A leadership team around a whiteboard of seven coloured levers, a rising cash chart and sticky notes, working out where to find cash

How do I find more cash without cutting what matters?

Costs are up and the cuts list is being drafted. Here's where the cash usually is instead.

It usually happens in the same meeting. Costs are up, the funding or pricing hasn't moved, and someone opens the budget and asks the obvious question: where can we save?

The meeting where the cuts get made

The list writes itself. Training gets pushed to next year. The admin role stays vacant. The new system that would save everyone ten hours a week gets parked. Each cut looks sensible on its own. Together, they quietly take away the very things that would have got the organisation out of the squeeze.

I've sat in a lot of those meetings, first as a banker looking at the numbers from the outside, then as a COO inside them, and now as a coach. Here's the line I keep coming back to: optimising an organisation isn't the same as cutting costs. Optimisation increases leverage. Cost cutting often reduces capacity. The difference is subtle. The impact isn't.

Why do purpose-driven organisations reach for cuts first?

Because cutting feels responsible, it's fast, and it's fully in your control. For a not-for-profit, a social enterprise or a purpose-driven business, there's extra pressure too. Prices are often capped by government (NDIS, aged care, childcare), funders want to see money going "to the front line", and nobody wants to be the CEO who spent on overheads while the waiting list grew.

The trouble is that the things that look like overheads are usually the engine room. Good people, good systems, good finance, the ability to tell your story and raise money. Cut those, and next year you're doing the same work with less capacity, so you cut again.

Capacity compounds. So do poor cuts.

The better question isn't "where can we save?" It's "what would increase our ability to do more of our best work, with the money we already have?"

What do the experts say about cutting overheads?

They've been warning us for years. In 2009, Ann Goggins Gregory and Don Howard of The Bridgespan Group named it the non-profit starvation cycle in the Stanford Social Innovation Review. It runs in three steps:

Funders expect running an organisation to cost far less than it really does.
Organisations feel the pressure to match that expectation.
So they underspend on their engine room, and under-report what it really costs, which makes funders' expectations even less realistic.

Round and round it goes, until the organisation is doing more and more with less and less. In their research, the four youth organisations they studied reported overheads of 13% to 22%, but their real overheads ran from 17% to 35%. And even knowing all this, more than half the executive directors they surveyed (56%) were planning to cut overheads further to get through the recession.

The cost shows up in very ordinary places. One organisation they studied found its program staff were spending a quarter of their time collecting data by hand. Another worked out that a single government grant was costing it about 31% of the grant's value just to administer, when the funder allowed 13%.

Dan Pallotta learned this the hard way. His AIDSRides raised $236 million for HIV/AIDS over nine years, and his Breast Cancer 3-Days raised $333 million over five. Both were shut down after public outrage that around 40% of the money raised went on "overhead", which really meant staff, marketing and a great experience for the people taking part.

Dan Pallotta took the argument to a much bigger audience in his 2013 TED talk, The way we think about charity is dead wrong, built on his book Uncharitable. His point is simple: we judge charities by how little they spend, when we should judge them by what they achieve. Spending on marketing, leadership and good people is often what grows the money and the impact. As he puts it, overhead is people. Later that year, three of the biggest charity watchdogs in the US (GuideStar, Charity Navigator and the BBB Wise Giving Alliance) publicly rejected the overhead ratio as a measure of performance.

It's not that every dollar of overhead is good. It's that the question "how low can we go?" is the wrong one.

So where does the cash actually come from?

This is where the Power of One comes in. It was developed by Alan Miltz and Joss Milner at Cash Flow Story, and Alan wrote the cash chapters of Verne Harnish's Scaling Up. The idea is that there are only seven levers any leadership team can pull to change its cash:

Four profit levers: price, volume, direct costs and overheads
Three cash timing levers: how long people take to pay you (debtor days), how long work or stock sits before it's billed (work in progress or stock days), and how long you take to pay your suppliers (creditor days)

The exercise is simple. Ask what happens if each lever moves by just 1%, or one day, in the right direction. The answer is nearly always surprising, because the lever everyone reaches for first, overheads, is usually the smallest.

