricably linked to a capital investment. Very few for-profit companies with revenues of $1 million or less are interested in taking on equity. Nor should they! Small is beautiful! They are the bedrock of our economy. The same goes for our smaller nonprofits.

Still, what about the small organizations that DO aspire to undergo a big transformation, perhaps to double their ongoing impact, for example? Why not focus on them?

Well, I believe that it is absolutely vital that we come up with a way to better capitalize these smaller organizations. Sadly, though, at this stage of capital market evolution, it is still quite expensive to prepare for a successful nonprofit equity campaign. Unless several million is being raised, the hundred thousand or more dollars of required planning, documentation, due diligence, marketing, reporting and campaign management expense is prohibitively high. This constrains us to campaigns of $5 million or more, which, in turn, constrains us to organizations that are already pretty large.

In some ways, we shouldn’t be surprised. There are hundreds of professional fundraising consulting firms that assist with traditional capital campaigns, involving billions of dollars each year. But they, too, are unable to justify their fees unless the campaigns involve a lot more money than most “small” nonprofits are prepared to take on.

I hope that some day there will be a less expensive way to create compelling “asks” for equity capital, but that day has not yet arrived.

As a field, we are still in the very early days of showing how (learning how!) philanthropic equity can help organizations thrive. As such, it seems prudent to focus initially on the limited number of comparatively high-profile organizations that seem best prepared to implement their social impact growth plans. This has led equity funders to partner, at least initially, mostly with organizations that have already shown they can scale. To date, NFF has worked on 16 transactions, involving $310 million of new philanthropic equity raised. Every one of those 16 organizations went into their campaigns armed with track records that showed, compellingly, that they already know how to grow, and are now prepared to accelerate. So far, in just two or three years, the group that we track closely has more than tripled its level of program execution, while also more than doubling the long-term business models that will sustain the execution once the equity runs out. If results like these can be kept up, I expect it will help to attract more and more equity-like funders that serve an ever-broadening range of high-performing nonprofit organizations.

Nell: You have argued in the past that the reason a nonprofit market for growth capital has not materialized is because nonprofit accounting does not allow for a distinction between money to build the organization (investments) and money to maintain services (revenue). But beyond the accounting issues there is also a fundamental lack of understanding about finance in the sector. What do you think will change that?

George: I envision an evolution where funders become more and more specialized. Most funders, I envision, will migrate towards playing the role of BUYER. They will be the real connoisseurs that search among providers to learn what works best. Then, without seeking to change those providers, they will fund the providers to do what they do so well. Collectively, the buyers will be an important part of the field’s overall portrait of sustainability. I would include government as being among the most important buyer-type funders, but so, too, would be the many philanthropic funders who seek the most effective existing ways to achieve social impact with their money.

I would expect a smaller number of funders to focus on playing the role of BUILDER — they are financiers, really, or banks. These financial specialists will play a niche role. Because nonprofits can only take on a limited amount of equity, the BUILDER funders will actually have to compete against each other to “win” the right to invest in the most promising nonprofit firms. And the way they will win in this competition is by offering not just money, but also very sound financial know-how, to the organizations they partner with.

Lots of accomplished BUYERS, a smaller number of accomplished BUILDERS. I sometimes explain this line of thinking by describing what happens when you go into a flower shop – suppose you want them to send flowers to your mom in Florida. Clearly, the vast majority of money that flows into this flower shop is money in exchange for flowers (BUYER-type money). Only a very small percentage of the money that flows into the flower shop comes in the form of capital – a bank loan, perhaps, or, in the early days, an initial equity stake. Thus, the vast majority of check-writers are interested in FLOWERS and the benefits that flowers bring. Only a very small minority of check-writers are interested in BALANCE SHEETS and the other technical details of finance.

I am hopeful that nonprofit equity accounting will allow funders to be better at self-selecting into their chosen areas of expertise. Most will need to be BUYERS of program execution. A smaller number of funders will emerge as the financially-oriented BUILDERS that are needed to provide philanthropic equity and growth stewardship.

