Non-profits aren’t like other organizations. Since their goal is to fulfill a mission and not to retain earnings or build shareholder value, tight operating controls are often necessary in order to maintain financial health. For service providers looking to work with non-profits, and to managers and decision makers within non-profits, it can be challenging to reconcile the true cost of a project with what has been set aside to execute the project. In order to work together more effectively, web service providers and managers alike may benefit from understanding the interplay between project planning and the Non-Profit environment.
Non-Profit Budgets Don’t Always Function Like For-Profit Budgets. In traditional corporations, budget decisions and approvals may be flexible, may map to a leadership chain of command, or may be addressed by accessible reserve funds. Non-profits are more likely to earmark a predetermined amount for a discrete project, with less ability to accommodate an unexpected difference in price. In order to ensure that funds needed for a project match funds in reserve, non-profits are advised to do hard research on project pricing prior to developing budgets.
Non-Profits May Be More Likely To Require Competitive Bidding. Non-profits may be under more scrutiny than for-profit businesses to demonstrate that funds are being spent prudently. A competitive bidding process may be a necessary measure prior to a hiring decision being made. To the extent that non-profits may also be more likely than for-profit businesses to require a fixed bid rather than a flexible retainer, service providers who understand pricing structure requirements may help non-profits by submitting bids that meet structural expectations.
Non-Profits Make More Decisions Via Their Boards of Directors. Non-profits may be more likely than for-profit businesses to require that large expenses or major projects be approved by committee—in many cases, the decision making body is the Board of Directors. This differs from some for-profit decision making practices, in which individual leaders have sole dominion over certain kinds of spend. In this sense, decision making within non-profits can be lengthier, with a more engaging sales process, and more conditions than usual placed on the provider than would be experienced with a for-profit organization.