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Nonprofits Are Sticking to Budget: 6 Tips to Cut Overspending

ByMegan Totka,
business.com writer
|
Jun 20, 2017
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> Finance
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It’s no secret that nonprofits run very lean. In fact, sometimes it can feel like every single paper clip, pen and Post-it note must be accounted for.

When you’re serving populations that are underserved, it can be easy to feel guilty about spending anything above and beyond the bare minimum, especially when it comes to things like software, supplies and employee needs.

That said, there are always a few ways that money can run out the door before you even know it. There’s always the obvious (high executive director salaries, big awareness campaigns, over-the-top events), but there are a few areas that you might not think of when it comes to cutting overspending. 

So, roll up your sleeves and get out your scissors – it’s time to cut some overspending!

1.  Be pennywise (but not pound foolish)

If you’re trying to save money for your nonprofit, it can be tempting to cut areas like employee benefits (which are probably already limited), new software or technology, or other areas that can bleed your budget dry.

However, when you’re pinching pennies, always keep the big picture in mind: What is the cost of higher employee turnover, training new employees and being unable to retain top talent? What is the cost of having to outsource graphic design, social media marketing or scrimp on volunteer or event planning because you don’t want to pay for technology updates?

2.  Use software that goes the extra mile

You can’t afford to spend money on software that doesn’t go the extra distance. Just like you and your employees give 110 percent to your organization, so should your software. That means using a CRM that integrates with your calendars, MailChimp and other software you might use.

It also entails finding software that’s user friendly, doesn’t require extensive training and setup, and can evolve with your business. Rather than jumping at each new fundraising app and platform out there, stick with the tried and true workhorses that you can count on to perform each and every time.

3.  Don’t let donors slip through the cracks

Just like customers in the for-profit world, donors are your bread and butter. And just like customers, it takes years to cultivate and steward a donor and only one misstep to lose them. Give your donors every opportunity to support you by keeping them apprised of your good work with updates, stories, photos and newsletters.

Don’t make every communication a solicitation (there’s a time to thank and a time to solicit), but don’t make donors work to give you their money. Set up an endowment and a legacy giving program. Keep your donation button front and center on your site. Give donors alternative opportunities to give by having an social media and crowdfunding platforms as well as regular avenues.

4.  Avoid the lure of the "big event"

For nonprofits, one of the biggest budget busters can be the "Big Event." You know how this works – you spend months planning the event, and employees labor over it and stress out. It becomes a huge money pit. Then when it comes time for the event, your goal shifts from big fundraiser, to "please let us break even."

Even if it seems appealing to have one big event – an auction or a golf outing – focus your efforts on one or two events per year, especially if you know it will be a stretch. Always assess if the event was worth the effort, or if employees could have better spent their time serving your target population in other ways. Most importantly, just because it’s your third annual event doesn’t mean you need to keep it on the calendar every year. If it’s not paying off, let it go!

5.  Care for and train your employees

Burnout in the nonprofit industry is big. While the work can be rewarding, it can also be very tough. With tight budgets, long hours, and dealing with difficult, heartbreaking situations, employees can quickly lose their momentum and question their impact. Give your employees plenty of kudos and training to be successful.

Employee turnover can be costly; the time and effort to find, hire, and train great employees can be a huge expense. Take the time to show your appreciation to employees and let them know you care about them. Thank them for their work and help them see the difference they're making. Avoid stretching them too thin or piling too much on their plate. Losing a great employee is more costly in the long run.

6.  Do your due diligence when spending money

When it comes time to make a purchase for your organization, whether it’s software, technology or on your annual campaign, always do your due diligence. Many nonprofits lose money because they don’t research purchases before they are made or they try to save money up front and end up spending more in the long term.

Always read up on reviews and ask for demonstrations. Find out any fees associated with programs and services, and, remember, if you are a 501(c)(3), ask for a tax exemption. Follow up on any extra charges and fees and make sure you were extended nonprofit rates for all services and products.

Following these few simple tricks can help you keep your budget out of the red and keep your donors, employees, and clients happy and well taken care of!

Megan Totka
Megan Totka
See Megan Totka's Profile
Megan Totka is the Chief Editor for ChamberofCommerce.com. She specializes on the topic of small business tips and resources. ChamberofCommerce.com helps small businesses grow their business on the web and facilitates connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.
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