What do we do with our profits?
We had a good reaction to my recent article on why we’re a not for profit organisation. It begs the question though: if you happen to make a surplus, where does it go?
First of all, it’s important that we do make a surplus.
We have quite a steady income stream, but there are always swings and roundabouts. In a recent example, our revenue and hours of support were substantially reduced for a number of weeks when a couple of clients were admitted to hospital and another went on a nice long holiday. A surplus helps us manage through those times.
We also need a surplus to invest in and improve our service over time. We’re not ones for sitting still :)
Just as importantly, though, we make a surplus to support one of our core organisational values: evolving how we work with people with disability as they progress through life.
The thing is, there’s a real incentive for disability support agencies to hold onto client programs to help fund their bottom line. Especially with large programs that can run to many tens of thousands of dollars.
Now in general that’s a good thing! In the new marketplace for disability supports, clients with large support programs are attractive clients, and can help drive better customer service if they shop around as informed, rational buyers.
But many people with disability are vulnerable and haven’t had the chance to learn how to exercise their choice. That’s a dangerous combination when their circumstances and support needs change.
The subtext of our core value? We’re determined never to cling to a client’s support program when it no longer makes sense for them.
And making a surplus means our bottom line doesn’t need to get in the way of that decision.
So… once we’ve made that surplus, what do we do with it?
Invest it back into the business of course!
This could take many forms: developing new services, offering better prices to customers, or better wages and conditions to our team of Assistants. (I’m wary of giving out staff bonuses by the way — they seem prone to the kinds of bad incentives mentioned above).
So far we’ve been investing to build up our cash reserves. We’re a high wage low margin business, that pays our staff weekly and gets paid by our suppliers in arrears. That needs a lot of dough!
But we’re getting more financially stable all the time. And are looking forward to investing our surplus more creatively and more directly in support of our mission in future.
Until next time,