Cutting Costs at a Nonprofit

by | Apr 23, 2020 | Budgeting, Development/Fundraising

A penny saved is a penny earned.

Organizations are always making miracles happen on a shoe-string budget. So it is hard to imagine cutting costs at a Nonprofit even more. The best leaders understand that two things must happen to sustain a nonprofit: SAVING money and RAISING moneySince penny-pinching focuses on “saving” money, we will explore 8 ways for cutting costs at a nonprofit that are easy to start today!

Fact: there are currently 2.7 MILLION nonprofits registered in the United States, and nearly 60,000 nonprofits close their doors annually.

Today you might be reading this from home as you social distance. You may feel stress about keeping your organization’s doors open during the COVID-19 pandemic. Others will read this long after things return to the new normal. In either case, these money saving strategies will apply. While they may not fill your bank account, these tips for cutting costs at a nonprofit may keep your lights on and your doors open.

Above all, it comes down to Budgeting and Expenses:

First, sit down with your accountant. It’s important to itemize your fixed expenses and upcoming bills.

Next, prioritize fixed expenses. These are bills that you pay monthly, like salaries, rent, utilities, landscaping, pest control, or accounting fees.

Finally, you will want to take the process one step farther and ask, “Are there any expenses on this list that do not directly keep our lights on or doors open?”

Once you have a good understanding of your expenses, you should consider the 8 ways cutting costs at a Nonprofit could help you:

1. Take advantage of tax breaks and stimulus programs- Did you know that the state will reimburse sales taxes on your purchases? You could be getting a reimbursement check every year for thousands of dollars if you file sales tax reports. Work closely with your board to explore any state or federal stimulus opportunities for nonprofits. These funds are often depleted quickly, so act immediately when opportunities are announced. 

2. Re-imagine work roles- When cutting costs It’s never easy to let staff members go, but “employees on payroll” come with extra expenses. Connect with your volunteer base and see who might be willing to offer some extra hours for the coming 3-4 months. Speak with your accountant to explore what “contract positions” entail. It might be possible to keep staff members on a contract basis until your organization can sustain employees long-term.

3. Conversations with essential vendors– Contact your provider and explain the situation. Above all, be gracious. Explain how your organization wants to honor your monthly commitment and what is preventing you from doing so. Ask if the provider would be willing to work with you. Furthermore, keep all options on the table: deferral of payments, reduced payments or even an in-kind contribution to cover those costs.

4. Take a walk around your facility and take an inventory. As a result, what can you cut temporarily or permanently?

Example: Energy/Utility

  • Unplug energy-sucking appliances.
  • Opt for open windows instead of AC and sweaters instead of heat if you can do so safely!
  • Set the heating/air controls on a cycle that allows for gradual increases/decreases in temperatures during non-peak office hours.
  • Seal windows/doors and install new blinds or energy-efficient curtains.

5. Marketing and Outreach- Seek multiple quotes for all current and upcoming projects. As the economy changes, so might vendor prices. If you love your current vendor, let them know that someone else has offered a better price for the same service. As a result, ask if they are willing to “price match.”

6. Community Service Programs– Similarly, general maintenance, repairs, and lawn care services impact the monthly budget. Consider contacting your court’s community service work program to explore options for becoming an approved worksite.

7. Service Contracts- Along these same lines are annual service contracts. The need for local pest control, insurance, copier lease, or related services may change, therefore you should re-evaluate each year. As a result of determining “peak seasons” for these services you may be able to just pay for peak months rather than every month.

8. Buy in Bulk– How many of us will buy small quantities of our office supplies at the local dollar store to “get us through until the next donation?” While the monthly cost might look reasonable you should consider discounts when buying in bulk. Even more, consider the savings in hours of paid staff time and mileage expenses with monthly trips to the store.

DISCLAIMER! This strategy is fantastic EXCEPT during a pandemic! Please refrain from buying essential supplies in bulk until COVID-19 has passed.

I am aware that these Penny-Pinching strategies might sound like common sense. However, I am amazed each time I walk through cutting costs at a nonprofit that is struggling.  As a result of this exercise, they commonly identify $3,000, $5,000, and even as much as $10,000 in savings! Above all, remember that when it comes to cutting costs, every penny saved is a penny earned. As a result, you will have more dollars to pay staff and keep your doors open.

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