A Nonprofit Guide to Outsourcing
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1 ANonprofitGuideto Outsourcing By AmyKarsonandMarciaBrown October,2012 NonprofitCoordinatingCommitteeofNewYork 1350Broadway,Suite1801,NewYork,NY10018 phone: fax: www.npccny.org
2 ANonprofitGuidetoOutsourcing Introduction:TheNonprofitOutsourcingClearinghouse... 3 Chapter1:Overview:NonprofitsandOutsourcing... 5 Chapter2:KeyBack OfficeFunctionalAreas... 6 Chapter3:SelectingandWorkingwithOutsourcingVendors Chapter4:Pricing Chapter5:ContractingwithVendors Chapter6:TrackingOutsourcingOutcomes Chapter7:ConclusionandContactInformation TheNonprofitCoordinatingCommitteeofNewYork TheNonprofitCoordinatingCommitteeofNewYork,Inc.,(NPCC)isthevoiceandinformationsourcefor NewYorkCity areanonprofitsonissuesthatfaceallnonprofitorganizations.establishedin1984,npcc hasapproximately1,500dues payingnonprofitmembersinthenewyorkcityarea. NPCCsaves nonprofitsmoneythrough14groupbuyingprogramsforbasicbusinessexpenses,fromliability insurancetoofficesupplies,sononprofitscanfocustheirresourcesonachievingtheirmissions.npcc strengthensnonprofits managementandgovernancebyprovidingtrainingandsupportfornonprofit managersandboardleaderstoeffectivelypursuetheirmissionsandmaximizetheimpactoftheir services.npccservesasthevoiceofthenonprofitcommunitybybuildingpositiverelationswithall levelsofgovernmentthroughourhighlyeffectivegovernmentrelationscommittee,andbypromoting goodgovernance,accountabilityandeffectivenessbynonprofitsthemselves. Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 2
3 Introduction: TheNonprofitOutsourcingClearinghouse Managingnonprofitorganizationsgrowsmorecomplexandchallengingeveryyear.Today snonprofit executivemustregularlydemonstrateprogresstowardachievingtheorganization smission,balancethe books,complywithagrowingnumberoffinancialandotherregulatoryrequirementsbyfederal,state andlocalgovernments,helprecruitandworkwithastrongboardofdirectorsthatkeepsthe organizationaccountablewhilecontributingexpertiseandleveragingresources.theexecutivemust alsocommunicatetheorganization s story toawidevarietyofaudiences,practiceenlightened managementofstaffandvolunteersincludingpoliciesofdiversity,inclusivenessandcultural competency,exploreandadoptappropriatenewtechnology,andsuccessfullyraiseneededrevenues allwhileassuringtransparency,effectivenessandaccountabilitytodonorsandthepublic! Yet,nonprofitorganizationsoftenlacksufficientresourcesor,insomecases,necessaryskillsor expertisetocarryoutkeymanagementfunctionscriticalinordertosustaintheorganizationandpursue itsmission.amongthestrategiesthatnonprofitsandnonprofitmanagementexpertshaveexploredto addressthesechallenges(e.g.,sharedservices,collaboration,co location,subcontractingtoconsultants, andothers)isoutsourcing. Inthenonprofitcommunity,outsourcingreferstothedelegationofkeymanagementareas,especially backoffice services,tooutsidecontractorsorvendors,usuallyonarelativelylong termbasis,with theexpectationofimprovingquality,strengtheningmanagementeffectiveness,andperhapslowering costs.nonprofitoutsourcingdiffersfromthecommonunderstandingofoutsourcinginthebusiness sectorinthatthekeyobjectiveor bottomline istobecomeamoreeffectiveorganization,notonlyto savemoney. Althoughusedbyallsizesandtypesofnonprofitorganizations,outsourcingofbasicbusinessfunctions isparticularlyrelevantforsmaller,mid sizedand/oryoungerorganizations.suchorganizationsoften lacktheinfrastructureandresourcestofullydevelopeffectivebusinessoperationsinthewiderangeof essentialareasthatrequirestateofthearttechnicalexpertise.suchkeyareastodayinclude: InformationTechnology(IT);BookkeepingandFinancialManagement;MarketingandCommunications; Fundraising;Purchasing;RiskManagement;LegalServices;andEmploymentandHumanResources. Outsourcingcanbealogicalanswertothechallengefacingthousandsoftoday snonprofitmanagers: Howdowebecomeexpert,well