Imagine that you are a management consultant hired by a local social services nonprofit with a $500k annual budget funded 1/3 by small donations from local donors (not philanthropy) and 2/3 by government grants. The board has faith in the executive director, who has established herself as a trusted leader in the community. While the organization has a solid financial foundation, it's not flush with cash. It maintains 2-3 months of operating expenses as its cash balance in the bank. The staff include an executive director who is responsible for fundraising, two client advocates, an outreach worker, and an office manager/bookkeeper/receptionist (this person juggles many jobs, not uncommon in small non profits)

The board and management want to expand their service capacity to meet the growing need of a growing population in the community. The services this nonprofit provides are critical and unique. If they don't provide the services, no one will. This situation is not entirely hypothetical in Colorado: In the county where I live two hours from Denver and Colorado Springs, the local domestic violence organization is the only provider of services to individuals who have experienced sexual assault. The forensic nursing program they provide costs $200k/year to run due to the cost of employing qualified nursing professionals and complying with a web of regulatory requirements that apply to clinic services. If this organization does not provide the services, survivors of sexual assault must travel about two hours to the next-closest service provider--a torturous journey for a person who has just experienced a significant trauma.

The organization has just secured a $50,000 capacity building grant, with only two requirements:

1. The funds must be spent in the next 12 months;
2. The funds must be used to "expand the organization's capacity to serve clients."

Based on what you've read over the past 3+ weeks, what is your advice to this nonprofit about their plan to expand? What are their best options for increasing their funding, and why? What funding strategies should they consider, given their mission? Are there strategies they should specifically avoid, and why? How should they spend the $50,000 grant? What risks might they be aware of as they pursue this strategy?