Stewardship to Equity is the Key to Capital Budget Success

Have you ever felt like you were incredibly stuck when it comes to funding capital projects?  In the past, you relied largely on federal funding. Today, as fewer government-funded programs are available, the game-changing key to capital budget success leverages venture capitalist thinking I like to call “Stewardship to Equity.”

What is “Stewardship to Equity”?

Let’s break it down. “Stewardship” means responsible overseeing and protection of something considered worth caring for and preserving.  So, you need to behaviorally demonstrate financial diligence with your own assets. So by exhibiting proper “stewardship” over your assets, you can attract “equity” for your company/institution.

Show people you can properly spend and manage the money you have. And it gives them confidence you can handle more.

What is the issue & why should I care?

Given the current state of our economy, there are just fewer federal funds for capital projects.  Let’s use the Higher Ed market as a specific example.  Federal funding to state and private universities has decreased.  Universities are also realizing they cannot just continue to raise tuition as college is becoming too expensive for many families, and the average student debt after graduation is rising.  So these institutions have to find creative ways to extract more cash out of their operational budget by showing that they are being more responsible about where their money is spent.

The next step is identifying companies who are both willing and have compelling reasons to invest in one of the university’s capital projects. If they can see that the university has been a good steward over their budget, and they have choices over where they can make investments, they will tend to select institutions who prove good stewardship. That is venture-capital-type thinking. (Venture capitalists invest in companies who they believe will give them a strong ROI).

An example of a “Stewardship to Equity” strategy from Higher Ed is the relationship developed between Clemson & BMW.

Here’s the bottom line…

The “Stewardship to Equity” strategy is something you can leverage you to help your business/institution to grow. Figure out where you fit into the solution equation.

• As an owner, it’s all about being a good steward of your funds so that you end up creating diverse funding strategies for multiple scope capital projects.
• As a service provider, your goal is to help clients be more operationally effective. Think of yourself as a steward of their funds, and part of your responsibility is to show them how they can better leverage their spending to create these types of funding opportunities.