Recession-Proof Your Nonprofit By Reducing Overhead Costs

With cries of a recession still looming in the U.S. and inflation hovering around 8% YoY, nonprofits are already feeling the heat. According to philanthropy.com, “the number of donors fell by 7 percent in the first half of 2022 compared to the first half of 2021 and the number of people making gifts of $100 or less dropped more than 17 percent.”

This decline in individual donations is most likely only the tip of the iceberg – if a recession does happen, corporate and foundation donors will also follow suit in giving less along with a decrease in governmental funding and any endowments your nonprofit was gifted (nonprofitrisk.org). Conversely, “economic downturns put added demands on nonprofits’ already dwindling resources” as more clients ask for help and volunteers dwindle. So how do you recession-proof your nonprofit?

Reduce Nonprofit Overhead Costs

According to the Better Business Bureau, 35% or less of a nonprofit’s budget should go towards overhead costs such as employee salaries, technology, utilities, and fundraising/marketing costs while Charity Navigator says that those costs should actually be less than 10% of the total budget. With 88% of nonprofits operating on $500,000 or less (nonprofitimpactmatters.org), that means small nonprofits should only be spending $50,000 – $175,000 on everything that doesn’t directly impact your programming and mission. Keeping that in mind, nonprofits need to find ways to reduce overhead costs now. Here are 4 ways to cut costs without cutting quality:

Hire interns

Employee salaries take up the majority of the overhead costs. So, how do you continue to get mission-critical work done when you need to cut costs? Hire unpaid interns! Interns are typically some of the most driven employees as they are eager to start working. They want to perform well in their jobs since they need the experience and want a good letter of recommendation at the end of their time with you. Plus – interns can become lifelong supporters and even volunteers or board members because they’ve seen firsthand the good your organization is doing and all of the hard work that goes into it.

Leverage your volunteers

While a recession will also impact your donors, you can still reach out to them and ask them to donate their time, knowledge, and other resources instead of money. That way you can still keep up with the demand for your organization’s resources by having an abundance of volunteers to execute your services.

Allow employees to work from home

Another way to reduce overhead costs for your nonprofit is to find ways to reduce any building rent or utilities. One way to do this is to allow your employees to work from home – especially if you don’t need a physical location to carry out your mission! Simply change your mailing address to a P.O. box to meet legal requirements, and then you’ll move the needle by reducing your utility bills and rent.

Switch to an all-in-one nonprofit software platform

Instead of paying for a bunch of different software, move to one platform. Look at this example:

A nonprofit was paying for 5 different, disjointed tools and spending over $5,000 in software alone, PLUS they were also losing out on a percentage of their fundraisers since Classy took a transaction fee. Once they switched to UncommonGood, they saved $4,241.52+ and still had access to the same high-quality design studio, donor management system, fundraising tools, email capabilities, and operational management calendars and checklists.