Nonprofits seem to be in constant response to any number of unexpected challenges, which leaves little time to effectively plan and run operations. Cost controls are critical to increasing and maintaining the organization’s efficiency and sound financials.
Here are some ideas to maximize limited resources.
Savings Tip #1
Establish a firm budget, share it with your employees, keep them informed, and give them appropriate levels of ownership.
With a bit of their own skin in the game, your workforce is more likely to hold itself collectively accountable with a culture of interdependency—in which employees individually own their financial responsibilities and expect their coworkers to do the same.
As your team builds expertise in managing their portion of a pre-set budget, consider involving your most notable stewards in fiscal year planning and budget development decision-making.
Savings Tip #2
Create an extra source of revenue by making your facilities available for rent to other organizations or private entities as a venue for workshops, staff retreats, awards presentations, or other events.
Managing event schedules like these can be made more efficient with a facilities management system from Facilitron that combines reservations, maintenance plans, and other management tools.
Savings Tip #3
Be wary of purported discounts on office supplies, cleaning supplies, and light bulbs advertised through mail or telephone.
In most cases, the discounts are the result of low-quality materials and exorbitant shipping and handling costs. Instead, visit local office suppliers where store managers are often authorized to grant discounted or free merchandise to charitable groups.
Savings Tip #4
Request an audit from your local utility provider to see if you can save money on utilities. To minimize paper towel consumption, Shading windows can limit heat loss in the cold weather months and entry in the summer.
Installing water-saving devices in toilets and hand dryers reduces water and paper consumption.
Savings Tip #5
The federal government allows 501(c)(3) nonprofits to “opt-out” of state unemployment tax systems, and instead directly reimburse the state for benefits awarded to former employees.
This can result in substantial savings, but the option can expose the organization to self-insurance risks. Do your research before you “opt-in” to this benefit.
Savings Tip #6
If your organization sends direct mail or newsletters, consider a bulk postal authorization for nonprofits. Adding a nine-digit zip code and bar codes can help reduce shipping costs even more.
Savings Tip #7
Self-publishing a newsletter or other printed materials in-house may seem like a prime cost saver.
But the time it takes for staff to master and operate high-tech computers and printers—and to do so efficiently when it comes to the use of paper and ink supplies—may have you spending more than you save.
Once you factor in time and costs for finishing, folding, shipping, and equipment repairs, outsourcing your printing needs may be a better bet.
Savings Tip #8
Invest in prevention! It is essential to plan for large and unexpected costs.
Every nonprofit organization should acquire “director and officer insurance” to protect the board in the event of legal action. Consider coverage for fire, flood, plate glass replacement or repair, computer hardware and software, and theft.
Directors should be personally insured.
Savings Tip #9
Invest in accountability! Everyone who is invited to join the board should have a “Board Member Performance Plan.”
Board members must understand what is expected of them; in addition to advising, they must actively raise funds and provide the organization’s long-term vision.
Similarly, all staff employees should have detailed job descriptions and a minimum of an annual evaluation.
Savings Tip #10
Shop around when you’re planning a large purchase or new service contract. Securing three written offers is a good rule of thumb to ensure competitive pricing and precise comparisons.
Savings Tip #11
Plan your spending. Don’t wait to purchase products or supplies until the day you need them. Planning ahead will give you the opportunity to negotiate a vendor discount or take advantage of post-seasonal price cuts.
Participate in group-purchasing programs for supplies, equipment, or services. Many national organizations provide similar programs but if yours isn’t one of them, organize your own. Don’t underestimate the purchasing power of your nonprofit community.
Savings Tip #12
Where and when it’s possible and sensible, engage volunteers to complete tasks and provide services that are less specialized. Don’t skimp on training where needed to avoid unforeseen expenses that can result from work errors, equipment breakdowns, or lost time.
Savings Tip #13
Evaluate the cost-effectiveness of every organization’s initiative. It is crucial to know if the programs you are implementing are generating an appropriate return on investment.
If not, consider alternative programs or improvements to existing initiatives to better serve your clientele.
Savings Tip #14
Reassess your fundraising strategy and adjust or eliminate any events that are no longer relevant.
For instance, if your group is ready to host its 20th annual fundraiser out of habit, rethink it to incorporate new themes or elements to demonstrate that your organization has its pulse on popular trends, new technologies, and audience interests.
Savings Tip #15
Review your bills. Both humans and computers make errors, so don’t issue a payment on faith alone.
If you did not receive what you’re being asked to pay for, contest the bill.
Savings Tip #16
It is hard to know everything on your own. Seek expert assistance. The finest board is comprised of experts.
Consider employing a minimum of one attorney, accountant, and insurance agent.
Savings Tip #17
Stay current on labor laws and other regulations that impact your organization.
Consider subscribing to newsletters, publications, or other resources to get the information you need.
Savings Tip #18
Examine your organization’s safety and security. Is your workplace risk-free? Are parking lots adequately illuminated?
Is everyone aware of evacuation routes and gathering points in the event of a fire or other emergency?
Savings Tip #19
All vital documents, including financial and employee records, property leases, liability statements, and other agreements, should have offsite backups. Establish these protocols as part of your crisis management strategy and business continuity plan.
Savings Tip #20
Ask large firms and banks if they have office furniture and other equipment they would consider giving as in-kind donations.
Every state department has a program for the excess property. Universities and community institutions offer comparable initiatives, and you may be able to negotiate a gift with them on a local level.
Fighting fires is what many nonprofits are accustomed to but doing so is unsustainable and lacks long-term business value. Make and spend the time to find and implement small cost-cutting initiatives that add up to substantial savings.