There is so much to read and so little time. While social media tools have allowed for an explosion of niche focused media (like this blog), tracking all of the information — absorbing the best and ignoring the rest — gets more and more difficult. But when you’re alerted to the fact that your own sibling wrote about a topic over a year ago that you’re just now getting around to, you’ve got to be a little embarrassed.
Growth capital, as Overholser framed it both in his speech and in his working paper “Nonprofit Growth Capital: Defining, Measuring and Managing Growth Capital in Nonprofit Enterprises, Part One: Building is not Buying,” is an investment in the firm, whether it be nonprofit or for-profit. As defined in this article, “Growth Capital is used to build the means of production,” while “Revenue is the money a firm receives from its customers in return for products or services rendered.” In other words, growth capital is intended to grow the capacity of a nonprofit, while revenue pays for its operations.
Overholser also argues that, in addition to covering the costs of “bricks and mortar” and similar needs, growth capital plays the important role of paying for mistakes, for the learning process that an organization goes through in its quest to become “compelling” to other funders, those who will provide the revenue it needs on an ongoing basis in order to deliver services. Says Overholser, the “enterprise that surrounds the program” needs support growth capital and often doesn’t get enough.
You can read the whole thing here.