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May 1, 2002

What does 'leverage' really mean?

by Philip Conkling

Remember 8th grade science class when we learned about the world's "seven simple machines?" The wheel, the pulley and the inclined plane were three simple machines, as I recall, and so, too, was the lever. I vaguely remember the observational exercises we did by placing a triangular block at different points along a board and measuring the height and weight you could move a load at the end of the board.

All these years later, the lever has migrated across all manner of enterprise and language usage as the word has morphed into adjective and verb. We've witnessed the "leveraged buyout" frenzy of the late 80s and early 90s. We've watched "leverage funds" grow and implode. We've learned to use the term as a verb, as in "to leverage."

But what does "leverage" really mean? The American Heritage Dictionary of the English Language, usually the most reliable guide to migrating word usage, only provides definitions for leverage as a noun; as "power to act effectively," or "positional advantage." Non-profit organizations, especially in the funding community, increasingly evaluate their grant-making activities as successful when they are able to "leverage" other funds.

The word has even begun to infect us at the Island Institute.

Earlier this year we launched the Island Community Fund, as an effort to formalize a set of activities we had been engaged in for years informally. Since 1985, the Institute has been assisting island schools, serving as a clearinghouse of information and connecting point for new teachers, parents and administrators who want to share information or get answers to questions pertinent to the special circumstance of island schools. For the past decade, we have been awarding scholarships to island students seeking higher education opportunities. More recently we have extended this scholarship support to those seeking continuing education training to stay on-island. A number of years ago we started a "mini-grants" program to help worthwhile projects get off the ground.

But recently it occurred to us that the most effective use of our resources is not to try to increase the number or size of our own grants. It might be better, we reasoned, to help teach others on islands how raise funds on their own. Possibly, we could help de-mystify the gamesmanship behind fundraising by using our fundraising experience to help island nonprofits "leverage" new sources of funds. While the word in this context no longer refers to a simple machine, there are some simple rules with which to start.

Islanders are so used to undertaking community projects on their own that countless hours of volunteerism sometimes go unremarked in community-building projects. But when quantified into valued labor, such volunteerism becomes an important source of "leverage" in the great game of grantsmanship. Assistance with concept development and strategic planning, along with introductions to funders, are other sources of leverage for noteworthy community projects. All of these techniques are like the triangular blocks you place near the tip of a lever to raise an imponderably large rock, or substantial amount of money, for a new community building, the undeveloped back shore of your island community, a skate park for kids.

We've been leveraging funds for island projects for long enough that the scope of these efforts went unremarked in our own offices until we stopped recently to quantify it. If we examine the instances in which we had a direct hand in helping to raise funds for island community projects last year, for example, the dollars start adding up. From scholarship support to island school and library grants through the MBNA Education Foundation, to Geographic Isolation Grants for island schools disadvantaged in the state aid formula, our staff activities leveraged over $1.3 million for Maine's year round island communities. We helped raise a set of worthy objectives higher than they would have been without our intangible leverage. We call that a good start.

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