As such, in general I do not give full credence to charities saying they need more funding because they want more than a year of runway in the bank. A year’s worth of reserves should provide plenty of time to raise more funding.
12 months of runway means that an organization with an annual fundraising drive will be near bankruptcy once per year, every year. That seems bad.
I agree that most organizations should be able to raise money in less than 12 months if they are 100% focused on raising money, but not having to worry about fundraising seems pretty valuable to me. An 18 month runway means, for example, that if your annual fundraising drive goes poorly you still have 6+ months to find some solution.
My general model is that charities get funding in two waves:
1) December
2) The rest of the year
As such, if I ask groups for their runway at the beginning of 1), and they say they have 12 months, that basically means that even if they failed to raise any money at all in the following 1) and 2) they would still survive until next December, at which point they could be bailed out.
However, I now think this is rather unfair, as in some sense I’m playing donor-of-last-resort with other December donors. So yes, I think 18 months may be a more reasonable threshold.
Thanks Ben! Great as always. One quibble:
12 months of runway means that an organization with an annual fundraising drive will be near bankruptcy once per year, every year. That seems bad.
I agree that most organizations should be able to raise money in less than 12 months if they are 100% focused on raising money, but not having to worry about fundraising seems pretty valuable to me. An 18 month runway means, for example, that if your annual fundraising drive goes poorly you still have 6+ months to find some solution.
My general model is that charities get funding in two waves:
1) December
2) The rest of the year
As such, if I ask groups for their runway at the beginning of 1), and they say they have 12 months, that basically means that even if they failed to raise any money at all in the following 1) and 2) they would still survive until next December, at which point they could be bailed out.
However, I now think this is rather unfair, as in some sense I’m playing donor-of-last-resort with other December donors. So yes, I think 18 months may be a more reasonable threshold.