staffedandefficientinkeybusinessoperations,despitetherealitythat weandourorganizationsfrequentlylacktheexperience,in houseresourcesand/orwherewithaltofully developandeffectivelymanagekeybusinessoperations?outsourcingoneormoresuchkeyfunctions offersopportunitiesfortoday snonprofitmanagerstotaptheexpertise,experienceandeconomiesof scaleofspecializedprovidersoftheseservices. Outsourcingalsooffersthepotentialadvantageofreducing(althoughneverentirelyeliminating)the scarcetime,financialresourcesandmanagementattentiondevotedtotheseareas,allowingmore managementattentiontomission relatedactivitiesandresults.ratherthaneachnonprofitentityand itsmanagerhavingtobecomehighlyexpertatmasteringandperformingthesedisparatefunctions, someorevenallcanbecontractedoutandmonitoredwithlessoveralladministrativetimeandeffort. Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 3
4 Itshouldbenotedthatmanybusinessesandmanynonprofitsalreadyhaveoutsourcingexperience. Manyuseapayrollcompany,forexample,toprocesstheirpayroll,remittheirtaxestotheappropriate governmentagencies,andprepareanddistributetherequisitew 2and1099forms.Other organizationsmayhavealawyerorlawfirmonretainerwhoreviewscontractsandadvisesthe organizationonlegalmatters.othersmayhaveabookkeeperwhomaintainsthebulkofthe organization sfinancialrecordsbutisnotonstaff. Untilrecently,feworganizationshavethoughtaboutoutsourcingofbackofficeservicesina comprehensiveandcohesiveway.however,areportreleasedin2009bytheeugeneandagnese. MeyerFoundationandtheManagementAssistanceGroup, 1 basedonasurveyofgranteesofthe Foundation,interviewswithgrantmakers,consultantsandback officeserviceprovidersaswellasa reviewofliteratureonthetopic,foundtherewasaneedforsuchservicestobeofferedtononprofits andanopportunityforvendorstocreatebusinessmodelsthatwouldservethenonprofitsector. Tellingly,thestudynotedthatsomeofthebarrierspreventingnonprofitsfromoutsourcingback office serviceswere:(1)aninabilitytoidentifyproviderstheyneededatareasonablecost;(2)thelackoftime necessarytofindandcontractwithvendors,and;(3)unproductiveexperiencesinthepast. In2010,NPCClaunchedaNonprofitOutsourcingClearinghouse(NOC)programtohelplocalnonprofits meetthechallengesidentifiedbythemeyerfoundationreportandattainlong termsuccessand sustainability.aprimarycomponentofthisprograminvolvedthecreationofapubliclysearchablenoc Databaseofoutsourcedserviceproviders.Theideaisthatnonprofitscanusethistooltocompare vendorsandtheircharacteristicsusingthesamecriteriato shop forgoodquality,cost effective outsourcedservicesprovidersacrosseightkeyareas:informationtechnology,bookkeeping&financial Management,Fundraising,Marketing&Communications,RiskManagement,HumanResources, PurchasingandLegalServices.Thedatabasecanbefoundatthefollowingsite: TheNOCprogramsimultaneouslybeganofferingoutsourcingconsultingfornonprofitsseekingin depth consultationontheirback officefunctionsandtheirpotentialforoutsourcing.thegoalofthese initiativesistomakeiteasierfornonprofitstodecidewhethertooutsourceoneormoreoftheir administrativeservicesand,ifso,tohelpthemchoosetherightprovider.thiseffortbeganwithapilot groupof50nonprofits,manyofwhichhavesinceengagedinsuccessfulrelationshipswithoutsourced serviceproviders.theprogramhasalreadydemonstratedthevalueofoutsourcingforparticipating nonprofitsandpromisestoshowpositive,measurableimpactontheseorganizations efficiency,aswell asonimprovingtheirorganizationalperformanceandincreasingtheirimpactontheirmissions. TheNOCprogramhasbeengenerouslysupportedbyTheNewYorkCommunityTrust,TheAchelis Foundation,TheBoothFerrisFoundationandTheFrancesL.andEdwinL.CummingsMemorialFund. Weareextremelygratefulfortheirsupport. 1 Leach,Mark,OutsourcingBackOfficeServicesinSmallNonprofits:PitfallsandPossibilities.AStudyConductedby themanagementassistancegroupinpartnershipwiththeeugeneandagnese.meyerfoundation,washington, D.C.(September2009):PDFfileavailableatwww.meyerfoundation.org/outsourcing09 Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 4
