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Cost-Cutting Ideas for Nonprofits: 6 Creative Ways to Save Money
I think we can all agree that 2020 has had a rough go so far.
We’re about a third of the way into the year, and most of the world is tucked away in their homes, trying to figure out how to navigate this weird limbo economy, and wondering when driving to the grocery store will stop being the highlight of the week.
It's been just over a month since most of us were recalled to work from home, and the reality is finally starting to sink in. Hard.
If you’re like most nonprofit professionals, the thought of keeping your organization afloat during a financial crisis seems like a huge undertaking; One you never thought you’d find yourself in.
Although we can’t control this unprecedented economic situation, we can control the actions that we take - including how we spend our money.
As most nonprofit professionals would probably agree, we aren’t known for our frivolous spending habits - in fact, we’re known for just the opposite. Being experts on how to run an organization on a shoestring budget is going to work to our advantage - and now it’s time to kick this superpower into high gear.
There are plenty of other things you could be doing to help you stay afloat in these uncertain times, but since most of us are experts at saving money, it might be a good place to start (if you haven’t already). If you’re not a frugality expert, then these cost-cutting tips will definitely help push you in the right direction.
Before we list off all of our creative ways to cut costs, we have two disclaimers:
- Cutting your staff will not be listed as a cost-cutting tactic. This is one of the biggest mistakes you can make. If you can in any way, try to avoid it - especially if they are in the fundraising department. Now is the time, more than ever, to come together and keep morale up. There are plenty of other ways you can cut costs.
- Many of these tips and tricks might not apply to smaller organizations - especially to those organizations that are strictly volunteer-run or who are already using every trick in the book to cut costs. This is more for the medium-sized organization that is looking for a little refresher on how to pinch every penny.
All right, enough with the long intro - now onto the good stuff. After sifting through our trove of cost-cutting tips, we’ve condensed everything into six themes:
1. Always ask for, and seek out discounts
This may be an obvious one for most nonprofit professionals, but it’s always good to hear something multiple times to make sure it sticks. The golden rule in fundraising is “you raise money when you ask for it,” and the same should apply for asking for discounts. Most for-profit companies do provide some sort of discount to nonprofit organizations - and almost always if you ask (even if they don’t officially have one).
In response to COVID-19, many companies and organizations are extending their discounts or offers even further to help small businesses and charities get through these uncertain times.
Another great way to receive discounts on top-notch services and products in the sector is to join a nonprofit state association or nonprofit network.
Not only are you able to have instant access to a community full of like-minded people, but you also have access to capacity-building resources, and services and products offered at a heavily discounted rate.
To join a nonprofit association, you typically need to pay an annual membership fee, which can range from $100, all the way up to $500 and beyond. However, you will quickly see a return on investment should you choose to take advantage of all the resources that are offered to you.
And don't forget to negotiate! I have seen first hand the power of good negotiation, a business will never give you their product or service for less than it costs them to make it, so don't feel guilty. Develop rapport, tell them about your cause, and then ask them to give you a better offer. It works almost every time.
2. Pool your resources with others
Remember the quote, “sharing is caring”? Well, there’s a good reason why that quote is so widely known and used. Life is always easier when things are shared, and there are many different ways to achieve these kinds of savings.
One way to approach pooling your resources is to look within your organization.
Are you and your teammates paying for different tools that have the same function? Maybe one of you is using Zoom and the other is using GoToMeeting? Or perhaps you work in a larger organization with multiple chapters. Are you using a different donor management system than a neighboring chapter or branch?
It’s not commonly known, but many software companies will give volume or bulk discount pricing for multiple subscription purchases. Spending money to save money might sound counter-intuitive, but think of this like Costco, or any other large wholesale store: the more you purchase, the better deal you get.
By purchasing subscription-based products or services in bulk, you’re not only cutting your costs and saving money in the long-term, but you’re also increasing your productivity by being able to work more collaboratively with neighboring chapters, and ultimately enabling your team to focus on your mission. So why pay full price when you don’t have to?
Another great way to pool your resources is by partnering with other local organizations or nonprofits in your area. You could split the costs of many resources by sharing office space, supplies, event materials such as tables and tents, and even volunteers or part-time and administrative staff.
Many cities in North America have co-working spaces - some are even solely dedicated to nonprofit or impact-driven organizations. Although sharing workspaces may not be for everyone, it is certainly worth considering due to the sheer amount of money that could be saved on rent, insurance, and other brick and mortar bills.
Finally, is there something you use a large volume of each month? Consider teaming up with other nonprofit organizations and purchasing together, you will have the power to negotiate much larger discounts as a group than you would as a single organization.
3. Take the “all hands on deck” approach
As mentioned above, letting go of staff should be a last resort when it comes to cutting costs. Instead, in an ideal world, you should be doubling down on them. However, we know that this is unthinkable for most organizations.
Instead, try recruiting volunteers to help with administrative or long-neglected tasks that never seemed to get done. Now is the time where many people have more time on their hands and are eager to step in and support.
So, you may be asking yourself, “Do I really have time to not only worry about my organization’s health, but to now manage recruiting, training, and supervising more volunteers? This does not seem realistic!” And you’re completely right - you don’t have time to juggle all of this yourself.
The key is to divide and conquer… and delegate.
Take the first step by pulling in a few long-term or dedicated volunteers and explain clearly what you need them to do. If they are new to this task you will need to give them detailed instructions, as well as a clear understanding of your end goal.
Once they are aligned with your goals, ask them to create training materials, on-boarding documents, or any other material that aids in the volunteer recruitment and training process. You will be amazed by what they can create if you communicate what you want well.
If there is greater trust, you can even go one step further by asking them to help supervise and mentor new volunteers. All organizations work differently, but there are always creative ways to mobilize volunteers and advocates.
