Investment readiness should strengthen an organisation’s ability to choose. We explore how leaders and boards can assess purpose, repayment, timing, capacity and mission, including when a different offer, a smaller step or a decision to wait would better serve their community.
Getting far enough in a funding conversation to receive an offer can feel like an achievement in itself. There may have been forms, forecasts, meetings and explanations of work that does not fit neatly into an investor’s categories. By that point, a leader can feel a responsibility to make the opportunity work.
That is also the point at which the organisation needs room to decide whether it should.
At Do it Now Now, we want Black-led charities and social enterprises to have more access to suitable finance and more power in the decisions that shape their futures. Those ambitions belong together. Access is incomplete if the only acceptable outcome is taking the money.
Social investment is repayable finance used to support a social purpose. As Access explains, it can help organisations purchase assets, finance contract delivery or develop their activities, alongside other sources of funding. It also creates an obligation to repay, often with interest. Its social purpose does not remove the need to understand whether the particular agreement works for the organisation.
Our recent Make it Big and Big Business alumni celebration explored the value of having space, advice and peers around these decisions. The next step is to be clear about what that preparation is for. An organisation should emerge better able to assess an offer, explain its choices and recognise when the terms need to change.
The starting point is the purpose of the finance. Before asking how much an investor might provide, it helps to describe the problem the money would solve. Perhaps a contract pays after delivery, leaving a gap between paying staff and receiving income. Perhaps equipment would make a service more reliable. Perhaps there is demand for a new activity, but it needs testing before the organisation commits to a larger operation. These are different situations and may require different responses.
The distinction between a timing problem and an ongoing shortfall is especially important. If the same activity costs more to deliver than it brings in, borrowing alone does not change that relationship. It may create time to make changes, but the plan needs to explain what will change and how repayments will become affordable. Hope that another grant will arrive is a fragile basis for taking on a new commitment.
A useful forecast should make the assumptions visible. Which income is contracted? Which depends on sales that have not yet happened? How long do customers or commissioners actually take to pay? What costs are likely to rise as delivery expands? Looking at the months when cash enters and leaves the bank can reveal pressure that an annual total conceals.
For example, imagine a community enterprise borrowing to expand a paid service. Its main forecast assumes that bookings build steadily and customers pay promptly. A second version could examine what happens if demand grows more slowly, a key payment is delayed or additional staff time is needed. The value of that exercise is in identifying the point at which a manageable delay becomes a threat to existing work.
The conversation then moves to the offer itself. Leaders need to understand the total cost, the repayment timetable and the conditions attached. If security is requested, what is being put at risk? What information will have to be supplied, and how often? If circumstances change, who should the organisation contact, and what does the agreement actually allow? Appropriate financial and legal advice should help the board understand those questions before committing.
It is worth asking for a different arrangement where a specific feature makes an otherwise useful offer difficult. A smaller amount or a repayment schedule better aligned with income may change the assessment. An investor may or may not be able to accommodate that request. Any flexibility that matters to the decision needs to be agreed clearly; a friendly conversation is not the same as an agreed term.
There is also a question of organisational attention. New finance can bring new delivery, recruitment, reporting and management work. A proposal may look affordable while relying on a founder to absorb all of that additional responsibility. The team should be able to explain who will do the work, what it will cost and what might have to stop. Unpaid overextension should not be the hidden contribution that makes the forecast balance.
The mission needs its own place in the discussion. Would the proposed growth improve support for the people the organisation exists to serve? Would the income model make participation less accessible? Could an obligation to increase sales pull attention away from work the community values but cannot pay for? These questions help define the kind of growth the organisation wants.
Alternatives deserve a fair comparison. Waiting may carry costs, including lost opportunities or continued uncertainty. Grants may be unavailable or too restricted. A phased approach may take longer, but produce evidence before a larger commitment. The decision is stronger when the board can compare credible options, including what happens if no finance is taken.
Responsibility also sits with those of us designing readiness programmes and providing capital. We should examine whether our measures of success leave room for an informed decision to decline. If completion is rewarded only when money is deployed, we risk encouraging leaders to treat doubt as something to overcome rather than something to investigate.
A well-supported decision might be yes, with a clear understanding of the commitments. It might be a request for different terms, a smaller first step or a return to the conversation later. Sometimes it will be no. Readiness should give a leader the confidence to explain that choice, and an investor enough respect for the organisation to hear it.
Before accepting an offer, ask the board to write down what the finance makes possible, where repayment will come from and which conditions would make the agreement unsuitable. That shared judgement is worth reaching before the relief of receiving money begins to decide on everyone’s behalf.
