Watching Costs Is Always a Smart Investment

CAITLIN G. GIBBS, CPA

Both for-profit businesses and not-for-profit organizations are looking for ways to conserve costs in the aftermath of the COVID-19 pandemic and resulting nationwide economic crisis. Not-for-profit organizations looking for a path forward out of the pandemic have had to strategically cut costs to contain expenses. Here are some suggestions to help guide cost-cutting for your organization.

Focus on staff

When COVID-19 was first making its presence felt in 2020, many not-for-profit organizations resisted laying off employees. Retention tax credits provided under the CARES Act gave some the breathing room they needed to retain employees.

Even with an economic recovery looking closer than before, organizations that were determined on preserving their staff may now have no choice but to cut compensation costs. But, alternatives to employee terminations may be available. Consider reducing hours or suspending employee benefits. You might trim wages or management-level salaries. And, allowing employees to work remotely may lead to lower overhead.

Related Read: The CARES Act Provides Some Relief to Not-For-Profit Organizations

Consider your facilities

Facility costs often rank with staffing near the top of a not-for-profit’s operational expenses. With stay-at-home orders, you may have had your first experience with remote work in 2020. If operations did not suffer, you could reap significant savings by continuing in that mode and giving up, or shrinking, your office space. Most employees enjoy the flexibility of a hybrid office and work-from-home model. If you have to reduce hours or trim wages, working from home could be a much-appreciated benefit to employees to keep morale high.

If you have a lease, approach your landlord about renegotiating, especially if you are nearing the end of the term. The market for commercial real estate faltered in 2020 and early 2021 in the wake of the pandemic and recession, so landlords were generally more amenable than they normally would be to rent reductions, abatements or holidays. As the commercial real estate market starts to rebound, landlords are likely to continue to work with you.

If your organization has more than one site, you may consider consolidating in a single location and closing the others. You may not be able to escape the rent obligations for the shuttered space, but you could eliminate the associated overhead, including insurance. If your not-for-profit organization owns its facilities, look into selling, downsizing or renting out unused space. 

Renegotiate with vendors

Also, explore renegotiation with vendors. For example, if you shifted to greater remote work, you will have less need for property maintenance and food services. Check for penalty or fee provisions in your contracts before terminating agreements, though.

It also could pay to join forces with other organizations, not-for-profit or not, to increase your buying power. Or, you could consolidate more purchases of goods and services with fewer vendors to obtain discounts. Do not hesitate to be assertive in the pursuit of lower prices. Ask your vendors if they offer not-for-profit organizations discounts or to contribute their services. Do your board members have any connections they can leverage to get you better rates?

Opt for virtual events

Many not-for-profit organizations have seen significant decreases in expenses for travel, meetings and events as gatherings were forced into virtual spaces. But, as with remote work, you may have been surprised at how well virtual meetings and fundraisers have worked. In fact, some report their virtual events have been more lucrative than past in-person events.

For example, one organization canceled its annual luncheon and instead requested donations from the usual attendees. It ended up with a substantially larger haul than a typical event would have. Other organizations have been able to attract higher numbers to virtual runs or walks, where participants do the activity on their own yet with far lower overall costs.

Time for cuts

The COVID-19 pandemic and its economic consequences have cut across a wide swath of not-for-profits. Making cuts to survive may be an option. Consult with your ORBA CPA to review your specific situation.

For more information, contact Caitlin Gibbs at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Not-For-Profit Group.

NOT-FOR-PROFIT NEWS

CHARLES J. BURKE, CPA

States move to block donor disclosure requirements

In June 2021, the U.S. Supreme Court struck down a California law requiring not-for-profit organizations to file a list of their large donors with the state. But some states did not wait to see how the Court would rule in the case. According to The NonProfit Times, at least ten states have considered legislation that would limit donor disclosure requirements.

For example, South Dakota passed a law prohibiting the state’s executive branch from requiring “any annual filing or reporting of a nonprofit corporation or charitable trust that is more stringent, restrictive, or expansive than that required by state or federal law.” The state also banned requirements that not-for-profits provide “personal affiliation information” on any supporter. Similarly, a North Carolina bill would declare the identity of not-for-profit donors confidential. The provision would specifically apply to information in IRS filings, including Form 990.

How Amazon’s expanding its AWS Imagine grant program

Amazon Web Services (AWS) has launched its 2021 AWS Imagine Grant program to help not-for-profit organizations access its tools. The program recognizes that not-for-profits often lack funding for foundational IT projects that may be viewed as overhead or administrative expenses.

This year, the program is expanding to offer two new award categories so more not-for-profits can receive support based on their organizational goals and the stages they are in on their “technology adoption journey.” The Momentum to Modernize Award provides resources, including up to $30,000 in unrestricted funding, for foundational technology projects, such as migrating servers to the cloud and expanding infrastructure.

The Go Further, Faster Award provides support for large-scale projects that leverage the cloud, with the potential to impact an entire industry or field. They include projects incorporating artificial intelligence and machine learning. Awards include up to $150,000 in unrestricted cash support.

Need volunteers? Charity Navigator offers a new solution

The not-for-profit evaluation website Charity Navigator has partnered with Golden, a volunteer management software company, to give site visitors a way to locate volunteer opportunities in their communities. Visitors can browse thousands of listings filtered by location, availability and targeted keywords, as well as view an organization’s Charity Navigator ratings.

Not-for-profit organizations can register for free access to Golden to post their open volunteer positions, receive signups, schedule volunteers and track productivity through the automated data collection of volunteer hours. Paid and custom memberships come with enhanced features.

For example, one plan includes access to comprehensive volunteer profiles, the ability to export data and priority email support. Another plan includes integration with specific customer relationship management software and priority support. Custom plans provide dashboards, a signup window for an organization’s own website and custom data points.

For more information, contact Charlie Burke at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Not-For-Profit Group.