Begin with the Budget
Now is the perfect time to review your budget and make sure it is realistic. When the economy is slow, people tend to donate less, so avoid forecasting a normal annual increase in donations unless you have good data to back it up.
One important aspect of the budget process that often gets overlooked is staff involvement. Let your staff know how things stand with finances and give them responsibility for their areas. This creates a sense of ownership that will encourage your staff to spend wisely and prevent going over budget. Also, ask your staff to look at expenses and identify ways to save. They will often be able to find alternatives for expensive items and eliminate nonessentials entirely.
A well-made budget is your best method to monitor fiscal health. But remember: when you are done making your budget, you are just getting started. The budget needs to be reviewed regularly and adjusted to stay on track.
Back to Basics
Many sources of savings come from simply following some basic rules of financial management. Many tried-and-true methods for economizing tend to be overlooked during boom times, so now is a good time to dust them off. Here are a few
- Get three written bids for major purchases and don’t be shy about letting vendors know how much others are asking. You’ll be surprised at how competitive prices will get.
- Read the fine print to determine the full cost of buying a service or product. You will often uncover hidden charges and fees.
- Double check your invoices. Mistakes happen, so if you are overcharged or did not get what you paid for, dispute the bill.
- Review suppliers on a regular basis for price and efficiency. You may find that you can reduce cost by consolidating purchases with one vendor rather than several. Also, try negotiating with current suppliers for better pricing and consider proposals from alternative suppliers to lower costs
- Review purchasing procedures to find areas for reducing costs. Look for adequate controls on spending limits and the number of people authorized to make purchases.
Share Your Expenses
Why pay for office equipment and supplies on your own when you can split the cost with others? For smaller nonprofits, sharing the expense of major purchases is a very cost-effective way to stretch a dollar. You can join with other organizations in your area in a group-purchasing program for supplies, equipment, and services. You can also consider sharing workspace. This will cut down on rent/mortgage payments, utilities, and a number of other expenses. And share information too. Tap into your network of nonprofits to discover where others have found the best deals and preferred vendors.
Get Creative
There are hundreds of ways to save if you think creatively. For example, try asking companies, schools, or hospitals if they would like to donate office furniture or supplies. You can also try using volunteers instead of staff — ask donors to donate time instead of money. Or ask your local utility company to come out to your facility to perform an audit to determine how you could save on electricity and water. And ask for discounts on everything — the worst that will happen is that the company or individual will say no. |
