It is well recognised that charities, social enterprises and third sector organisations rely heavily on fundraising and sales to support their various causes. However, fund saving can prove just as vital. Reducing expenditure and streamlining operations can free up additional finances for those in need, for improving products and services, or other revenue generating activities.
Before we address how not-for-profit organisations can reduce overhead costs, let's take a quick look at why they should:
The impact of overheads on charitable giving
While some have previously argued in favour of greater investment in back office costs, the view of the wider population is often one of indignation. Though an essential expense, donors may be put off at the thought of their contribution being used for rent or utilities. Instead, supporters prefer to see that their hard-earned money goes directly to those in need. Although running costs are an unavoidable expense in ensuring any organisation both survives and thrives, reducing them where possible is likely to place you in better favour with supporters. Not to mention, stripping out unnecessary costs minimises financial waste, leaving more funds to be reinvested.
Reducing costs without compromising the front line
It is possible to reduce costs without adversely influencing the front-line performance:
1. Utilise the right software
By utilising the right software, it is possible to simplify operations. From organisational tools to finance management, there are a host of systems available that can optimise your performance. Need help managing your finances? Software such as QuickBooks, NetSuite ERP and FreshBooks, can manage invoices, keep track of expenses, or organise donations. Making good use of CRM systems, task management systems, and other time-saving software can allow you to save valuable hours and money.
2. Make use of free services
Did you know that there are many services and systems that are available to charities, either free, or for a significantly discounted rate? From sharing office spaces in order to eradicate costly rent and utility bills, to accessing system management services designed to make things easier. Some options include:
- Charity Digital, providing a range of subsidised digital resources for charities
- CAN Mezzanine, a charity that support other not-for-profit social organisations, by providing cost-effective workspaces, fully equipped with high-speed broadband and office furniture
- Slack, an online workspace with a range of communication channel options available to not-for-profits, for communicating and managing staff and volunteers
- Google, providing free ad grants to not-for-profit enterprises, enabling them to reach more people and generate awareness as well as revenue
- G Suite, another offering from Google, free for charities, full of useful systems and people management tools to keep organised
- Canva, an image and design tool accessible for free for charities. With 100’s of images available, it can be a real time saver for generating marketing materials
3. Use your most valuable resource, resourcefully
No, not money, we are talking about people. People, whether staff, volunteers, supporters, stakeholders, suppliers, beneficiaries, or others, are the most valuable asset of any not-for-profit organisation. It pays to make the best use of the groups and individuals that support these causes to help reduce costs:
- Avoid setting staff or volunteers unnecessary or repetitive tasks. Instead, identify which processes could be removed to make your organisation more efficient
- Make use of volunteers. Charities in particular, rely on the support of volunteers but aren’t always sure where to look. University students, job seekers, part time employees, previous beneficiaries, and even your existing supporters may all include people who would be keen to get involved. Why not reach out to them?
- Play to people’s strengths. We all have our strengths and weaknesses, and we get the best from people when we set tasks that are achievable and enjoyable
- It is well documented that reward and recognition is a huge motivator. Praise successes often, however small, and your team are likely to be inspired to carry on the good work. Particularly those who have given their time for free
Invest in the right areas
While it is evident that there are cost-cutting tips to be explored for the not-for-profit sector, do not be afraid to invest in the right areas. It is true that it takes money to make money, and investment, particularly in the right personnel and marketing, is still essential. So, while reducing expenses is beneficial, do not let cost-cutting efforts get out of hand. Instead, when looking to reduce overheads for your not-for-profit enterprise, focus on areas that allow you to streamline and consolidate your operations, and you are sure to reap the benefits!