Cost Cutting Tips for Non Profits
Written by Gautam Patil for Gaebler Ventures
Non profits operate on extremely lean budgets which leave little or no room to accommodate 'administrative' expenses. It thus becomes important that Non Profits use other channels to operate and communicate to save costs.
The typical expenses incurred by Non Profits usually constitute communication, utilities and personnel expenses.
Other organizations may be able to afford conventional modes of operation since they usually factor in these expenses while pricing their products or these costs form a very small proportion of their expenses.
However, for non profits - owing to their lean budgets - cost cutting becomes even more critical for achieving their objectives and sometimes even for their survival. Thus they need to look at unconventional albeit less reliable ways to operate.
Non profits can drastically cut down their telecommunication expenses by switching to VoIP (Voice over Internet Telephony) based services. These basically make use the internet as a medium instead of the conventional landlines. Skype and Gtalk (from Google) are typical examples. While computer to computer calls are completely free, other call rates are much lower than those offered by telecom operators. The only fixed expense is the broadband rental expense.
Traveling expenses can also be cut down by switching to video conferencing where possible. Some Non Profits have also saved on start up costs by hosting their websites on blogging sites and not on dedicated servers. Official email addresses are also created on free email services like Gmail or Yahoo! reducing the need for a dedicated IT infrastructure.
Non Profits usually work with a lean workforce but sometimes this may place a constraint on their effectiveness. Exploring the use of volunteers can help overcome this. Volunteers have traditionally been considered an ad hoc source of man power and an unreliable - from an execution quality point of view - one at that.
Proper planning and a good incentive structure can help ensure a regular supply of skilled man power when required. Many Non Profits take care to study their organization to study the bare minimal work force required for daily operations and also make projections for the short term and start scouting for volunteers in advance through social community and official websites, word of mouth and advertising on free volunteer websites. Many universities necessitate community service as a part of their coursework.
Similarly, many corporations constantly look for volunteering opportunities for their employees. Put together, such sources can ensure a steady supply of quality volunteers.
A closer look at stationery usage and printing policies may help reduce related costs. Mandating travel by public transport or deliberating on cheaper modes of transport during field trips may also help. At an extreme are Non Profits which avoid office space rentals altogether as employees work directly from their residence and an internal messenger and email helps them keep in touch constantly.
The focus should basically be on looking at unconventional ways to operate as not all rules defining the functioning of corporations apply for Non Profits.
Gautam Patil is a recent MBA graduate from the Indian Institute of Management, Bangalore. In addition to serving as a contributing writer for Gaebler.com, he will join the consulting firm Oliver Wyman at their London office.
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What's your advice on how to cut costs if you run a nonprofit organization? We welcome all comments, questions and suggestions.