Obviously the curtain has been raised on many schemes and risky financial practices during the last year. Interestingly, some of the high-profile nonprofits that have gone out-of-business or had to make major cuts in their staffing and programs can attribute part or their failure to leveraging their debt. In many cases, the unstoppable need to build more facilities, grow bigger, reach across the globe has left them holding tax-free bonds that they cannot finance. When enrollment at a school meets capacity and there is a waiting list, it is hard to believe that the educational institution will suffer any financial hardships. Being fiscally conservative is tough, even during good times. Leaving the next board (those board members who follow you) with a budget that is reasonable and limited liabilities is one of the ultimate signs of wise stewardship. Low hanging-fruit that is not core to the mission sometimes leads your enterprise to start climbing a tree it never intended.
How do you operate as wise fiduciary? The New York Times highlights some organizations that reached beyond their means.