Here's an illustrative example. Take a purpose-driven organisation with $5 million in revenue, direct costs of $3.5 million, overheads of $1.3 million, and a surplus of $200,000 (a thin 4%).

Lever	The 1% (or one day) change	Extra cash a year
Price	Charge 1% more for the same work	$50,000
Direct costs	Deliver the same work for 1% less	$35,000
Volume	Do 1% more work (after its direct costs)	$15,000
Overheads	Cut 1% of overheads	$13,000
Debtor days	Get paid one day faster	about $13,700, freed up once

Pull the four profit levers together and the surplus rises from $200,000 to $313,000, up 56%, without a single redundancy. And notice where the overhead cut sits: at the bottom. A 1% lift in price is worth nearly four times a 1% cut in overheads.

"But our price is capped." I hear this a lot from NDIS, aged care and childcare providers, and it's a fair point. When the rate is set for you, the price lever looks different: are you charging for everything you deliver, are you claiming promptly and correctly, is your mix of services weighted to the ones that actually cover their costs, and do you have any services or customers where the price isn't capped? Often the money isn't in the rate. It's in the leakage around it.

The Power of One also works because it turns cash into a team sport. Price and volume sit with sales and fundraising, direct costs with operations, cash timing with finance, and overheads with everyone. Not because people are pushed harder, but because the system supports them.

What does this look like in real life?

A network that was drowning in data entry. In the same Bridgespan research, a well-regarded youth development network (they called it LGON to protect its identity) was about to grow fast. When it looked closely, its program staff were spending 25% of their time collecting data by hand, and one person spent half her week typing results into an old database. The "saving" of never investing in systems was costing it a quarter of its frontline capacity.

Instead of trimming, its leaders spent several months working out their real costs and gaps, took the numbers to their board, and built a plan for a proper tracking system and more support staff. Another organisation in the same study found a technology investment was freeing up about $350,000 a year in staff time. That's not overhead. That's capacity.

A client of mine. When we started working together, margins were sitting around 5% and the founder was running on empty. We started with the seven levers and over six months, margins went from 5% to 25%, and the burnout went with it. As one of my not-for-profit clients put it, cash flow is the oxygen of a thriving organisation.

What can my leadership team do on Monday?

Here's a simple workshop, and it's the one I run with clients:

Write the seven levers down the side of a whiteboard. Price, volume, direct costs, overheads, debtor days, work in progress days and creditor days.
Get the whole leadership team in the room, not just finance. Give everyone sticky notes and work through one lever at a time. Where could we move this by 1%, or one day?
Rank the ideas by how much cash they'd free up, then pick the top four or five. Ask which one could move inside 30 days.
Before you cut anything, ask one question: will this reduce our capacity to deliver, raise money or keep good people? If yes, it goes to the bottom of the list.
Do it again next quarter. The repetition is where the momentum comes from.

Why cash problems are usually people problems too

I spent years on the banking side of the table, looking at numbers. Then I spent years learning how people actually feel, listen and connect. What I've learned is that the cash answer is usually sitting right there in the seven levers. What gets in the way is human.

It's the price conversation nobody wants to have with a funder. The team that has never been shown the numbers, so they can't help. The tired CEO who cuts because cutting feels like control.

That's why I never treat cash as just a finance problem. Cash is oxygen: without it, the purpose can't breathe. But you only get more of it when the team understands the levers, owns them, and trusts each other enough to pull them.

Want help finding the cash?

If your organisation is squeezed and the cuts list is already being drafted, let's talk before you make them. I run the Power of One with leadership teams of purpose-driven organisations, so you find the cash and keep the capacity.

Tell me about your organisation

Sources

Ann Goggins Gregory and Don Howard, The Nonprofit Starvation Cycle, Stanford Social Innovation Review (Fall 2009)
Kate Torgovnick May, Correcting the overhead myth: How Dan Pallotta's TED Talk has begun to change the conversation, ideas.ted.com (March 2014)
Dan Pallotta, The way we think about charity is dead wrong, TED2013
Dominic Monkhouse, Understanding Cash Flow and the Power of One with Alan Miltz, Curious Leadership podcast (November 2021)
Verne Harnish, Scaling Up (Gazelles, 2014; revised edition 2022), financial chapters by Alan Miltz
The worked example is illustrative, built for this article.