6 Ways Your Nonprofit Can Cut Operating Costs for 2016
On average, charities spend nearly 37 cents of every dollar on overhead. That means just 63 percent of contributions go to services that further the nonprofit’s mission—probably not quite as much as you or donors might wish.
You could cut programming, but that defeats the purpose. Thus, you look at staff, but that doesn’t make much sense, either. Who’d oversee the services—or raise the funds to provide them, for that matter?
When leaders manage charitable organizations with clear visions, realistic expectations and sound budgets, that overhead spend tends much closer to the public’s ideal of 23 cents per dollar. The key is finding a balance between the costs of overhead support for the mission and the mission itself, and the answer is often found in the realm of business.
Think Business to Serve Better
Just because you run a nonprofit doesn’t mean business rules don’t apply. They do, and you can take cues from the business world to control costs and better serve people’s needs. Fulfilling your mission objectives—just like for a business—requires a savvy strategy to spend wisely.
So, where should you start looking to cut expenses?
1. Re-evaluate phone service systems. Business phone systems can cost hundreds or even thousands per month, depending on the number of lines and features you opt for. If your organization isn’t making calls all day long from multiple lines, then you’re probably overpaying. If your nonprofit has just a handful of full-time employees or volunteers, it’s probably time to reconsider your plan features. Do you need to upgrade or downgrade your monthly allotment in minutes? What about its maintenance costs? A mobile-based phone system like Grasshopper can offer your team unlimited extensions and 500 minutes per month for just $24 a month.
2. Outsource technology. Depending on the size of the organization, you may not need a full-time IT department. Even if that department is a team of one, less labor still equals lower overhead. And offsite network management, in particular, can lead to fewer disruptions in service, improved network security and increased access to IT services often reserved for larger corporations. Check out this guide by the Nonprofit Coordinating Committee of New York for tips specifically geared toward nonprofits wishing to outsource.
3. Gauge storage needs. If data is stored in-house, then it’s time to reexamine storage needs. There are cloud-based storage solutions designed exclusively for nonprofits, with some Web interfaces offering a TB of storage for just $10 a month. These cloud-based solutions enable your team to access data from anywhere, and can give you peace of mind with professional-level data security.
4. Look into Google for Nonprofits. Becoming a member of Google for Nonprofits provides nonprofit organizations access to many apps and services for free, such as Gmail, Google Calendar, online collaboration tools and 30GB of storage on Google Drive, thereby further reducing the cost of IT. Why not take advantage of a free way to reach more donors and volunteers, serve more effectively and tell your story?
5. Take stock of marketing efforts. How you get the message out is sometimes just as important as the message itself, especially when trying to cut operating costs. If you use direct-mail marketing, be sure you’re getting nonprofit mailing rates. Look into Every Door Direct Mail from the U.S. Postal Service to help establish mailing lists and even print mail pieces. Also, evaluate what can shift to digital marketing, like newsletters.
6. Calculate in-house printing costs. The cost of printing collateral in-house is often more than you think. Don’t just account for the price of paper and ink. Look at the time staff spends printing and pulling together materials, as well as the cost of copier maintenance. By outsourcing to a local printer, your nonprofit can save up to 30 percent on its printing expenses.
Like a business, nonprofits must identify the initiatives that can drop costs the most—while not burning up a lot of resources in the process. And while a change might save you money, there’s often a time cost to consider. Switching phone service systems, for example, saves less money than creating a culture where everyone works remotely—but it also doesn’t take as much effort on your part.
Once you identify areas to save money, then it’s time to commit to the change, even though changes can sometimes ruffle others’ feathers. You’re actually streamlining the organization, which doesn’t just control costs, but it also helps the mission thrive. Isn’t that the most sustainable way to serve your community?
Anthony Clervi is the vice president of growth at UNA Purchasing Solutions, a group purchasing organization (GPO) dedicated to helping businesses and organizations across multiple industries improve their financial and operational performance. With extensive experience in sales, marketing, and business consulting, Anthony provides consistent leadership and strategic direction for company success.