Cost Cutting Strategy Examples for Nonprofit Organizations
A nonprofit organization can increase cash flow in two ways. The first and most popular method is to raise more money through donations. The second method of cutting costs is just as valid and will provide additional money that can be used for programs and projects instead of overhead expenses. Smart nonprofits use both methods to maximize the resources available to carry out their work.
Nonprofits can cut costs by soliciting in-kind donations of materials and services the organization previously paid for. An "in-kind" donation is a gift of things or services that normally cost money but are provided by a supporter at no cost to the charity organization. Examples of in-kind donations include a business owner who donates paper and office supplies to an organization she supports and an accountant who provides free accounting services to a local nonprofit.
Some businesses offer nonprofit organizations special discounted rates. Others do not publish nonprofit rates but will provide discounts for charity organizations when asked. Nonprofits may be able to significantly reduce overhead costs by calling each of their vendors to ask for a discount and by shopping around for lower costs and larger discounts from other providers.
Volunteers are an excellent way for nonprofits to cut staffing costs. Many retirees and stay-at-home spouses possess skills comparable to paid employees and are willing to volunteer for organizations they believe in. As a nonprofit organization grows, it can draw from its pool of supporters to fill roles with unpaid talent rather than paid staff members.
Organizations can partner with other nonprofits to share costs on large ticket items and save significant sums. Items than can be shared in this way include office and event space, automobiles, copiers and office equipment and even support staff. Nonprofits seeking to cut costs through partnering should have written agreements in place with their counterpart organizations to ensure that the terms and responsibilities of the sharing arrangement are understood by all parties.
In many countries nonprofits qualify for special discounted mail rates for bulk mailings. Setting up discounted mail service is often as simple as filling out a form and paying a small registration fee. Nonprofits that send out lots of fundraising mail or other types of direct mail can save significant sums through discounted postage costs.