The latest message from Owen Charters, President & CEO, BGC Canada (June 26). Full transcript below.
This may not be as exciting a topic as some of the other weeks, but I think it’s an important one. I want to talk balance sheets and business.
Carolyn Tuckwell, CEO of Boys & Girls Clubs of South Coast BC, noted this week that charities and nonprofits are being treated the same as for profits in many of the government conversations and support programs that have been central in the last few months, and this is a refreshing change. I’ve joked that charities often feel like they are at the ‘kids table’ at the dinner party, so it’s nice to be at the adult table. Usually, we may be in the room, but we don’t always get to play with the adults—that’s reserved for the big corporations.
Well, if we are to be treated the same as business, then we need to act like it. That means we need to pay attention to one vital tool of organizational health—the balance sheet. The balance sheet is your bank account. What cash do you have available? What do you owe? What do you own? And most importantly—in a crisis, how much do you have available quickly to pay bills and keep you afloat? It’s where the emergency savings are stashed. A good balance sheet is a sign of fiscal health. We need to pay attention to the fiscal health of all charities—we will be tested again beyond this initial pandemic lockdown. And we need to be prepared.
Unfortunately, too many donors frown on a strong balance sheet. Why isn’t that cash being put to immediate use? Why not spend every last dollar on the immediate needs of today? Unrestricted giving is low on the priority list, if even a consideration. Yet unrestricted dollars support the most essential work—making sure the organization is strong enough to do the work that’s demanded of it. And part of that is a healthy balance sheet to ensure that the organization can survive fiscal downturns like the recession we’re in today—our Clubs need to be able to survive to provide services.
Yet there is one way we are not like businesses—supply and demand come from different places. Supply of cash and resources, and demand for our services, that is. More people, more families will be demanding our services—and already are. Clubs have already said there are waiting lists that they can’t fulfil. But unlike in a business, the supply—the cash to do the work—comes from other sources: donors, funders, governments. This can lead to a fundamental mis-match—high demand, but weakening supply.
We need funders to step up, to see the demand, and to understand that charities—like our Clubs—are part of the vital social safety net that is needed to catch those who are struggling, and prop up those who need a push. Otherwise, they will not benefit from an economic recovery.