Nonprofit organizations advocate for admirable causes and create community, but they have to face unique challenges throughout their life cycle. Perhaps the biggest challenge is that nonprofits have less cash flow for their operations. Nonprofits often need to make do with tiny budgets and save money whenever they can while keeping overhead costs to a minimum.
While there’s no one-size-fits-all strategy to help nonprofits to save money, there are many strategies you can use to reduce your organization’s spending and raise funds. In this article, we look at some of these tips and discuss how they help your nonprofit stockpile funds.
1. Seek online donations
Nonprofits, social enterprises, and charities have used donations for decades. Donations have been key in funding their purposes and operating costs. However, physically collecting donations can take a lot of time and manpower.
To save money while still getting the funds you need, you can opt to receive online donations instead. There are plenty of services including MembershipWorks that allow you to receive donations and withdraw your money with minimal transaction fees such as those charged by your payment gateway.
2. Take advantage of nonprofit sales tax certificates and refunds
Some nonprofits can get sales tax refunds or use a certificate to exempt themselves from paying sales tax. As rules can vary between countries and states, make sure to consult a tax advisor or CPA to help you learn the right approach for your organization.
3. Apply for nonprofit government and foundation grants
Grants are an obvious choice for raising revenue. Grants to help organizations impacted by Covid-19 are already available. Often you will have to complete a significant amount of paperwork to qualify for a grant. You’ll need statistics on hand about your organization and whom it serves. Once you have prepared for one grant, you can often repurpose that same information for other grant applications. Note that grants do come with additional caveats; in many cases you must return unused funds and provide accurate reporting of how money was spent.
4. Downsize your office expenses
Save extra cash by cutting your budget for the workplace – this implies reducing office furniture expenses, avoiding renovations and minimizing electric consumption. The trend toward remote work introduced by stay at home orders might allow you to reduce the amount of commercial real estate you lease. Some organizations are now moving toward a completely virtual workplace where all staff works from home.
Downsizing can not only decrease or eliminate your utility costs, but it may also give you enough financial room to focus on nonprofit services while helping the environment. Over time, your savings can eventually stack up and help you allocate your budget to more urgent matters.
5. Get your equipment at a discount
Buying brand-new tech at full price could be an enormous investment, especially if every member of your staff gets a new laptop or desktop computer. Look for wholesalers or local retailers that offer discounts for nonprofits. You can also opt to get office equipment refurbished or even secondhand from office auctions. If you are outfitting a small office and have little to no funds to spend on furniture, consider asking your local Buy Nothing group for what you need, check Craigslist for free items and explore what your local Freecycle Network has to offer.
Some organizations have a ‘bring your own device’ policy for employees, allowing them to use their own computers in the workplace. There are security concerns with this type of arrangement, so it’s not advisable — especially if you have any kind of data that you wouldn’t want shared widely such as member contact information.
6. Go paperless and stay in the cloud
Too many organizations – whether nonprofits or regular companies – are still stuck in a world filled with printer ink and stacks of paper records. Going entirely paperless can save you a significant amount of money if your organization is paper-heavy; it’ll be friendlier for the environment too. You’ll also have a much easier time sorting your records and managing business operations, improving productivity in the process.
7. Backup and secure all of your data and website
Sometimes saving money isn’t about reducing your expenses now, but ensuring that you don’t have to break the bank in case something goes wrong. Make sure that all your financial records, communications and other important details are kept backed up on the cloud or on offsite backups. This ensures continuity of business if you lose your data. Remember that even if your office is insured, data loss can make it difficult to get back on your feet.
A hacked website can cost hundreds if not thousands of dollars to fix, so be sure that automated nightly backups are in place at your hosting provider for a fast restoration. If a hack into your internal systems or website reveals sensitive data that hackers share online, the liability that follows could bankrupt your organization. Ensuring that strong security measures in place is a good investment.
8. Recruit volunteers and contract workers
Most organizations spend thousands of dollars on manpower, but a nonprofit may use volunteers and contract workers as strategically. Since these temporary hires work on a per-project basis, overhead costs are lower than maintaining a full slate of employees.
Using short-term contracts is a great method for helping a nonprofit save money. Some organizations use a project-based contract strategy to test out potential hires as well. Interns can help in offices or any fundraising event; if they have passion for your organization, they’ll be happy to work for you in exchange for resume-building experience.
9. Source locally
Getting suppliers from out of state or overseas can rack up very large shipping costs. Try to find local suppliers instead so you can meet your nonprofit’s needs without paying extra for shipping. You’ll also reduce your shipping times, allowing you to get your goods faster.
10. Refine training programs
When you hire new staff members, it’s important to have the right training resources to reduce the amount of start up expenses for each employee. Once you have a standard manual for your team, you can ensure maximum efficiency, productivity and savings for your nonprofit by reducing program expenses. You’ll also reduce the time it takes to create employees who are well-versed in the services required by the company. Consider filming videos to cover topics that are repeated to each new hire.
11. Expand your network with professionals
Finding opportunities that benefit your nonprofit and the community with a win-win situation. Always ask for ideas and suggestions from your board, which hopefully is filled with professionals who may be willing to provide their services for free. Many nonprofits look for board members who are attorneys, accountants, financial advisors and bankers to help them make the best decisions for better revenue. Your board may have others on it or businesses within their networks who can offer their services or supplies to help you reach your nonprofit’s goals.
Expanding your network will help you gather all the information you need to make improvements on your finances while avoiding mistakes along the way. Once you establish a solid group backing, your nonprofit you can make sure you’re more prepared for every situation.
