Ways Nonprofits Can Save Money

There are three common elements that most nonprofits share. First the need for operational and/or capital dollars exceeds what they currently have. Second, most public charities are doing good things in the communities they serve, and third, in order for a nonprofit to last they must operate like a business! Nonprofits often times find themselves in a rut of constantly putting out fires, leaving little time to truly manage their business. It is difficult to know all that is needed to manage your organization. Too often the ideas that seem so obvious to one individual are so enlightening to another.

Savings Tip #1
Beware of the supposed savings on office supplies, janitorial supplies or light bulbs through the mail or by phone. Often times those sales calls or color fliers, while tempting, fall in the category of too good to be true. In most cases the savings are due to the fact that the merchandise you receive is of poor quality or there are usually outrageous shipping and handling fees when you get the item. These companies try to get you to agree for them to send you a free sample, then they will send you a bill! To make matters worse, if you do make a few purchases you will normally get sales calls offering you further “deals” when you least want them, taking you away from running your organization, or you’ll get more junk mail than you can stand.

Why not buy locally from the people who support you? If you are in need of office supplies, why not try Staples or Office Depot, if these chain stores are in your area? The local store managers, when approached, have the authority to donate items to nonprofit organizations. One way you might try this is to have your list of items you need and tell the manager up front that you plan to purchase the items at their store, but you would love their help and support if he could donate any portion of these items. Get the store manager’s name and business card and give them your brochure or any material about your organization. Also, be considerate of the manager’s time; please do not show up at peak business hours or at lunch. Regardless if anything is donated, send a thank you note for at least taking their time and/or for their donation! Build the relationship and put them on your newsletter mailing list as well.

Savings Tip # 2
Save on utilities costs by asking your local utility company to come out to your facility to do an audit to determine how you could save money. One idea may be putting on a window tinting, placing water saving units in your toilets, or installing hand dryers to reduce paper towel usage. As you look to save money, look at the cost of any improvement and the amount of time it would take for you to recover the cost in savings.

Savings Tip #3
In North Carolina as well as in other states nonprofits can get a refund on the sales tax they spend; however, it is not automatic. You must apply for the refund and have the proper documentation to show you did actually spend that amount, so save those receipts!

Savings Tip #4
As a 501(c)(3) Non-Profit Organization, the federal government has provided you the luxury of ‘opting’ out of the state unemployment tax system and directly reimburse the state for benefits paid to former employees. Opting out of the state unemployment tax system can save nonprofits a considerable amount of money, however, exposes the nonprofit to self-insurance risks. For more information go to: Opting Out Of State Unemployment Taxes

Savings Tip #5
If your organization does direct mail or mails out newsletters, you should consider getting a nonprofit bulk postage permit. By making changes like adding the nine-digit zip code as well as bar codes, you can further lower postage cost. The United States Post Office has a program that can help organizations with their mailing list to get proper zip codes. You should make an appointment to talk with your local postmaster about these savings. Lastly, consider emailing your newsletter.

Savings Tip #6
Beware of in-house printing for your newsletter or other printed materials. While today is the age of everyone using high-tech computers and printers allowing most of us to produce a wonderful looking product, be careful. Make sure you honestly run the numbers on all the cost. Include the time staff spends on printing and folding, the repair cost to the copying machines and supply cost, versus taking the project to a local printer.

Savings Tip #7
Invest in prevention! It is important to be covered for those really big and unexpected expenses. Every nonprofit should have “directors and officers insurance” that covers the board in case of lawsuits. You should look at insurance that includes fire, flood, plate glass coverage, computer hardware and software, theft, and dishonesty. If you have a retirement plan the person who is directly in charge of that may need to be bonded. Executive directors of an organization should also be insured personally.

Savings Tip #8
Invest in accountability. You should have a “Board Member Performance Plan” for everyone who is asked to serve on the board. Board members need to know what is expected of them. Board members should not only be advisors but active in raising funds and providing the vision for the future of the organization. Likewise, there should be written job descriptions for all staff members as well as the minimum of an annual review.

