Cost-of-living crisis: five ways charities can reduce costs

Many charities are being squeezed right now by an invisible pair of pincers. On one side they are struggling to maintain their incomes as donors cut back in the face of a cost-of-living crisis, and on the other side their costs are surging as the impact of inflation begins to bite.

 

If this sounds familiar to you, the good news is that there are plenty of things your charity can do to fight the squeeze. In particular, there are probably considerable opportunities to cut your charity’s costs – even in the face of rising prices. Here are five ways you can make your charity’s funds go further.

 

1. Automate where possible

 

If your charity is still manually carrying out “business” processes – such as fundraising, marketing, and recruitment – then you can almost certainly cut your costs using automation software. Some of the best places to start include:

• Constituent relationship management (CRM) software for fundraising and sales automation
• Marketing automation software to help run email and printed marketing campaigns
• Chatbots to provide information, answer frequently asked questions, and to provide a first point of contact for customer service
• HR automation to enable employees to enter their hours for payroll purposes, for digital recruitment, and for the virtual onboarding of new hires

 

2. Encourage hybrid working

 

Most charities will already have some experience of staff working from home thanks to the pandemic, although many staff have now returned to normal office-based working practices.

 

But hybrid working – where staff only come in to the office a few times per week or even per month – offers the prospect of significant costs savings by reducing the amount of office space needed. And thanks to the rise in energy costs, the associated savings in electricity and heating bills can also be significant.

 

If your charity is committed to a multi-year lease on its existing premises, then reducing office space may not be possible in the short term. But, at the very least, hybrid working should help avoid the need to take on existing space if your charity is expanding.

 

 

3. Outsource whatever you can

 

Charities can spend significant amounts providing their own support services which are not key to their charitable work. Outsourcing these support services can often result in big costs savings.

 

For example, using software-as-a-service (SaaS) offerings for functions such as CRM, office administration and accounting means that the maintenance, updating and security patching of software is all effectively outsourced to the SaaS provider.

 

Other functions that are often outsourced include overall IT (including cyber security), logistics, marketing, and research.

 

 

4. Review contracts and haggle!

 

It’s quick and convenient to renew annual contracts automatically for services ranging from insurance to mobile phones to cleaning. But if your charity does that then it is almost certainly paying over the odds for these services.

 

That’s because many organisations take advantage of their customers’ loyalty to keep pushing prices up.

 

That means it’s a good idea to make a note of when all of your service contracts come to an end. Each time they are up for renewal you can then make time to review the market to make sure that you are getting the best deals available.

 

Even if you decide that switching to a new service provider would be too disruptive or too much of an administrative headache, it is still worth asking for discounts from your existing suppliers in recognition of your loyalty in order to cut your costs.

 

 

5. Strive for economies of scale

 

Large organisations enjoy economies of scale by buying in large quantities and ensuring that everything they buy can be utilized to the maximum. But that doesn’t mean that smaller organisations can’t benefit from economies of scale too – it just takes a little more effort in order to do so.

 

For example, if you work for a smaller charity then it’s likely that some of your office equipment (such as printers, photocopiers and so on) are underutilized. In other words, they could be working harder than they are for little or no extra cost. If that’s the case there may be the opportunity to share equipment with other small charities or businesses which operate in your office building. That way you can share the costs and everyone benefits.

 

Another way for your smaller charity to access economies of scale is to get together with other organisations and make group purchases to bulk-buy office supplies. By doing that, your charity will enjoy lower prices and save on delivery costs as well.

 

Perhaps the easiest way to get the benefits of scale is to join a free scheme such as the Charities Buying Group which has buying agreements with a range of organisations to help charities reduce the cost of their IT, insurance, utilities, and telecoms.