5 Chapter1: Overview:NonprofitsandOutsourcing Definition: Outsourcingisthedelegationofkeymanagementareas,especiallyrepeatableback officeservices,to outsidecontractors/vendorsforarelativelylong term.outsourcingmaybeanappropriateoptionfor organizationsofallshapesandsizes,wherethedesiredresultisoneormoreofthefollowing: 1. Improvedoperationalefficiencyandquality 2. Increasednetrevenue(intheformofcostsavingsorincreasedrevenue) 3. Improvedorganizationaland/ormissionperformance TheRoleofOutsourcingProfessionals: Theroleofoutsourcingprofessionalsvariesbasedonthesizeandscopeofeachindividualengagement. Avendorisfrequentlyusedasanimplementerandissubsequentlyresponsibleformanaging daily/weeklytasksrelatedtoaspecificfunctionalarea.avendormayalsobeutilizedasateacherinan efforttoeducatethenonprofitandsubsequentlyhelpthemdevelopanadditionallevelofexpertiseinhouse.additionally,aserviceprovidermaybeusedasastrategicpartnertohelpthenonprofitmake wiseandeducateddecisions.allvendorcontractsshouldexplicitlystatetheroleoftheoutsourced serviceprovideraswellasthespecificdeliverablestobemanagedbybothparties. BenefitsofOutsourcing 1. Reducelong termoperatingandcapitalcosts 2. Increaserevenues 3. Enhanceorganizationalimpact 4. Improvemanagementeffectivenessandflexibility 5. Increaseaccesstotechnology,skillsandinsightsnototherwiseavailableoraffordable 6. Improveabilitytofocusonorganizationalmission 7. Shiftliability(eg.,Payroll) OutsourcingCaveats Nonprofitsshouldbeawareofthefollowingpriortomovingforwardwithanoutsourcedvendor: 1. Providersmustbeselectedandservicesmustbeperformedwellandwithinlegaland regulatoryrequirements. 2. Nonprofitexecutivesshouldbesensitivetoemployeereactionsandmisconceptions.Employees mayfearforpersonaljobsecurityandsafety,subsequentlymakingthetransitiontoan outsourcedserviceproviderchallenging. 3. Duediligenceisrequiredtomonitortheperformanceofoutsourcedserviceprovidersona quarterlybasis. 4. BoardsandSeniorManagementmustprovideoversightandretainlegal,fiduciaryandprogram responsibilities. Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 5
6 Chapter2: KeyBack OfficeFunctionalAreas TheMeyerFoundationreportonoutsourcingnotedtheareasofback officemanagementmostinneed bynonprofitswere:marketingandcommunications,humanresourcesandfinancialplanning.atnpcc, wehavefoundthistobetruebut,overmanyyearsofofferingreferralstovendorsthatcouldhelpour members,we vealsoreceivedalargevolumeofrequestsforhelpwithinformationtechnology,legal issues,fundraising,riskmanagementandpurchasing.afterextensiveinterviewswithvendors,we believethattheseeightareasofback officeresponsibilityare,infact,theonesmostrequestedby nonprofitsandtheoneswithasufficientnumberofvendorsavailableandwillingtotailortheirservices tothenonprofitsector. Anonprofitorganizationmaychoosetooutsourceallorpiecesofanentirefunction.Forexample,itis notnecessarytooutsourcetheentirefundraisingfunctiontoathirdparty.manyorganizationssimply wishtooutsourceprospectresearchorgrantwriting,whileretainingallotherfundraising related responsibilitiesin house.serviceprovidersaretypicallyveryflexibleandwillingtoworkwithclients aroundwhichareasremainin houseandthosethatareoutsourcedtoathirdparty.acomprehensive listingofservicesprovidedbydifferentoutsourcingproviders,byfunctionalareas,canbefoundbelow. Itishelpfultohaveageneralideaofwhichservicesyourorganizationwishestooutsourcepriorto contactingavendor. 1 InformationTechnology 1. Strategictechnologyplanning 2. ITauditmanagement 3. Procurement 4. Serverinstallationandmanagement 5. Networkinstallationandmanagement 6. Desktop/laptopinstallationandmanagement 7. Mobiledevicesupport 8. Cloudservices 9. Serverback upandmaintenance 10. Systemsmonitoring 11. Networksystemupgrades 12. Networkingacrossmultiplesites(WAN) 13. VirtualPrivateNetworking(VPN) 14. Networksecurity 15. Softwareupdates 16. Websitecreation 17. Websitemaintenanceanduploads 18. Developmentandmaintenanceofintranet 19. Developmentandmaintenanceofextranet Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 6
