Cutting expenses can be a race to the bottom and often is, but it doesn't have to be like that. Here are 20+ ways, to reduce your charity expenses, without cost cutting. You can also health check your charity's financial management online in 30 mins, plus 3 online directories Funding Finder, Help Finder and Data Finder, 60+downloadable funder lists and Quality Mark.
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We always seem to focus on fundraising, but competition is fierce and the ultimate decision is outside your control. Managing charity expenses and operating costs is much more within your control and often much quicker to do.
It's effectively core funding, some can be claimed retrospectively, giving you a lump sum, all pay back again and again in the future, so even small savings become substantial over time. And it's something we're not good at, so is a real opportunity.
|What Do You No Longer Need? COVID has fundamentally changed the way we work, bringing new opportunities and, that aside, what you needed a few years ago, might not be what you need now. When did you last review your most expensive contracts to see if you're still getting a good deal and if you still need everything you're paying for?
|Office Accommodation – the move to home working is likely to become permanent and the coming recession is likely to drive down property costs. That may make office accommodation much cheaper.
· Review your office accommodation needs and how much you’re paying.
· If you have a lease/rental contract, check what the lease break clause and end dates are, or the notice period in your rental contract.
· You may be able to move to more suitable accommodation and there are alternatives, such as shared working space and serviced accommodation.
· Or you may be able to negotiate a better deal with your existing landlord.
· If you can’t, but could sub-lease, you could offer any spare space to another charity who can move.
If you need help, both the Ethical Property Foundation and the RICS offer pro bono. Go to the CEF Resource Hub and scroll down to property advice.
· Seek out and act on collaboration and opportunities.
Merger is not without risk, can be expensive and the benefits can take time to deliver. But, there is substantial overlap and duplication between many charities, creating waste and inefficiency in a sector that cannot afford it.
· Shared services may be an option worth considering.
And collaboration can be as simple as working with others in a different way to help and support each other.
What expertise/resources might a sister charity have that you need and which wouldn’t be expensive for them to give you, and what could you offer them in return?
|Consider Other Delivery Options - Outsourcing and in-sourcing (bringing outsourcing back in-house) in areas such as HR, IT, design and finance take time and money to set up.
However, these can offer long-term cumulative savings that may make this attractive and can also achieve improved delivery.
|Assess Projects and Proposals - Even, if only a simple exercise, ensure projects and proposals are subject to evaluation.
· Be clear on cost (time and money) compared to the benefits that will be achieved and making sure that the funding needed will realistically be available.
· Identify any high cost activities that add limited value and remove or scale these back.
· Identify and scale up any high value/low cost activities.
You can use this CEF resource, if you're not sure how to assess a project/proposal.
|Effective Financial Controls
We all need finance and resource procedures, but these only work when used and by everyone, not just the finance team. The Finance and Resources questionnaire enables you to find opportunities to improve your financial and resource management. It's scored much less often than others, but is one of the highest rated by those who do.
A good way to start is to focus on costs you can control and the big issues, where even a small percentage saving can make a big difference. Often staff costs, rent and utilities. And I don't mean redundancies - there are better ways to reduce staff costs.
|Tax Reliefs – we lose out on £ billions, simply because we don’t claim these and tax reliefs may be claimed up to 4 years retrospectively – a useful cash injection, just when we need it.
The reason we don’t is there are a lot of them and it can be quite confusing. For Gift Aid alone, there are 6 different things you can claim this for and, unclaimed Gift Aid, loses us £600m a year. That's just 1 of the 17 in the CEF master database.
· Select ‘Tax Reliefs’ within the CEF query system and it’ll identify those you’re missing out on, with links to the resources you’ll need to claim these.
The CEF Resource Hub Tax Reliefs page includes a list of the main tax reliefs.
|Insurance – When did you last review your insurance, to ensure you're getting the best deal and aren't paying for cover you don't need?
|Cash & Deposits - Having too much cash isn’t likely to be a problem for many but:
· If you hold significant amounts in your current account, transfer what you don’t immediately need into a deposit account.
The amount of interest is likely to be small, but it’s cumulative and will do more good in your pocket, than it will in your bank's.
|Pro Bono and Free Resources - There are 100s of organisations in the CEF that provide free goods and services to non-profits, ranging from consultancy, mentoring, HR and legal to free software, website support, design services, furniture and meeting rooms.
· The Help area in assessment statements and in your reports will identify relevant ones for you.
· Here are some of them.
· Providing goods/services is much cheaper for companies than cash, so identify what may be of value to you and ensure this is part of your fundraising planning.
|Manage Procurement - Have robust processes to ensure that purchasing is cost effective and what you buy meets your needs.
· Even for small purchase, shop around, find discounts and bulk buy to save money and:
For major purchases, competitively tender these. The CEF includes tools to help you do that.
|Review Contracts – you’ll probably be surprised at just how many contracts even a small charity has. Often these may have been in place for years and/or poorly specified in the first place. You may now be paying too much and/or for supplies/services that aren’t actually what you need, particularly in light of COVID.
· Identify and review your contracts on a rolling basis, starting with the most expensive and any that haven’t been reviewed for a long time.