Another important, yet under-utilized set of hands that many organizations often overlook, are university students. Many are keen to gain real-world experience and most are even required to complete some form of internship in order to complete their studies. Bonus - they often bring fresh insights, best practices, and information learned from their current studies!
4. Audit, audit, audit!
The reason we mentioned this blog post is more directed for the medium-sized organization has mainly to do with this section.
In a smaller organization, most expenses don’t go unnoticed, whereas, in growing organizations, things can become a little tangled and forgotten. For example, a marketing manager who was using Adobe Suite for Photoshop and Illustrator recently quit. The new marketing manager prefers to just simply use Canva and outsource a graphic designer when necessary. Now you’re paying for both Adobe and Canva, which can total up to $70 USD a month per user. It’s little subscriptions like these that can really add up.
This is why we highly recommend doing a quarterly audit of your credit cards and subscription purchases.
Remember, it may seem like a $1,000 purchase is far more important to restrict than a $100/month subscription, but a year goes by quickly and that’s $1,200! I have seen small organizations leave $100 subscriptions running for multiple years before they realize they don’t even know what they are for. Consider every subscription cost as a monthly cost times 12 when calculating savings or expenses.
Doing these spend audits regularly will quickly show you where your cash is going and how it’s being managed. It’s worth noting that some members of staff, while well-intentioned, often have a different relationship with money and fail to ask the seemingly obvious questions about spending money and whether it’s necessary. Always have other team members sign off on budgets and expenses.
5. Shift your “business as usual”
Many organizations that have been around for a while tend to have the mentality of “we’ve always done things that way.” However, if you want your nonprofit to have the best chance of survival, you have to start thinking of new ways to achieve the same results.
Procedures and systems are important but they only work if they are vetted, revised, and updated for current circumstances.
Let’s take your office space, for example. If your lease is running out, or you’re not tied down long-term, maybe it’s time to start thinking about downsizing your office space. Since most of us have been forced to work from home during the pandemic, it might not hurt to save money on rent by allowing employees to work more permanently from home, or at least a couple of days a week.
We’ve all been given this opportunity to re-evaluate our work environments. Consider if this “new normal” could become an effective cost-cutting strategy.
Is moving your entire office to everyone’s home too far of a stretch? You can always start off smaller; Consider removing all of your phone landlines. Not only is the cost of monthly phone bills expensive, but when you add in hardware, repairs, and maintenance it may surprise you how much you spend to have a phone on your desk. There are really great alternatives to landlines, such as cloud-based VoIP phone systems like Voxter, Jive, or RingCentral.
Another easy shift: take a closer look at the smaller, administrative things like paper, mail, energy, waste... These things add up and are often easily revised with new technology (email vs snail mail) or better management. (space heaters running all night?)
You will not only save money, but you will also help save the environment. Being more environmentally conscious is one of the best (and most important ways) to eliminate those non-essential purchases.
Perhaps, instead of printing everything to file away, consider shifting to digital document storage, like Google Drive or Dropbox. Storing files offsite has its challenges but a host of benefits as well!
Already doing that?
What about assessing your direct mail strategy more regularly? Many nonprofits consider their direct mail fundraising campaigns a main source of revenue, however, as our population becomes more technically savvy and environmentally conscientious you may be surprised by how many donors would prefer digital communication. Save some money, reduce environmental impact, AND appease a new generation of donors, win, win… win!
6. Manage your cash flows effectively
Right now cash is the thing you have been watching most closely if you are like most organizations. If this concept makes you feel anxious, it could be because you don't really understand your cash position. Cold, hard, tangible cash is the one thing needed to keep any organization afloat, so you will want to manage yours wisely.
Every organization should have a detailed understanding of where their cash goes and how much they have coming in to cover expenses. A simple budgeting tool that looks at cash can mean the difference between an organization that survives and one that doesn't.
If you have an accountant that manages all this for you, I would like to challenge you, in saying that isn't good enough. Accountants are brilliant, they can file taxes, create reports, and appease government regulatory bodies. Yet when it comes to simple day-to-day cash management, accountants can at times, become so wrapped up in the rules and regulations that they miss the simple fact that if you need $5,000 to pay your bills and only have $2,500 in your bank account, you have a problem.
Few accountants have operated a cash-strapped business or organization so don’t assume they will let you know if cash may become a problem. They report on what has been and are less involved with anticipating what will be.
Build out a simple cash flow tool that shows you your position today and forecasts at least 12 months ahead. Your accountant can help you with this but you must understand how it works and how to use it.
A simple spreadsheet will do. Start by developing the main spending categories and estimate how much you think you will spend on each, then forecast the cash you will receive and add this on the day you think you will actually receive it.
A cheque in the mail is not cash until it arrives, and clears the bank. If you want to take this a step further you can look at metrics and trends over time to understand how your cash position may improve as you make organizational changes.
Track Your Nonprofit Metrics Using Keela
See how nonprofits use Keela’s reporting and analytics features to track and measure the success of their fundraising campaigns.
If you want to keep it simple, track cash-in buckets (donations received, recurring and one time) and cash-out buckets (salaries, office, marketing expenses, etc.) then do the math to ensure you will stay cash positive.
Finally…
Cutting costs can seem boring and tedious but getting savvy at this skill can make it exciting.
Some of the managers that are best at this end up building some of the most successful, enduring organizations.
Remember, not all costs need to be cut! Some spend is necessary and will net you more in revenue than you would have saved by cutting it. In fact, you should use that as a consideration for all cost-cutting.
If the cost does not net you more in revenue, even indirectly, than you would save by canceling it, then it should be cut. Your office should add more value in collaboration, communication, culture, and teamwork than it costs each month, or it’s not worth having.
While it may be hard to quantify, it’s a good question to ask yourself.
Good Luck!
