Like your donors, you want as much of your nonprofit‘s funds to go directly to the cause it supports. However, you also know that there are a lot of administrative and operational costs involved in your organization, and those can add up. So how do the most successful nonprofit organizations manage to keep their overhead to a minimum without sacrificing productivity?
Some experts suggest calculating your overhead ratio by dividing administrative and fundraising costs by your nonprofit’s total expenses. And while that can be a helpful reference point, there are plenty of savvy ways to keep expenses well below that ratio. Not only do these entail finding cheaper tech solutions, but you can also invest in certain ways that will cut other expenses down the line.
We talked to five leaders from Forbes Nonprofit Council who take a scrappy, business-centric approach to their operations. Here’s how you can adopt some of their strategies for your nonprofit.
1. Look For Low-Cost IT Options
One of the biggest efficiencies on an overhead level could come on the IT side. There are so many low-cost, web-based software packages to look at. We use combinations of Smartsheet, WorkFlowy, 15Five and others to keep costs down. Many nonprofits are using Google Apps and getting free licenses for Salesforce.com. There are also nonprofits that provide tech services to other organizations. – Charles Eaton, Creating IT Futures Foundation.
2. Don’t Overwork Your Team
People are the biggest asset in any organization. To keep overhead lean, prioritize paying your people first. They work for your organization because they believe in its mission, but no one should be a martyr or you’ll lose talent to other sectors. Develop systems that promote efficiency so your team isn’t overworked. Solicit in-kind donations, and engage your board for services that can be outsourced. – Alison M. Friedman, Ping Pong Productions, Inc.
3. Reward Innovation
To keep overhead costs low, it’s important to create a culture that rewards innovation and encourages employees to be scrappy. If you have to spend money, make sure it goes far, and communicate that value to your employees. – Scott Bailey, MassChallenge.
4. Maintain A Clear Business Methodology
“Nonprofit” is simply a tax status, not a way to do business. You need to instill throughout your organization that you are running a business that needs to pay its bills and retain a surplus of some sort to build reserves for a rainy day. After all, no money, no mission. Financial transparency with board and staff will help everyone understand where and how much of your funding is going to various aspects of your nonprofit business. I’ve found that the more your internal stakeholders understand the reality of the finances of your enterprise, the better stewards of donor dollars they become. – Jack Kosakowski, Junior Achievement USA.
5. Invest In Community Leaders
Human capital is the biggest contributor to overhead and typically the hardest area to fund. Build a cadre of excellent volunteers and supporters for a lean operational team — it can have the most significant administrative benefit on the bottom line. I recommend finding contractors and community leaders who can contribute services and time pro bono, or source contractors, interns and students to get creative with labor needs. – Kari Keefe, Think Big Foundation.
Originally by: Forbes Nonprofit Council, Source: Jun 14th, 2016, Forbes.
