Dear Reader
Before we get into the subject - just a quick final note on the Women CEO Masterclass taking place soon on 13th April - feel free to skip ahead
I will be joined by Emily Bancroft, Wawira Njiru, and Jennifer Schechter for a candid conversation on what experienced CEOs wish they had known earlier in the role.
We will cover the realities that are often left unspoken. Pressure from boards. Leadership mistakes. Identity shifts. The adjustments leaders make to remain effective over time.
Tickets are now moving quickly and places are limited to keep the room focused and engaged.
If you have been considering joining, I would encourage you to book soon so you do not miss out.
Some scholarships are still available. Register or find out more here
Now to the main content - sorry for the interruption!
When I was at Living Goods and we closed our four year partnership with The Audacious Project, we had built significant reserves. That was deliberate.
The Audacious funding allowed us to test, refine and strengthen our scale model. The end goal was always clear: replace the majority of philanthropic subsidy with government financing.
That shift started to happen.
Government stepped up.
Funding began to transition.
But success created a harder question.
If government is now paying, how big do we actually need to be?
The messy middle
Securing deeper government commitment was not linear. It was slow, political and operationally complex. Then momentum came. Budget lines moved. Commitments strengthened.
At that point, I was clear as CEO. We did not need to remain as large as we were during the heavy investment phase. We could become leaner as we moved away from direct delivery and toward scaling through government systems, even while increasing targeted technology investment.
Some board members saw reduced revenue as decline.
I saw it as progress.
Revenue fell because subsidy need reduced.
Government financing rose.
Our role evolved.
That is not contraction. That is transition.
The reserve question
I built reserves intentionally towards the end of our Audacious funding cycle. It was a post COVID uncertainty reality. Philanthropic markets were tightening. I wanted runway.
Then, for three consecutive years, where I proposed and the board approved a net deficit budget.
New board members were uncomfortable. Deficit signals risk. But context matters.
We were not covering structural operating gaps.
We were spending down reserves on one off investments.
HR systems.
ERP additional upgrades.
Process and structure redesign.
These were efficiency plays. They reduced long term cost and strengthened our ability to scale without growing headcount.
A deficit can be irresponsible.
It can also be disciplined capital deployment.
The real question
A deficit budget should never be the target.
But if you have:
• Built reserves intentionally
• Defined what is one off versus recurring
• Aligned spending to a clear strategic shift
• Brought your board along on the logic
Then a temporary deficit can be exactly the right move.
Not all growth is scaling.
Not all shrinking is failure.
Not all deficits are distress. |
Before reacting to a red number, pause.
Is this drift?
Or is this design?
If you are navigating a funding transition, a government scale pathway, or board pressure equating size with success, this is a conversation worth having.
Warmly,
Liz
Strategic Advisor | Former CEO | Founder, Volante
Based in Kenya, available globally
