Charities need to focus on smart procurement to survive a post pandemic world considering the funding and staffing challenges ahead, as Michael Hodgetts, Chief Executive Officer of the Charities Buying Group explains.
It has been a difficult time for charities throughout the pandemic with many charities struggling to raise much needed funds to continue their vital work for the community they serve. Good procurement practice can help to make the most of those limited funds. I have no doubt that the next twelve months will see many charities close, as local government funding will be reduced or even cut completely as they struggle to meet other objectives leaving the charitable sector behind. There are currently around 166,000 charities in the UK, with an annual turnover of just under £75bn. It is estimated that £20bn is spent on goods and services and with charities very much the backbone of society, professional purchasing expertise only operates in less than 100. In the next twelve months costs are predicted to rise significantly. Areas such as electricity, gas, fuel and food are of particular concern. What can be done to assuage this fear?
Review Costs – Make reviewing operating costs a number one priority and where possible collaborate with other charities. Often this is done by organisations that provide similar services but why? Goods such as electricity, gas, food, stationery and telecoms are common to all and by combining purchasing power and offering suppliers an increased order value for goods and services, costs can be significantly reduced. Charities need to focus on the fact that they are running a business and whilst the charitable aims are clear sometimes business management takes second place. Managing and reducing cost unlike fundraising has a clear return on the time invested.
Estate Costs – Premises are expensive to run, so serious consideration needs to be given to how property is used. With the current climate many organisations have adopted a working from home approach for Admin Staff, so maybe it is time to consider whether selling property would bring in much needed revenue or renting out office space will return an income.
Telecoms – Savings of up to 40% could be realised simply by changing suppliers. It is a lot simpler than it used to be, but I see a lot of charities that never review these costs working on the basis it is easier to stay with the current provider.
Food – Food costs are rising, and this can be a large burden on charities who operate care homes. By working together charities can maximise the savings, whilst still receiving small deliveries of goods as and when needed. They gain from the ‘bulk buy’ deals available from major suppliers without needing to increase the order for their care home.
These may seem obvious areas to explore, but this is not something that can be done “when I get around to it” as time is of the essence. When changing suppliers, it can take time for savings to be realised and I have seen a few charities where the changes were made too late for them to survive. Working together, focussing on procurement at Board level and auditing costs will help the Charity sector survive what will undoubtedly become a difficult year.
“My passion is to help those who need the help most, that’s why after working for a large charity for several years I created the Charities Buying Group which now has buying power based on the 56,000 charities we work with. We provide this service at no cost, others make a charge based on your savings but utilising a service such as ours will help cut costs.”
*Article courtesy of Supply Management Magazine*