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Home / How to... / How to cut and control costs

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How to cut and control costs

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Some simple and more challenging suggestions for cutting and controlling costs across your organisation. To ensure that you survive, you may need to make some big decisions. Here's how to look at your services and income to make significant changes.

This how-to guide is based on the Guardian Voluntary Sector Network's Q&A in June 2011.

1

Suppliers and services you pay for

Some small changes everyone could make:

  • buy in bulk
  • buy from InKindDirect
  • use your resources efficiently (eg print in black and white rather than colour)
  • source pro bono workers
  • use the cloud for your IT (see how to make the most of the cloud)
  • ask your suppliers if they have a cost-saving strategy you can take advantage of, don't wait for contracts to end to review costs.
2

Your services

Focus on sustaining services rather than keeping jobs. Consider stopping some services completely rather than reducing all, don't make preserving the shape of the organisation your greatest priority.

Evaluate which of your services are most effective and concentrate on these. Do this by understanding your impact and / or assessing your social return on investment.

3

Cutting costs

Challenge finance staff to make cuts, this could include getting them to source more quotations and review accountancy practices.

Review your assets, especially property - are they costing too much, could any be sold?

Don't cut on quality, for example don't reduce the cost of your audit or legal advice if it means that you get the office junior instead of the senior partner that you have come to expect.

4

Income

Focus the majority of your time on sourcing income not cutting costs. Cost control is important but many organisations spend too much time on it for diminishing returns. Use the 80-20 rule (or even 90-10): spend 80% of the planning time on where the income is going to come from, not where you will save the costs.

Get advice about how you can claim additional Gift Aid on your donations. Many organisations miss out on this income.

5

Collaborate

A recent ACEVO survey found that about 90% of those interviewed said that mergers have fulfilled their intended benefits, with the most common motivating factor being efficiency. Here are some examples of positive collaboration:

  • share information - discuss with colleagues in other organisations what they are paying for equivalent services
  • collaborate with others in a formal/informal buying consortia - there is plenty of scope for this sort of arrangement in the sector as long as people are prepared to be flexible
  • joint lobbying is cost-effective - Macmillan recently worked as part of a collaboration with ten healthcare charities influencing the government on the NHS reforms. Not only did the government appreciate a unified voice, it stopped us doubling up on work and meant we were even more influential.
6

Planning

Have a strategy and a back-up - A lot of people are having difficulty planning ahead with so much change affecting them, but it's really important to maintain a vision of what you're trying to do and where you want to go. Putting together some different scenarios for different levels of income is really important - what would you keep if you had 25% less income than expected, or 40% less? It is difficult, but be prepared to cut in areas that aren't in-line with your strategy.

Be realistic about what you can achieve - Performance and an understanding of capacity are important - knowing what your staff can do and what your organisation's capacity is means you can be realistic about what you can achieve and at what cost.

You need a strategy for making cuts - Take everything back to strategy. If it's not a corporate priority for your charity and it costs money, don't do it.

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