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Outsourcing for Nonprofits: What It Is and Why It Matters

Outsourcing for Nonprofits: What It Is and Why It Matters

It’s relatively common knowledge that nonprofit professionals often wear many hats. From fundraising to marketing to financial management, so many different activities go into running a nonprofit that it can quickly become expensive and time-consuming to hire someone to fill every role. The smaller your organization is, the more likely it is that one staff member will need to take on multiple responsibilities that could benefit from specialized expertise.

However, there is another solution: outsourcing. When your nonprofit outsources certain duties, you partner with external professionals who specialize in the areas you need additional help with to achieve your goals

To help you get started, this guide will answer some common questions about outsourcing for nonprofits and provide tips for choosing partners whose services align with your strategy.

How does outsourcing benefit nonprofits?

Ultimately, outsourcing aims to free up your staff members’ time so your nonprofit can more effectively advance its mission. However, there are additional benefits of outsourcing that your organization can enjoy if you go about it strategically, including:

  • Cost-effectiveness. Recruiting and onboarding new employees is expensive, not to mention the complete compensation package (i.e., salary and benefits) you’ll need to provide for the whole time they work at your organization. When you outsource, you can receive all of the services you need at a much lower cost.
  • Access to expertise. Although you’ll pay less for outsourced services than in-house professionals, outsourced professionals bring the same level of expertise to the role you’re trying to fill. Sometimes they’ll even have more knowledge, since they’ve worked with many organizations and therefore have navigated various situations and solved different problems for each client. You might also get to tap into the experience of a whole team of outside consultants, depending on which firm you choose.
  • Scalability. Many outsourced professionals offer a range of service packages, so you can choose the one that aligns with your current needs and budget. Then, you can scale up or down as your nonprofit’s situation changes. This flexibility is especially helpful if your organization faces funding uncertainty or other challenges that may make it difficult to consistently pay a professional with specialized skills
  • Risk management. Ensuring your organization is adequately staffed gives everyone more time to check in with each other. This increased visibility across your team can prevent various negative situations (from noncompliance to fraud) from flying under the radar. Plus, outsourced professionals provide an outside perspective that can help you identify potential risks that might have gone unnoticed internally.

To maximize these benefits, hire professionals who have experience working with nonprofits. Operating a nonprofit is very different from running a for-profit business, so your outsourced partners need a strong understanding of nonprofit regulations and success strategies to complete the best possible work for your organization.

Which nonprofit roles lend themselves to outsourcing?

Because there are many services that your nonprofit could outsource, you should start by evaluating your budget for these external services. Then, conduct a needs assessment to see what areas of your operations would benefit most from additional help and create a prioritized list. That way, you can outsource the roles you most need assistance with and maximize your budget without exceeding it.

Let’s review a few of the most common functions nonprofits outsource to help you understand your options.

Information Technology (IT)

Your nonprofit likely depends on technology to run all of its operations and programs efficiently and stay up-to-date in an ever-changing environment. External IT professionals can help you use your tech in the best possible manner for furthering your mission and address any roadblocks that might stand in the way of your doing so. Specifically, they might:

  • Set up new software and configure it for your needs
  • Create logins and establish user permissions for everyone who needs access to a platform
  • Troubleshoot any technical issues that may arise
  • Ensure you follow best practices for cybersecurity and data privacy compliance

If you’re ever unsure whether your nonprofit should invest in a new solution, which software provider to choose from among your options, or if your existing platforms are effectively meeting your needs, your outsourced IT consultant may also provide advice based on their knowledge of nonprofit tech.

Marketing & Design

Getting the word out about your nonprofit’s initiatives can be easier said than done when your staff members have limited time and graphic design experience. Outsourced marketing professionals can support various aspects of your promotional efforts, as long as you choose the right partner. Some agencies provide very general marketing services, while others specialize in one or a few areas, such as:

  • Website building and maintenance
  • Brand development
  • Digital communications (email, text messaging, social media, etc.)
  • Direct mail campaign support
  • Google Ad Grant management

Depending on your budget and staff bandwidth, you may opt for year-round marketing support or tap into these services on an as-needed basis (e.g., if you’re planning a rebranding campaign or want help developing your year-end fundraising appeals).

