A penny saved is a penny earned.
Organizations are always making miracles happen on tight budgets. So, it’s hard to imagine cutting additional costs at a nonprofit.. The best leaders understand two things must happen to sustain a nonprofit: SAVING money and RAISING money. Afterall, nonprofit is your tax status, it shouldn’t be your business model. Let’s focus on “saving” money at a nonprofit by exploring 8 ways to cut costs that are easy to start today.
Fact: there are currently over 2.7 MILLION nonprofits registered in the United States, and over 60,000 nonprofits close their doors annually (this statistic is pre-COVID and does not account for COVID-related closures).
Today you might be reading this from home as you social distance. You may feel stress about keeping your organization’s doors open during the COVID-19 pandemic. Others will read this long after things return to the new normal. In either case, these money-saving strategies will apply. While they may not fill your bank account, these tips for cutting costs at a nonprofit may keep your lights on, doors open, and sustainability closer and closer.
Above all, planning for financial sustainability comes down to Budgeting and Expenses:
- First, sit down with your accountant. It’s important to itemize your fixed expenses and upcoming bills.
- Next, prioritize fixed expenses. These are bills that you pay monthly, such as salaries, rent, utilities, landscaping, pest control, or accounting fees.
- Finally, you will want to take the process one step farther and ask, “Are there any expenses on this list that do not directly keep our lights on or doors open?”
Once you have a good understanding of your expenses, consider the following 8 ways cutting costs could help:
1. Take advantage of tax breaks and stimulus programs- Did you know states will reimburse sales taxes on your purchases? You could be getting a reimbursement check every year for thousands of dollars if you file sales tax reports. Work closely with your board to explore any state or federal stimulus opportunities for nonprofits. These funds are often depleted quickly, so act immediately when opportunities are announced.
2. Re-imagine work roles –When cutting costs It’s never easy to let staff members go, but “employees on payroll” come with extra expenses. Connect with your volunteers and see who might be willing to offer some extra hours for the coming 3-4 months. Speak with your accountant to explore what “contract positions” entail. It might be possible to keep staff members on a contract basis until your organization can sustain employees long-term.
3. Conversations with essential vendors – Contact your provider and explain the situation. Above all, be gracious. Explain how your organization wants to honor your monthly commitment and what is preventing you from doing so. Ask if the provider would be willing to work with you. Furthermore, keep all options on the table: deferral of payments, reduced payments or even an in-kind contribution to cover those costs.
4. Take a walk around your facility and take an inventory –As a result, what can you cut temporarily or permanently?
Example: Energy/Utility
- Unplug energy-sucking appliances.
- Opt for open windows instead of AC and sweaters instead of heat if you can do so safely!
- Set the heating/air controls on a cycle that allows for gradual increases/decreases in temperatures during non-peak office hours.
- Seal windows/doors and install new blinds or energy-efficient curtains/lighting/appliances.
5. Marketing and Outreach –Seek multiple quotes for all current and upcoming projects. As the economy changes, so might vendor pricing. If you have a long-term relationships with or have a great connection with your current vendor, let them know that someone else has offered a better price for the same service. As a result, ask if they are willing to “price match.”
6. Community Service Programs – General maintenance, repairs, and lawn care services impact the monthly budget. Consider contacting your court’s community service work program to explore options for becoming an approved worksite.
7. Service Contracts – Don’t forget to reassess annual service contracts. The need for local pest control, insurance, copier lease, or related services may change, therefore you should re-evaluate annually. As a result of determining “peak seasons” for these services you may be able to just pay for peak months rather than monthly.
8. Buy in Bulk – How many of us buy small quantities of office supplies at the local dollar store to “get us through until the next donation?” While the monthly cost might look reasonable, consider the possible discounts when buying in bulk. Even more, consider the savings in hours of paid staff time and mileage expenses associated with monthly shopping trips.
DISCLAIMER! This strategy is fantastic EXCEPT during a pandemic! Please refrain from buying essential supplies in bulk until COVID-19 has passed.
Many of these strategies might sound like common sense. However, I am amazed each time I walk through cutting costs with a nonprofit that’s struggling. As a result of this exercise, we commonly see organizations identify $3,000, $5,000, and even as much as $10,000+ in savings! Above all, remember when it comes to saving money at a nonprofit, every penny saved is a penny earned. As a result, you will have more dollars to pay staff and keep your doors open.
About the Author
A grant writing expert, executive and development coach, fundraising consultant, and national fundraising trainer, Mandy Pearce, launched Funding for Good, Inc. in 2009 to equip organizations with the skills and tools needed to become successful and sustainable.
Mandy has taken her passion and expertise for fundraising to the development field and shared it with individuals and organizations for over two decades through 
executive coaching, strategic and development planning, seminars, and specialized consulting programs. Mandy’s dynamic teaching style brings thousands of people annually to her presentations at conventions, trainings, and workshops, in person and online.
Funding For Good, Inc. continues to create sustainability and build capacity for organizations across the country through the effective sharing of the knowledge and skills required to generate success. Learn more, visit https://fundingforgood.org/.
Even in a good national economy, nonprofit organizations can havetight financial constraints. And since most nonprofits are alreadyoperating close to the fiscal balance line, they feel the financialpinch sooner and more acutely than business or government when theeconomy takes a downward spin.
In your article, you tag a line that “A penny saved is a penny earned” that means most non-profit organizations have their tight budget, for this reason, they are trying to raising their fund by cutting down additional expenses. And they are also stepping up to meet the increased burden among the community by awareness. Therefore, now I know that if I want to sustain any non-profit organization, I should raise and save money. Thanks a lot!
Being a non-profitable organization, I have done several things to cut down my extra expenses by following your guidance. For instance, I have taken advantage of tax breaks and stimulus programs. By having these business facilities, I was able to maintain sustainable growth for my organization. Thanks for your informative article!
Excellent! Way to take action on what you’re learning!