• Thanks so much for this article. This is a critical issue, but one that most nonprofits are under-equipped to address.
    Focusing on government contracts, I don’t hold out much hope of government being more supportive of nonprofit working capital whether through quicker turn-around or advance payments. I just don’t know what would motivate that kind of shift. In fact, agencies at all levels find themselves under pressure, both politically and with respect to efficiency, when it comes to paying vendors.
    Private funders are absolutely part of the answer. Many have the fiscal capacity and can comfortably bear the limited risk. This lending would be supportive of their mission and would help leverage their grants. For funders interested in growing their impacts, this is a very promising direction.
    Building on your advice about better understanding organizational dipping, I would emphasize that the time for this financial assessment is BEFORE entering into a government contract. The bigger the contract the greater the financial risks the more likely that dipping is going to happen, with all the downsides you describe. Payment delays are likely to be longest at the outset, as agencies slowly adjust to a new vendor and the nonprofit figures out how to successfully invoice. Nonprofits can do a much better job of calibrating the size of contracts (and attendant risks) that they sign up for, often by gradually scaling.