12. Utilize social media marketing
Unless you are getting free advertising through a media sponsorship or are getting free press through publicity, forget using traditional promotional methods through media outlets – in the age of social media, your post can reach millions of people for free. Even if you do shell out money for paid promotions on online platforms such as Facebook or Instagram ads, they’re much cheaper than paying the high cost of typical advertisements.
Besides starting your own website, social media sites like Facebook, Instagram, and Twitter will allow you to reach between hundreds to millions of people worldwide. A strong social media presence means you can boost donations while saving money. Essentially you’ll be accomplishing two goals in one.
13. Use free online resources
You don’t have to outsource graphic design jobs, especially with innovative technology on the rise. With tools like MailChimp, Canva and Google, creating your own graphics, videos, forms and newsletters will help you get the word out to everyone efficiently.
From social media posts and website banners to infographics and branding, everything can be done with a few simple drags and clicks. With access to online software, you’ll have no reason to pay thousands of dollars for your charitable campaigns. These semi-automated resources provide tons of templates and layouts so your interns and volunteers can churn content out easily. That said, it’s a good idea to have strong brand guidelines or a style guide prepared by a professional graphic designer so that your communications maintain a visual consistency in terms of fonts, colors and logo usage.
14. Don’t waste time and money on traveling to meet
Some nonprofits look for potential investors, donors, contractors and vendors far from home. Staff travel — once it’s encouraged again in a post-Covid-19 environment — takes a lot of time, energy and money. If you’re covering all the expenses for travel, accommodations and food, the cost can go through the roof.
If you’ll be dealing with multinational or out-of-state contacts, teleconferencing is the more convenient decision for both parties. Whether through email, voicemail or conference calls, you can save money with the help of video conferencing programs like Skype and Zoom.
15. Start fundraisers and seek sponsors for your projects and programs
Fundraising is the best way to reach financial success for a nonprofit mission. That’s why it’s important to have a network of donors and sponsors to support your organization’s events and activities. Examples might include asking for sponsorships and donations related to a capital campaign for a facility or special equipment. Some organizations have asked for backers to support their educational podcast series or the creation of a documentary about their mission. Donors are often more interested in contributing to these types of goal-oriented fundraisers than general appeals.
Your supporters may donate different amounts depending on your incentives and perceived value. When making deals, try to make it work in your terms for maximum effectiveness. If you get the attention of an influential sector or an attractive target audience, a business might even sponsor you without asking for much in return beyond exposure to that audience.
16. Make merchandise for supporters of your nonprofit
A nonprofit can make money on the side by creating fun products like T-shirts, mugs, and other merchandising staples that showcase your vision. You’ll make the most money if you order goods from vendors in bulk so you can buy items at a discounted price. However, the last thing you want is a bunch of inventory that isn’t selling. Consider polling your board, volunteers, members or others in your circle as to their interest in a given product or their favorite T-shirt design. Some vendors will print shirts and other goods at no cost or risk to you as an online fundraiser; you’ll simply provide the artwork. To ensure good sales, it’s important to have a super attractive design that’s uploaded in the proper file format when you use print on demand services.
17. Improve employee retention
According to HR consulting firm Bersin by Deloitte, the average company spends around $4,000 on every hire. It’s clear that if you want to save money, you should exert effort on keeping your existing employees and preventing turnover.
You can use incentives, benefits and a healthy company culture to keep employee retention high. You can also choose to hire only employees who are truly passionate about nonprofits and your company’s values. This helps to ensure that they stick around even through troubled times.
18. Bolster donor retention
Nonprofits don’t just need to focus on employee retention. Donor retention is also an essential way to keep cash flowing in. Every time you lose a donor, you don’t just lose the money they bring in – you also have to spend even more money in acquiring new donors, perhaps in the form of marketing, meetings or hosting new events.
To improve donor retention, keep your donors in the loop about the progress your organization is making toward your common goals. Send personalized emails to each one and take advantage of each email to slip in a donate link.
You should also make donating as painless as possible. Have ways to collect both single donations and recurring donations. Some donors want to keep investing in your organization without thinking about it.
One big way to get all of this done right is to invest in a website that supports memberships. By listing your donors as members, you’ll be able to keep your donors updated about events, meet other members and donors and track their donations in their account. Donors appreciate these features, and it won’t be a huge cost for you.
19. Purchase software subscriptions with nonprofit discounts
Many major office and productivity applications have discounts for nonprofits and students. Take a look at the most important software suites you need and check if their developers offer these discounts. You could save a lot of money, especially with subscription platforms that you rely on. Note that the large majority of MembershipWorks customers are nonprofits, so pricing is already geared toward nonprofits’ needs.
20. Constantly evaluate
Even nonprofits have to optimize for income generation. Every regular fundraising event you host and every program you run should be evaluated on a regular basis. If something is underperforming — not producing enough donors or not raising enough funds — it should be revised or even reconsidered. This way you won’t be wasting resources on things that don’t work and you’ll be re-centering your efforts on what matters.
Some organizations look to zero-based budgeting for their events. This means that any event that is planned has to at minimum cover the cost of producing the event. To accomplish this, an organization might look to secure potential sponsors before picking a venue that may be unaffordable without sponsorships. They’ll also look at past event ticket sales to determine how much ticket revenue is realistic and will be sure to not incur expenses on decor and entertainment that will exceed what they expect to bring in.
Your nonprofit’s future will rely on careful spending and management of resources. With these tips, you can build an expenses strategy that will keep you in the black, while improving the goal acquisition. If you do everything right your donors will appreciate it, your employees will stick around for the ride, and your beneficiaries will get what they need.