Savings Tip #9
As a general rule, when you are planning a major purchase or contracting for a service, it is best to get three written bids. By doing this you can ensure competitive prices and get accurate comparisons.

Savings Tip #10
Calculate the full cost of buying a service, or product. Read the fine print and see if there are any hidden charges. Sometimes there are delivery fees or special maintenance fees.

On a copy machine you lease you could be charged if you produce more copies per month than your lease allows, or you may be charged for toner.

The bill you pay for a Yellow Page ad is not an annual bill but a monthly cost! Beware of fake bills that look like a Yellow Page bill that is to include you in a national directory, which no one uses.

Savings Tip #11
Ask for a discount on everything! You are not going to get it unless you ask. You also should not be ashamed to ask. If you truly believe in your organization and can express your passion to others about your cause, just ask. Because the worst thing a person can say is no. Some companies give you a discount if you prepay a bill or pay a bill within a certain period of time.

Savings Tip #12
Buy in bulk when it makes sense and you have a place to store the items, but only when it is more cost effective and you really need the item. Don’t buy an item just because it is on sale! Also, make sure to ask others in the nonprofit community where they found the best deals and share your information with others.

Savings Tip #13
Establish a budget, a budget process, and keep staff aware of your finances. Allow staff to “own” the budget and give them the responsibility and authority for sub-budgets. Too often this task is one that just the executive committee or executive director and board treasurer work on. To truly be useful, the budget must be honest and fully justify any increases shown from the previous year’s budget. Numbers must not just be picked out of thin air. If you budget a 10% increase in the amount of individual donations you expect to receive, then what are you doing next year that you didn’t do this year to make that a reasonable assumption? Sometimes in nonprofits, when executive directors draw up the first draft of the budget, they tend to increase the expected donation revenue from the previous year without honestly having a plan to back this up. The budget is the organization’s blueprint for the year ahead expressed in monetary terms the specific goals and objectives that both the board and staff as partners are expected to achieve. The budget should be looked at by your board month to month; the staff and board should make adjustments as needed.

Savings Tip #14
Establish written policies and make sure each staff member knows each of your policies. Be consistent in your enforcement of these policies. Make no exceptions. Otherwise, you will open up yourself and the organization to a lawsuit.

Savings Tip #15
Buy at the right time of year. Nonprofits typically buy items the day they need them and not before. However, you might ask a supplier if and when an item might go on sale.

Savings Tip #16
Use volunteers instead of staff. However, don’t fool yourself by thinking that just because you use a volunteer you are getting something totally free. Any good program requires that a volunteer be trained, which does cost money. However, volunteers can do repairs, clean or help with special events or provide a special service.

Savings Tip #17
Join with others in a group-purchasing program for equipment, supplies or services. Many national organizations have these programs. Or you may consider starting one locally. You will be surprised if you examine the purchasing power of your nonprofit community.

Savings Tip #18
Evaluate the cost effectiveness of every program your organization runs. Programs you have for your clients cost you money, and you must know if you are truly are getting the biggest bang for your buck providing the programs or could you do something else to better serve your clients?

Saving Tip #19
Evaluate your fund raising plan. If you have your twentieth annual fund raiser only because that is what you have always done, then consider what it truly does cost you by having the fund raiser. Your board’s time is valuable, and there are only so many fund raising events you are going to be able to motivate any board to do.

Saving Tip #20
Do not automatically pay late fees, interest charges or bank fees. Ask for fees to be waived if you normally are a good payer of your bills. Even with banks now merging and becoming larger, they still want to have a community presence, and no bank wants to get a bad reputation for not being kind to nonprofits.

Savings Tip #21
Review your bills. People and computers make mistakes. Don’t pay a bill on blind faith. Also, if you did not get what you paid for, dispute the bill.

