Nonprofits rarely decide to operate in deficit. It happens gradually, through reasonable choices made in the absence of systems.
When organizations fall behind financially, attention often turns to a missed grant, an unexpected expense, or leadership decisions. These explanations feel concrete, but they miss the structural pattern underneath.
Most program costs are carried through staff time. Salaries reflect how labor is organized, allocated, and sustained in service of the mission. This is not excess. It is how work happens.
Consider a simple example. An organization offers a course with 70 registered participants. Staff prepare materials, manage registration, coordinate access, assemble packets, print documents, and handle logistics. Each task is small. Each requires time. That time is charged to the organization.
Now repeat that process across 30–40 courses per year. The labor compounds quietly. One dollar here, another thousand there, with the familiar reassurance: we’ll absorb it when the next funded grant comes through.
This is how deficits become normalized. Not through misuse of funds, but through repetition without redesign.
Even in organizations with 5–10 staff, where time is charged to one or multiple grants, those grants are depleted well before deliverables are complete. The issue is not commitment. It is that labor is compensating for missing systems.
When systems function well, staff time aligns with program delivery. Reporting is proportionate. Work supports outcomes rather than filling gaps created by manual processes, fragmented data, or undocumented workflows.
Deficits are rarely about one person or one decision. They are signals of structural strain.
For boards and executive teams, the most important question is not who caused the deficit, but where is staff time going when it cannot be charged to a grant.
That question changes the conversation from blame to design. And design is where sustainable organizations are built.
