We know, the title presents quite a straightforward question and many company owners will immediately answer with ‘Bring it all in!’ However, it turns out that raising too much money for your company in a short period of time may have negative consequences. In his article The Risks of Fund-raising Too Much Too Soon, AJ Agrawal argues that raising too much capital early on will hurt your organisation’s future prospects, and although he is talking about commercial ventures, the same reasoning applies to NFPs.

It appears that companies that get too much too early lose their creative side. The motivation for finding funds can do wonders with you, your team and your company – you think of what-not just to attract more investors and customers. Sometimes, you will be surprised how creative you can be, but that may not be the case when you are financially stable and have all the funds you need to survive and develop. Nowadays creativity means success, and if you stop being creative, you may lose your place in the competitive world of fundraising, donations and grants.

You need to approach your fundraising very carefully. Another issue caused by having too much money, according to Agrawal, is that you forget how to run lean.  We already know that there are some people who are highly critical of the amount of money used to fund the business and administrative sides of NFPs. The last thing you need is to have people spotting areas where you could have saved money but didn’t.

Operating your NFP on a tiny budget can be really difficult but it teaches some really important lessons about making the right choices – the right items at the right price. It teaches you to think cautiously, and reach for the moon on a tight and highly controlled budget.

Can you really have too much money too early? Most of us would answer ‘no’ but after reading Agrawal’s article it seems that we could be wrong.

What sort of budget did you have when you first started out?