Financial Management

Effectively managing your nonprofit’s finances ensures you have the resources you need to run mission-critical programs, complete projects, plan engaging fundraisers, and even just keep the lights on. However, financial management duties often get pushed to the back burner when you don’t have dedicated team members to complete them.

Your organization could structure its finance team in various ways, so there are several different outsourced professionals you could bring on, including a:

  • Bookkeeper. Bookkeepers are primarily in charge of financial recordkeeping, but they also complete other everyday financial tasks like making bank deposits, managing invoices, and processing payroll (if that responsibility doesn’t fall under human resources at your organization). Since bookkeeping doesn’t require specialized education or certifications, it’s the easiest role to have an existing staff member take on, but you may need to outsource this function if no one has the bandwidth to manage these activities.
  • Accountant. Accountants handle a wide range of financial analysis and reporting responsibilities, from performing bank reconciliations to creating financial statements and filing tax returns. Unlike bookkeepers, they need at least a bachelor’s degree in accounting or a related field plus a CPA certification.
  • Chief financial officer (CFO). CFOs focus on duties related to financial strategy, such as budgeting, cash flow forecasting, and policy development. Since a full-time CFO would be on your nonprofit’s executive leadership team, your fractional CFO (a common term for outsourced professionals in this position) will work closely with leadership to ensure your financial strategy aligns with your organization’s overarching goals. Many fractional CFOs were previously full-time CFOs, so they know the ropes of management.
  • Controller. As Jitasa’s guide to this role explains, “The [nonprofit] controller position essentially combines the duties of two other nonprofit financial roles: accountant and chief financial officer (CFO).” So, this professional (who often works with a team) typically spends some of their time on analysis and reporting and the rest on strategy.

It’s especially critical when outsourcing financial roles to choose partners who specialize in nonprofit work. Nonprofit finance is more distinct from its for-profit counterpart than almost any other area of your operations. So, you need outsourced professionals who understand how tax-exempt organizations spend and bring in money, along with the proper protocols for reporting these activities to ensure compliance and accountability.

How do I find outsourced professionals for my nonprofit?

Hiring outsourced professionals is slightly different from recruiting new staff members. Outsourcing is typically more streamlined because you don’t have to create job postings and conduct formal interviews with every qualified candidate. However, you still have to carefully consider which agency or individual contractor to partner with, especially because there are lots of options available for each role.

According to Orr Group’s nonprofit consulting guide, defining your organization’s goals is the first step in forming an external partnership, which you’ve already done if you’ve completed a needs assessment and budget evaluation. From there, you’ll need to:

  • Conduct research by browsing various outsourcing partners’ websites, comparing service offerings and pricing structures, reading reviews from past clients, and tapping into your network to see whether other nonprofit leaders you know have worked with the type of external professional you’re looking for and, if so, what their experience was like.
  • Make connections with a few potential partners, since introductory conversations allow you to ask specific questions about how outsourced professionals could help your nonprofit and get a feel for whether they’ll work well with your team.
  • Create a request for proposals (RFP) and send it to your top choices so they can each provide a standardized overview of their work, pricing, estimated timeline, and references for easy side-by-side comparison with other candidates.
  • Bring your RFP findings to your leadership team and board to ensure all key decision-makers at your organization are on the same page about your final decision.
  • Align on contract terms so everything is clear to you and your partner as you begin working together!

Remember that the outsourcing process isn’t always linear. It’s completely fine to continue adjusting your goals as you conduct research or revisit your network after meeting with a few options that aren’t the right fit. Just keep any official or unofficial timelines you may have in mind (e.g., your desired date for a marketing campaign launch or the Form 990 filing deadline your outsourced accountant has to meet) as you work toward your final decision.

Outsourcing is a great way to gain access to the expertise your nonprofit needs while saving time and money. As long as you choose an experienced external partner who provides services that align with your needs and offers pricing plans within your organization’s budget, you’ll form a partnership that helps you achieve your goals and make a bigger impact.

The post Outsourcing for Nonprofits: What It Is and Why It Matters appeared first on Nonprofit Hub.

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