Saving Tip #22
Get professional advice and don’t feel like you have to know everything yourself because that’s impossible! The best board is made up of professionals. Consider having at least one lawyer, accountant and insurance agent.

Saving Tip #23
Keep current with labor laws and other laws that effect your organization. You may need to purchase a newsletter or other publication to get the information you need.

Saving Tip #24
Look at your organization, keeping in mind safety and security. Is the work environment safe? Are the parking lots lit with proper lighting? Many times insurance companies will give you a credit on your insurance policy if you have an alarm system, but you have to ask for it. You also need to ensure in case of fire that everyone knows the evacuation routes and at least two ways out of the facility and where to meet to make sure everyone is out of the building.

Saving Tip #25
You should keep back-up copies off-site of any important records, like financial records. This should be a part of your overall disaster plan that you should establish.

Saving Tip #26
Find free office furniture and other equipment by asking the major corporations and banks if they have any they would consider donating. Every state agency has a surplus property program. Universities and community colleges have similar programs, and even though most of what they do not use is supposed to revert back to the state, you may be able to talk with them at a local level and receive a donation. Also, consider hospitals as a source of furniture, or if you need used sheets and towels for rags they may donate but you must ask.

Saving Tip #27
Nonprofit Standard Mail – Authorized nonprofit organizations are eligible for additional savings. Nonprofit organizations and businesses use Standard Mail® the same way. The only difference is that authorized nonprofit organizations are eligible for additional savings on Standard Mail. Eligibility to use nonprofit rates is based both on the eligibility of the organization and the content of the mail piece as established by federal statues. Authorized Nonprofit organizations can use Standard Mail or Enhanced Carrier Route mail.

Eligible Organizations – Simply being an IRS-approved nonprofit organization does not qualify an organization for these rates. Typically, there are 10 categories of organizations that may be eligible.

Organizations eligible for nonprofit rates include:
Agricultural
Educational
Fraternal
Labor
Philanthropic
Religious
Scientific
Veterans
Voter Registration Officials
National and State Political Parties

For more information read the following:

Business Mail 101 contains an overview of the application process and eligibility standards

DMM 703 Nonprofit Standard Mail and Other Unique Eligibility

Also, Nonprofit Enhanced Carrier Route Standard Mail allows nonprofit organizations to save even more for bulk mailings weighing less than 16 ounces. All you have to do is sort mail pieces to the individual carrier routes within a 5-digit ZIP Code™.

Remember, think outside the box!

Additional Information

AdTech specializes in managing non-cash donations for nonprofit organizations. By converting a wide range of donated inventories into cash, AdTech is able to increase cash funding to your nonprofit organization.

Consumer World – Over 1,500 of the most useful consumer resources on the Internet, and categorized them here for easy access. Loads of useful consumer information.

Gifts in Kind America
A generous 3M corporate product donation in 1983 marked the beginning of Gifts In Kind International, a charitable organization that today is the 8th largest in the world. Today’s top manufacturers and retailers, including 40 percent of the Fortune 500 companies, rely on Gifts In Kind International to design and manage the donation process.

National Association for the Exchange of Industrial Resources (NAEIR)
NAEIR is a nonprofit organization founded in 1977 and dedicated to soliciting donations of valuable, new merchandise from American corporations (donors) and redistributing this merchandise to our members, nonprofit organizations, churches, and schools.

Start-Rite has the living essentials you need, at wholesale prices! The line of products include baby care kits, basic kitchen accessories, personal hygiene kits, bathroom toiletries, first aid kits, dish racks, eating utensils, and bedding accessories.

Surplus Exchange collects discarded and surplus business equipment from area, regional and national businesses. They bring this equipment into their 50,000 square foot warehouse, refurbish, rebuild or repair the items if necessary. This equipment is made available to their primary concern – The Nonprofit Community, and to general public secondary markets. Sales to secondary markets help fund their environmental, educational and human service programs and help keep prices lower to our charities.