Investing in the Mission vs. Growing the Balance Sheet

This may not be the most timely of issues with the recession and corresponding funding difficulties that many nonprofits are going through, but I've recently been wondering about the role that profit plays in nonprofit finance. As we know, nonprofits have no owners who benefit when (if) profit is earned through operations, development and investments. Instead of enriching owners, nonprofits must choose between expanding services and retaining those earnings to ensure the future security of the organization.

The case for expanding services seems convincing. If there is a need for the services that are being provided, how can we justify withholding funding to provide those services if the agency has the financial means? Shouldn't a mission driven organization do all it can to advance it's cause?

Alternatively, an organization can save or invest any profit that is generated and grow their balance sheet. The best example of this may be those universities with endowments valued in the tens of billions. They have, to a certain extent, insulated themselves against short-term financial pressures. But could some of these funds be better used for research or tuition assistance?

While it doesn't have to be the either/or choice I've presented here, the underlying question is real. A balance needs to be struck between current support of the mission and the organizations ability to maintain that support long term. My impression is that many nonprofits could use more attention paid to growing the balance sheet during good times so they can withstand the lean times more easily.