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Putting the Profit Back into Not-for-Profits

By definition, not-for-profit (NFP) organizations exist to fulfill a need that is usually charitable in nature. They focus on the wellbeing of their communities in areas such as education, literacy, health, community service, environment, arts and culture, and other common pursuits. And while some people might believe that NFPs are in dire straits (and, certainly, some are!), there are plenty of very profitable NFPs – just think of the United Way or the Cancer Society for examples of financially secure NFPs.

For the most part, NFPs rely on grants and donations to stay solvent, so they can continue their good work. However, NFPs that incur high operating or administrative expenses may be subject to questions by potential supporters who check the filings of revenue and expenses on the Canada Revenue Agency website before making a donation. Astute donors seek organizations that are able to demonstrate their effectiveness and show accountability, no matter how admirable the NFP’s mission.

Money can only stretch so far – it is up to the NFP to ensure they keep their expenses under control by implementing processes that are not only efficient and effective, but also serve to improve the productivity of the entire organization. So if you’re working in a struggling NFP or an NFP where expenses are on the high side, “cleaning up your house” is a must. By implementing efficiency and effectiveness measures, you will be signaling to your donors and grantees that you’re serious about ensuring that their money is put to the best possible use in the community.

Here are five things you can do right now to improve your NFP’s effectiveness and efficiency.

  1. Improve your buying power by consolidating vendors. If you have many vendors for many products, use only one (or few) vendors for the same products. Vendors are happy to negotiate better deals if you’re willing to purchase more than one type of product from them.
  2. Focus on your core competencies and outsource/delegate everything else. An area of great savings is in information technology. If you’re a small NFP, don’t hire permanent IT staff – outsource for cost savings. The same goes for other services – while the cost may seem large at first, spending on external expertise will save you money in the long term.
  3. Upgrade your systems and applications as you can afford to do so, but remember that working with very outdated applications can also harm your productivity and your image. Find the balance between new applications and productivity before you spend money.
  4. Improve internal processes to save time and money. Start by improving workflow, not only your own, but that of your staff, also. Clean up clutter, conduct meetings online instead of travelling (and wasting time), handle paperwork only once (use the “OHIO” method), and make sure projects have clear objectives before starting them.
  5. Use technology to improve your efficiency. Despite what you might think, grantees and donors like to associate themselves with organizations that look like they know what they’re doing. Use your website to work for you, not against you. What does your website say about you? Is your website accessible? What about your own accessibility? Do you have multiple phone numbers or multiple email addresses? Is your email address intuitive? Small changes can make a big difference to both your image and your efficiency.

Implementing the above changes in your operations will help you save time and money. It will also help improve your NFP’s efficiency, effectiveness and productivity. At the end of the day, when you can demonstrate superb efficiency, effectiveness and productivity in your operations, who doesn’t want to be associated with such a well-run organization?

Mary Colak | MNC Consulting Group
Mary Colak is a Management Consultant with MNC Consulting Group and one of the Victoria Foundation's Community Advisors. 
 

 

 

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