7 20. Developmentandmaintenanceofweb basedapplications 21. Databasecreation 22. Databasemaintenance 23. Cabling 24. Movesandexpansions 25. Setupandmaintenanceofvirtualinfrastructure 26. Installationandmaintenanceofphonesystem 27. TrainingServices 28. On siteemergencyassistance 29. Off siteemergencyassistance /7support/helpdesk 31. Disasterrecoveryservices 2 Bookkeeping&FinancialManagement 1. Strategicfinancialplanning 2. Generalbookkeeping(includingA/Rprocessing,A/Pprocessingandbankreconciliations) 3. Managementofrelationshipwithpayrollprocessingfirm 4. Preparationofdonationreceiptsandthankyouletters 5. Auditpreparation preparation Questionnairepreparation 8. Assistancewithbudgetpreparation 9. ChartofAccountspreparationand/orupdates 10. Creationoffinancialreports 11. Boardreporting 12. Funderreporting 13. Forecasting 3 Fundraising 1. Strategicfundraisingplanningandexecution 2. Grantwriting 3. Grantmanagement 4. Prospectresearch a. Individual b. Foundation c. Corporate d. Government 5. Eventmanagement 6. Majorgiftcampaigns 7. Capitalcampaigns 8. Plannedgiving 9. Governmentcontracts 10. Hiringfundraisingstaff Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 7
8 11. Casematerialsandmessagedevelopment 12. Infrastructuredevelopment 13. Directmailande solicitations 14. Databasemanagement 15. Boardandstaffdevelopment 4 Marketing&Communications 1. Strategiccommunicationsplanningandexecution 2. Mediarelationsandmanagement(includingpressreleases,researchandmediaplacements) 3. Crisiscommunication 4. Branding 5. Creationofdonorcommunicationandsolicitationmaterials 6. Creationofsocialmarketing/programmaterials 7. Stafftrainingformediainterviewsandpublicspeaking 8. Socialnetworkcapacitybuilding 9. Websitedevelopmentanddesign 10. Generaladvertisingandmarketing 11. Specialeventpromotion 5 RiskManagement 1. Strategicriskmanagementassessmentsandperiodicriskreviews 2. Propertyandcasualtyproductsandservices 3. Employeebenefitsandretirementproductsandservices 4. Healthinsuranceproductsandservices 5. Stafftraining 6. Training,proceduresandpolicymanuals 6 HumanResources 1. Strategichumanresourcesplanningandexecution 2. Recruitmentandstaffing(permanentandtemp) 3. Benefitsadministrationandconsultation 4. Traininganddevelopment 5. Performancemanagement 6. Employee/laborrelationsservices 7. Compensationanalyses/salarysurveys 8. Creationofemployeemanuals/policies 9. HRcompliance,auditandassessment 10. HRhelpdesk 11. Vendormanagementsolutions 7 Purchasing 1. Strategicpurchasingplanningandexecution 2. Accesstodiscountedgrouppurchasingprograms Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 8
9 3. Vendorreferralsandcoordination 4. Managevendorbiddingprocess 5. Cutpurchaseordersandmakedeliveryarrangements 6. Managevendorrelationsincludingissueresolution 8 LegalServices 1. Strategiclegalplanningandexecution 2. Startinganonprofit 3. Generalcommercialandcorporatedocuments 4. Taxexemption 5. Governance 6. Structuringofcollaborationsandpartnerships 7. Mergersandalliances 8. Litigation 9. Fundraisingandsolicitationguidance 10. Privacyissues 11. Bondwork 12. Realestate 13. Governmentrelations/lobbying 14. Intellectualproperty 15. Laborandemploymentlaw 16. Outsourcedgeneralcounsel Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 9
