The question of a nonprofit’s future needs and impact raises a couple of related concepts: intergenerational equity and longtermism. Of course, all planning involves thinking about the future – whether it be in designing programs, fundraising, marketing, budgeting, investing, advocating, collaborating, or engaging in myriad things that are necessary for managing and governing a nonprofit. But contemplation of a more distant future (perhaps one, two, ten, or more generations from now) is not an area that has received much focused attention until recently.
Definitions
Intergenerational equity is currently defined in Wikipedia as follows:
Intergenerational equity in economic, psychological, and sociological contexts, is the idea of fairness or justice between generations. The concept can be applied to fairness in dynamics between children, youth, adults, and seniors. It can also be applied to fairness between generations currently living and future generations.
https://en.wikipedia.org/wiki/Intergenerational_equity
Longtermism is currently defined in Wikipedia as follows:
Longtermism is the ethical view that positively influencing the long-term future is a key moral priority of our time. It is an important concept in effective altruism and a primary motivation for efforts that aim to reduce existential risks to humanity.
https://en.wikipedia.org/wiki/Longtermism
Governance
We’ve written quite a bit on nonprofit boards, governance, and the application of purpose-driven board leadership (PDBL). With respect to intergenerational equity and longtermism, a nonprofit’s leadership must determine how these values compare to those that focus on immediate and more short-term needs in different areas of organization and operation. This might weigh on a number of decisions like –
- How should the nonprofit allocate resources for expenditures versus investments, including in program-related assets, that may have greater impact on future beneficiaries than current ones?
- How should the nonprofit incorporate and invest in advocacy efforts with little, if any, measurable short-term benefits but with possible important long-term benefits that further the nonprofit’s mission and values? Consider, for example, the major movements that have taken generations before resulting in positive changes and the efforts needed to make those changes stick.
- How much consideration should the nonprofit give to the types of financial investments it makes in terms of how such investments are aligned or at least not in conflict with the nonprofit’s values and purposes?
- How much of a priority should a nonprofit place on fundraising for an endowment fund that is subject to prudent investment and spending rules (e.g., UPMIFA) and not wholly expendable by the institution on a current basis?
- What factors should be most important in considering how much to spend from an endowment fund (either a true endowment subject to UPMIFA or a quasi-endowment not subject to UPMIFA) or a reserve fund?
Some Arguments to Consider
“We should use current funds to address current problems. We’ll raise money in the future to address future problems.”
“We can’t keep addressing current problems without investing in long-term changes to stop those problems from continuing to arise.”
“We must raise and save funds for future uses and times when it may become difficult, if even possible, to raise enough funds to deliver needed services.”
“We must raise and spend funds to address certain immediate needs (like fighting climate change) because if change doesn’t happen now, it will be much, much more costly to address the adverse impacts later and with much less impact.”
Related Posts
Purpose-Driven Board Leadership, Legally Speaking
Restatement of the Law: Duty of Loyalty
Anchoring Equity in a Mission Statement
The Mission Statement: Some New Thoughts