By Linda Zager and Em Hall
If your non-profit organization’s end-of-year is June 30, it can feel like there is ample time to set overall goals and determine what initiatives will take priority in the next fiscal year. Funding and revenue is an ongoing challenge, but starting or even implementing a strategic expense management plan now is enough time to have a significant positive impact on the 2019 budget. A strategic expense plan, directed from the C-Suite, ensures the right overhead is in place without overspending. This uncovers significant money to fill budget gaps, and improve supplier relationships. Additionally, the plan can be implemented in the current and next fiscal year, not the following year, the year after or even… someday.
A nonprofit strategic plan includes a keen focus on important initiatives for the mission, and an understanding of all aspects of revenue and funding to meet these plans. Making the management of expenses, with owners and actions, part of the leadership strategic plan, can be a key source of cash needed. This also removes barriers to donors and foundations who want to make sure you are operationally sound and optimizing money going to the mission.
There are a few things to keep in mind during the planning process:
One of the first steps in the assessment process is analyzing the organization’s current areas of expenditure. Review the organizational spend for the past 12 months and determine exactly where your money is going, how much, and how many suppliers are associated with each expense area. You also should know who on staff oversees procurement or supplier relationships in each expense area and how often suppliers’ services go out to bid.
Once it’s understood where your organization currently stands, the information can be analyzed and incorporated into a larger strategic plan going forward. This analysis allows you to set an actionable, data-driven plan with owners and to find areas where expenditures can be streamlined to free up cash flow and further the initiatives you want to set in the coming fiscal year.
Also consider bringing in a third-party subject matter expert to help facilitate the process. An outside source can offer alternative perspectives, get away from “that is always the way it was done” mentality, and help your organization better define initiatives. Specialists have the broad industry knowledge on where to look for opportunities to streamline spending, as well as an understanding of what suppliers should be charging, without impacting the level of a supplier’s services or compromising much needed donations they provide. A third party provides key learnings for your staff on how to properly execute savings opportunities and ensure best in class procurement practices.
Bringing on a third party also provides your staff with the time to focus on their core responsibilities as they’re heading into budgeting season this spring. Also, a third party can provide the support to execute and implement supplier relationships with the best services at lower costs. Best in class organizations understand they never have the time to do everything on their own. If your organization chooses to go this route, it’s best to start consulting with a third party at least 4 months ahead of when your staff is budgeting so that the third party knows what your larger initiatives are and can help you find ways to secure the cash flow for this in the new fiscal year.
Developing a culture of having expense management as part of the senior leadership strategic plan with proper execution will result in maximizing money for the mission, and even opening more doors for donors and foundations interested in your nonprofit. Treat expense management like any other part of your strategic plan. The results are high-value and after the first year of making this part of the culture, your team will also maximize the time they spend on delivering the mission. Working with a third party just means a seamless and most timely transition to a high value organization.
Em Hall is the Director of Marketing and Communications for the Back Office Cooperative, an organization that provides the non-profit community with expense management and cost reduction efforts. The Back Office Cooperative is a strategic partner of ERA.