The CEF has an example contracts management register, which lists 38 types of contracts, to enable you to review yours thoroughly, with minimum workload.
|Manage Your Suppliers - To make sure you’re getting a good deal.
· When an ‘expert’, such as your builder or IT provider, tells you certain work needs to be done, don’t just accept that without asking enough questions to be sure you actually do need and want it and;
· Don’t necessarily accept the first price you’re given. If you can’t negotiate a price reduction, you might be able to get something extra.
· Have a process to ensure that what’s delivered came on time, is what you ordered and the invoice is the price you agreed to.
· If you use an energy broker, a July 2020 report found out that 90% may have been mis-sold, check yours for hidden commissions.
If you have a lot of suppliers:
· Consider consolidating them, as it’ll take less staff time to manage and you may get better prices or service.
Alternatively, consider joining a group buying, or collective purchasing scheme, but make sure you’re getting a good deal, not just falling for the hype.
|Review Any Equipment Leases
· If you have leasing for equipment, such as a phone system, mobile phones or photocopiers, check when the lease is due to end.
Once ended, the equipment has been paid for and you can usually either buy it outright for a small fee, or continue with a reduced leasing cost. If you don't, they’ll probably keep charging you the full amount.
|Review Stock Procedures - Simple steps, such as Last In/First Out, and setting re-order levels work for even a stationery cupboard and help to:
· Avoid items becoming out of date and thrown away.
· Make sure you’re not tying up any more money than you need to.
Make best use of any discounts/bulk purchasing.
· Not painting the window frames or fixing the roof may save money now, but is almost always more expensive in the long run.
· Equally, ensure that physical and cyber security, and insurance cover are adequate. Not doing so can be very expensive and also impact significantly on delivery, if something goes wrong.
Fraud can be expensive, so ensure that you have adequate financial controls and that your people are aware of the risk of cyber-attack and scams.
Consider New Technologies – COVID19 has seen charities begin to exploit digital much more. It can be much cheaper and deliver increased impact, in areas, such as online delivery, increased reach, streamlined services and increased efficiency.
Care for the Environment – climate change is as big a threat as ever. You can’t solve it, but we can all do something and doing so can save you money too. The CEF Environmental Management policy includes a checklist of more than 50 options to consider. Here are some of them:
This CEF 100+ Fundraising Platforms resource lists companies who do this. It also includes fundraising, online selling, sourcing corporate funding/volunteers, cash for using browsers etc. But, as ever, don't fall for the hype by making sure those you use work for you. It includes guidance to help you do that.
If you want more, this Charity Excellence Environmental Policy Template, has 50+ ideas to help the environment, reduce expenses and even ways to earn money whilst caring for the planet.
|Funders are being increasingly flexible.
· If you haven’t already done so, you may wish to talk to your current funders about using existing restricted grants, as core funding, or for other purposes.
However, for some, there may be additional options. If you hold significant restricted funds or endowments, it may be worth reviewing these, to see if you can free-up restricted funds to use for core activities. For example:
· Legacies made subject to an expression of wish that the funds be used for a specific project or activity. This does not generally create a binding legal obligation, but it is not unusual for these to be incorrectly treated as restricted.
· The law allows charities to spend permanent endowment in certain circumstances. This includes money, property or land given on the condition it’s used to help it meet its purposes; functional endowments.
I’m no legal eagle, so one to get professional advice on and you will almost certainly require Charity Commission, or other regulator’s approval. You can find links to pro bono legal providers on the CEF Free Goods & Services page.
They are (almost always) the single biggest cost, but also our greatest asset. Cost cutting is what is done to people, making savings is what you achieve, when you work with them. Here are a range of ways to do that.
Do those leading your charity treat financial management as 'boring' and/or is it seen as something that the finance team do, rather than something we're all responsible for? Here are some questions to ask yourself.
Do you recognise and celebrate their successes, in the same way you would a big funding bid or other success?
Too often we simply replace staff when they leave, or include new posts in bids, because that’s what we’ve always done.
Volunteers and unpaid interns add huge value to our work, but using them to replace paid staff is both unethical and may be illegal.
Our people are our greatest asset and spending money on developing them is an investment, not a cost, which will pay you back.
We’re all short of money and time, but there are a whole range of ways to develop staff that’s often free, better than a training course and/or doesn’t take a lot of time.
The People questionnaire will help you do that, with links to not only a whole range of free training courses, including digital and fundraising, but also other development support and resources, such as mentoring.
Or have a look at the CEF Personal Development web page - links to a whole range of articles and videos, sorted by category. From leadership and innovation, to happiness, resilience and managing stress.
OK, Covid very significantly reduced travel, but online meetings have a cost too.
Meetings and travelling to them, has a real cost, not only in financial terms, but also time. Too often the same people go to the same regular meetings, with the same agenda items, because that’s how we’ve always done it, although we're all really busy. Why?
The CEF Travel Policy resource gives you a process and ideas on how to do that.
With energy costs spiralling, even small savings in energy costs help, these are cumulative, so build up over time and not wasting energy helps the planet too.
Your equipment will also last longer and be less of a potential fire risk.
Want more? Here are a whole series of office energy efficiency guides from the Carbon Trust.
A registered charity ourselves, we provide 8 online health checks, the huge information hub, Quality Mark and 3 online directories.