10 Chapter3: SelectingandWorkingwithOutsourcingVendors TipsforCreatingSuccessfulOutsourcingArrangements Manynonprofitsstrugglewiththedecisionofwhenandwhethertooutsource.Itisfrequentlyless expensivetooutsourceaspecificfunctionratherthanhireafull timeorpart timestaffperson. Numerousvendorsandnonprofitscitethefollowingessentialtipstomaintainingsustainable,efficient andproductiverelationshipswithoutsourcedserviceproviders.thesearealsohelpfulindetermining whetherornotyourorganizationisadequatelypreparedtooutsource. 1. Yournonprofitmustmakealong term,internalcommitmenttodevelopaspecificfunctional areawithoutsourcingasapotentialfirststep 2. Yournonprofitandtheoutsourcingservicesproviderorvendorthatyouselectshouldsetclear expectations,goalsanddeliverablesforallrelevantpartiesinwriting 3. Yournonprofitshouldobtainbothstaffandboardsupportpriortocontactingoutsidevendors a. Ensurethatyouhaveappropriatestaffsupportbothinanoversightandadministrative capacity b. EnsurethatyourBoardofDirectorsisawareofyourselectionprocessandpreparedto supportyouchoices(s) 4. Yournonprofitmusthavetheabilitytopayforoutsourcedservices Ataminimum,nonprofitorganizationsshouldtakethefollowingstepspriortohiringanoutsourced serviceprovider: 1. Conductanin personinterview 2. Checkthreereferences a. Allvendorreferencesshouldbefornonprofitorganizationsofsimilarsizeandscope(if possible)andforworkperformedwithinthepast12months 3. Reviewthevendorwebsitetobothobtainabetterunderstandingofservicesprovidedandthe clientservicemodel 4. SearchresourcessuchastheNOCdatabase,theBetterBusinessBureauorperformasimple Googlesearchforadditionalinformation Alistingofpotentialquestionstoaskvendorsduringtheinterviewprocessisasfollows: 1. Whatisthescopeofyourservice indetail? 2. Howlonghaveyoubeeninbusiness? 3. DoyouworkwithclientsoutsideNYC?Ifso,where? 4. Whereareservicestypicallyprovided;on site,off siteoracombination? 5. Howmanynonprofitclientsdoyouserveinmycity,sector,andorganizationalsize? 6. Doyouhavethebandwidthtotakeonanotherclientrightnow? 7. Can you provide references for three nonprofit clients of similar size and complexity to my organization? 8. WhowillIbeworkingwith? 9. Howdoyouhandleemployeeturnover? Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 10
11 10. What sthe foodchain ifyouhaveaproblem,howdoesitgetresolved(indetail)? 11. Howdoyouchargeforservices;hourlyorprojectfee? 12. Howlongdoyouusuallyworkwithclients(monthsoryears)? 13. What will you expect of our organization (including board, staff, etc)? Describe the ideal relationshipwiththeorganization sprofessionalstaff. Priortoengagingwithavendor,mostoutsourcingserviceproviderswillsupplyastandardcontractfor nonprofitstoreviewandsign.itishighlyrecommendedthatallvendorcontractsbereviewedand editedbyanattorney. Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 11
12 Chapter4: Pricing Thepriceyoupayforavendor sserviceswill,ofcourse,dependonmanyfactors:theserviceoffered, thelengthoftheengagement,thelevelofservice(s)youneedandthecomplexityoftheservice arrangement.youwillnoticeinthenocdatabase( eachvendortooutlineitspricingmodel.weurgethosecontemplatinganyoutsourcingrelationshipto comparecostsamongvendors,inquireaboutpastandfutureanticipatedpriceincreases,and memorializeallpricingwithinthecontractestablishedwithavendor.youmayalsowanttoinclude pricinginthequestionsthatyouaskothernonprofitorganizationsthathaveusedorareusingthe vendor sservices.forexample, Wastheoriginalestimatetheamountthatyouactuallypaid,ordidthe costsubsequentlygoup(ordown)? Werecommendaskingasmanycurrentorrecentusersaspossible togetafeelfortherangeofyourpotentialactualcosts. Pricingforoutsourcedservicesvariesbasedonthesizeandscopeoftheclientengagement.Although somevendorsmayofferprobonoservicesforclientsthatmeetspecificcriteria,thisisnotthenorm. Numerousserviceproviderswill,however,offerdiscountedpricingfornonprofits.Manyofthevendors includedaspartofthenonprofitoutsourcingclearinghouseprogramofferadditionaldiscountstonpcc members.pleasereviewourdatabaseofserviceprovidersformoreinformation. Vendorsnotonlyvaryinhowmuchtheychargeforspecificservicesbuthowtheybillclients.Abrief overviewofthetwomostwidelyusedbillingschedulesareasfollows: 1. Hourly Manyvendorswillbillclientsateitheraflatrateperhouroravariableratebasedon thelevelofexpertiseprovided(ex.partnerbillshigherthananassociate).underthis arrangement,clientsstrictlypayforhoursworkedbythevendor,whichmayultimatelybeless expensivethanafixedfeearrangement. 