PurchasingPoint Group Purchasing Volume by Members Increased Estimated 10 Percent in 2014
(Press release, Dec. 8, 2014) — PurchasingPoint®, the only group purchasing organization in the nonprofit marketplace focused solely on the needs of large national nonprofit human services organizations and their affiliates, announced that 2014 produced the highest member purchasing volume — totaling $66 million and up an estimated 10 precent from 2013 — in its 10-year operating history. The activity reflects the discount purchasing of approximately 4,500 nonprofit networks and affiliates, as well as a large national foundation and multiple nonprofit associations, which resulted in an average savings of 33 percent on products ranging from office supplies to travel services.
The National Human Services Assembly estimates that large human services nonprofits in the U.S. spend, on average, 37 percent of their revenue every year on non-programmatic, non-personnel overhead. While human service organizations often have high personnel expenses due to the significant amount of direct services provided, the discounts available through group purchasing programs can provide relief toward the remaining overhead expenses.
"Group purchasing is increasingly becoming a strategic decision for nonprofit management," said Irv Katz, president and CEO of PurchasingPoint®. "While nonprofit spending continues to increase, current activity is coming at a time when donors and grantees are reluctant to fund overhead. As a result, many nonprofits skimp on overhead spending altogether. Instead, nonprofit managers can begin to look closer at managing the largest component of overhead after personnel: purchasing the products and services needed to deliver on their mission."
Katz explains why:
- Absent a GPO's buying power, nonprofits cannot go to national vendors with real critical mass in spending that attracts the kind of discounts normally reserved for Fortune 100 companies.
- Even large national nonprofits typically lack the internal resources to do direct purchasing in a cost-effective way.
- And the affiliates of national human service organizations are even less prepared to lower overhead by effectively managing their purchasing process.
"There's no doubt that managing a nonprofit is a complex and challenging process," said Katz. "The good news is ... it's easier to save money through group purchasing than it is to raise it through traditional fundraising!"
In fact, there is promising news on the horizon. According to the 2014 State of the Nonprofit Sector Survey administered by the Nonprofit Finance Fund, 31 percent of nonprofits say they will change the primary ways in which they raise and spend money over the next 12 months. PurchasingPoint® expects to see continued growth in group purchasing due to the changing mindset of the nonprofit manager.