Nell: Do you think there is something to be gained by having the bottom 80% of nonprofit organizations better financed, more knowledgeable about finance and with more access to patient capital? What needs to happen to get there?

George: This may sound strange, but I believe that the key to helping most nonprofits to thrive has more to do with improving our BUYING behaviors than to do with finding more capital. To me, the problem is not so much that the bottom 80% lacks access to the capital they would need to maintain healthy balance sheets. Rather, they find themselves chronically saying “yes” to funding arrangements that cause them to deplete these capital reserves. The capital can be raised — but the unhealthy buyer relationships cause the capital to evaporate.

It’s hard to place blame for this phenomenon. Taken one at a time, most of the grants that an organization relies upon make a lot of sense. But, collectively, when multiple funders converge upon an organization with differing theories of change, or expectations that someone else will pay for overhead, or a hunger for customized reporting, special tweaks to the program, and long conversations about small checks, organizations can’t help but burn through whatever small cushions of capital they may have squirreled away.

We need to raise consciousness among BUYERS that whole enterprises — not just programs — should be kept in mind when they make their grants.

Tags: George Overholser, nonprofit builder vs buyer, nonprofit capital campaign, nonprofit capital market, nonprofit finance, Nonprofit Finance Fund, philanthropic equity

A Radical Spin on Capital Campaigns: An Interview with George Overholser, Part 1

In this month’s Social Velocity blog interview, we are talking with George Overholser, Founder and Managing Director of NFF Capital Partners, a division of the Nonprofit Finance Fund. George is a recognized leader in the field of capitalizing high-performing nonprofit organizations. Since its launch in 2006, NFF Capital Partners has served as advisor on transactions involving over $250 million of charitable investment.

We had such a great conversation with George that we have broken it into two parts. Part 1 is below and Part 2 will be posted next week.

You can also read our past interviews with Clara Miller, Kevin Jones, Lucy Bernholz and Paul Tarini.

Nell: George, you have a pretty radical idea for getting nonprofits out of the hand-to-mouth starvation fundraising cycle, which you describe as expanding a traditional capital campaign so that the entire balance sheet of a healthy organization gets funded, not just buildings and endowments. How does a nonprofit break out of the mindset that they can only raise large amounts of money for a tangible building or endowment?

George: Ha! Please don’t tell my mom that I’m a radical! In truth, the concept of “Philanthropic Equity” may feel a bit radical, but really it is just an extension of tried and true nonprofit capital campaign techniques that have been with us for generations. Every year, billions of dollars are raised (often tens of millions at a time) to support capital campaigns for permanent, tangible things like buildings and endowments. Philanthropic equity suggests there is a third permanent, tangible thing that lends itself well to a capital campaign: not a building, not an endowment, but a business plan and management team that, if well-capitalized, will build an enduring and effective nonprofit organization.

This isn’t about just money. It’s about capital. And what makes capital different from all of the other money that flows into an organization? Precisely put, capital is all about turning a one-time infusion of money into benefits that recur over and over again. An endowment gets raised once and then provides subsidy every year, forever! Constructing a new building costs $5 million, once. But it wouldn’t be a good capital investment unless the building went on to house effective programs for years and years to come.

And so, the key shift in mindset is for an organization to envision very crisply how it intends to sustain ongoing program execution, once the equity has run out. It needs to paint a “portrait of sustainability” around which the philanthropic equity is raised.

But there’s a catch! The portrait cannot simply involve repeating equity capital campaigns over and over again. That would be cheating! Equity funders, who seek “perpetuities of impact”, would catch on pretty quick.

For example, imagine an internet-based nonprofit that plans to be sustained entirely by its online fundraising pitches. When originally launched, the organization has not yet built its web site, and so the online sustainability model is not ready to work. This is where philanthropic equity comes in. Philanthropic equity (from OFF-line funders) pays the bills while the site is first being built. It also subsidizes the organization in the early years of operation, before a critical mass of online donors has been established.

Once these changes (a new site, a critical mass) have been accomplished, the organization becomes self-sustaining, and — this is key — the site doesn’t need to raise any more philanthropic equity. In this way, a one-time infusion of $5 million in OFF-line philanthropic equity can give rise to $10 million per year of recurring ONLINE revenues that keep the program thriving year after year.

