Nonprofit leaders often say the same thing: more money, more grants, more funding. The reasoning follows quickly. Revenue is needed to serve. The economy is uncertain. Costs are rising. COVID left its mark.
Those pressures are real. But external pressures expose systems. They do not create them.
Have you ever cooked dinner for six in a kitchen with almost no counter space? Every plate touches another. Every spill spreads. One small misstep creates chaos. The recipe is sound. The ingredients are fresh. But there is no room to move.
Margin in a nonprofit functions like that counter space.
Margin is not revenue.
It is not profit.
And it is not about cutting back.
Margin is operational breathing room. It is the space between what comes in and what is required to deliver the mission well. It allows organizations to absorb fluctuation without destabilizing staff, programs, or credibility.
When margin is absent, people compensate. Staff absorb additional coordination. Leaders carry risk meant to be handled by structure. Grants deplete faster than anticipated. Over time, these adjustments surface as deficit.
Consider one organization that faced a legal challenge in 2019. Revenue tightened in 2020. Since then, it has operated in deficit. The shock did not create fragility. It revealed it. There was no cushion to absorb strain.
In another case, leadership used funds saved from departing staff to offset an 800K deficit. The short-term relief masked a deeper structural issue. The deficit remained.
Deficit is rarely a single event. It is often the visible result of systems operating without margin.
For boards, this is a governance issue.
Fiduciary responsibility is not limited to approving budgets or reviewing financial statements. It includes understanding whether the organization has the infrastructure required to sustain its commitments. Systems shape financial outcomes long before numbers appear in reports.
Boards do not need to manage operations to see this clearly. They need visibility into structure:
Where staff time goes when it cannot be charged to a grant
Where staff are manually filling system gaps
Whether processes reduce repeat work or multiply it
How deficits are interpreted, as signals or as problems to explain away
The goal is not intervention. It is clarity.
Margin protects mission. Without it, even the strongest programs operate at the edge.