Nell: Why has this idea not caught on throughout the nonprofit sector? And how do we reach that tipping point?

George: Clara Miller is right: “Accounting is destiny!” And I believe that a change in nonprofit accounting practices would be our most effective way to move towards the next nonprofit capital market tipping point. These need not be official changes to GAAP (the federal standards), although that would be GREAT! As we’ve seen with our 16 philanthropic equity clients, an awful lot can be accomplished simply by adjusting the way today’s standard accounting rules are used to track equity.

Until recently, there was simply no way to distinguish nonprofit “equity” as being different from all the other types of money that flow into a nonprofit organization. There was no way to keep tabs on (a) who is and is not an equity investor, (b) how much equity has been consumed by the organization so far, or (c) whether or not the organization continues to take on more equity, in which case it has not yet achieved its chosen “portrait of sustainability”.

In recent years, we and others have begun to learn that equity accounting actually CAN be applied to nonprofits. Unlike for-profit accounting, it doesn’t track who has first dibs on the distribution of profits — after all, this is philanthropy, and there is no financial return to be had. But it DOES track whether or not the organization has achieved its chosen portrait of sustainability. It DOES answer the question of how much equity has been consumed so far. And, like any good naming opportunity, it DOES document who deserves the financial credit for having built an enduring institution.

Why does this matter?

This isn’t just window dressing, or simply a gimmick for creating more pseudo naming opportunities. Most of all, it is about changing incentives, and, therefore, it is about changing behaviors among key funders. That’s because clear accounting allows equity stakeholders to stay keenly focused, in a measurable way, on protecting the nonprofit’s FUTURE ability to have ongoing impact. (Just as someone who paid for a building is keenly focused on knowing it won’t be crumbling to pieces any time soon!)

Equity accounting also places the equity stakeholders into a single pool. It helps to point out that equity investors act in concert with one another, at the enterprise level, to comprise the nonprofit’s capital structure.

Thus, equity stakeholders (if you are lucky enough to have them!) provide a vital counterbalance to all of the other stakeholders, most of whom act alone (not in concert with others), most of whom seek nearer term results than the equity stakeholders, and most of whom need not contemplate the long-term consequences that their near-term desires may imply.

Please don’t get me wrong! These non-equity stakeholders (I often call them BUYERS) are the lifeblood of any sustainability plan. As BUYERS, who seek to exchange their hard-earned dollars for effective program execution, it is right and good that they demand certain accountabilities. Otherwise, our sector would not be performance-driven:

• I am asking you to turn my money into effective program execution, and I would prefer you to have low overhead.
• Please tell me how many tutoring sessions will happen as a result of my grant — the more the better!
• Please customize your program to address the particular needs and communities that my foundation has charged me to serve.
• I don’t need you to tell me about your other funders. Just write a report about my grant and what it accomplished. Again, the more you can accomplish during the grant period, the better!

But for an organization to thrive, it needs a counterbalance to the BUYERS. Equity stakeholders, (when they exist!), provide this counterbalance because they measure success in terms of how much impact the organization makes over the long run. Their presence—and their money—make it POSSIBLE for the organization to push back against unhealthy funding relationships… until healthy and enduring ones can be found. They ask questions like:

• How do we avoid accepting underfunded program grants?
• How do we resist the temptation to add too many new program features?
• What can we invest in today that will make us more compelling in the future, even if it bloats our overhead for a while?
• Can we really afford to keep a sub-par person in this key management role?
• How can we grow more quickly (without imperiling the long-term health of the organization)?
• When we look at the organization holistically, taking all of the funder relationships, program designs, infrastructure, balance sheet — you name it! — into account, does it feel like it will thrive and endure?
• If we write a bigger equity check, will that make it easier for the management team to resist distractions in the critical early days? Will they be more likely to build an enduring institution?

Stay tuned for Part 2 of our interview with George next week.

Tags: George Overholser, NFF Capital Partners, nonprofit accounting, nonprofit capital campaign, nonprofit equity, Nonprofit Finance Fund, philanthropic equity