2. Fixedfee Numerousserviceprovidersfinditbeneficialtobillaflatrateforservicesprovided. Thisistypicallydoneonamonthly,quarterlyorprojectbasisandisderivedbasedonthe estimatednumberofhourstobeworkedwithinagivenperiod.thismodelmayworkverywell fororganizationsonafixedbudgetandaresubsequentlyunabletohandlevariablemonthlyor quarterlycosts. Manyvendorsalsoofferanhourly/fixedfeehybridarrangementwherebysomeservicesarebilled hourlyandothersarelockedinatafixedrate.othersmayinitiallybillonanhourlybasisforthefirst fewmonthsandthentransferontoafixedfeescheduleonceclientneedsandpreferencesarebetter understood.itishelpfultohaveaclearunderstandingofvendorbillingoptionsandtheprosandcons ofeachscenariopriortoengagingwithaserviceprovider. Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 12
13 Chapter5: ContractingWithVendors 2 Acontractatitsmostbasicisasetofpromisesbetweenpartiesthat,ifonepartybreachesorfailsto perform,entitlestheotherpartytoaremedyunderthelaw.itisthedocumentthathelpsseteach party sexpectationsandputsinwritingthegoalsanddeliverablestowhicheachpartyhasagreed.read allcontractscarefullyandmakesureyouunderstandthetermsbeforesigninganyagreement. Anagreementisreachedasaresultofanegotiationbetweenparties.Eachpartyhastobenefitenough fromtherelationshiptobewillingtoaccepttheagreementandsignthecontract.severalkeyprinciples maybeusefulinapproachinganegotiation: Beprepared:Gatherinformationinordertounderstandeachparty sgoalsincludingmarket ratesforservicesandindustrypractices. Determineabottomline:Whatisthemostyourorganizationcanaffordtopay?Whatminimum levelofservicesmustbereceivedinorderforthearrangementtomakesense? Haveacleargoal:Whatbusinessarrangementwouldbestbenefityourorganization? Whenenteringintoacontractitisessentialtounderstandallthetermsoftheagreementandto thoroughlyreviewthewrittenagreementsinceimportanttermscanbeburiedin boilerplate language attheendofadocument.keycontractualprovisionsinclude: Term: Howlongwillthecontractualrelationshiplast? Costs: Howmuchwillyoupayforwhatservices? Modification:Whathappensifthepartieswanttochangethecontract? Termination: Underwhatcircumstancescaneachpartyendthecontract?What,ifany,isthe penaltyforendingthecontractearly? Justbecauseavendormaintainsthatacontractistheir standard formofagreementdoesnotmean thatitcannotbechanged.askforthechangesthatarenecessarytomakethecontractadvantageous. 2 ThankstoLindaManley,LegalDirector,LawyersAllianceforNewYork,forthisadvice.Aneweditionofthe LawyersAlliancepublication,AdvisingNonprofits,whichincludesachapteroncontracting,willbeavailablein January, Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 13
14 Chapter6: TrackingOutsourcingOutcomes Itisessentialtomeasurekeyoutcomesasaresultofworkingwithanoutsourcedservicesprovider. Performancemetricsshouldbetrackedinconjunctionwiththevendorandwrittenintocontractsas appropriate.thesemetricsshouldfallintothefollowingthreecategoriesandwillvarybothby organizationandfunctionalareaoutsourced: 1. Increasednetrevenue 2. Improvedoperationalefficiency 3. Improvedorganizationalperformance NPCCworkswithnonprofitstotrackperformancemetricsforaperiodofoneyear.Allparticipantsin ournonprofitoutsourcingclearinghouseprogramareaskedtotrackthefollowingmetrics,regardlessof thearea(s)outsourced. 1. Increasednetrevenue a. Declineincosts b. Increaseinrevenue 2. Improvedoperationalefficiency a. Decreaseinstaff/boardtimespentontheoutsourcedfunction Additionally,NPCCalsotracksthefollowingmetrics,withintheareaofimprovedorganizational performance: Bookkeeping&FinancialManagement: 1. Declineinbookkeepingerrors 2. Improvedauditresultsasmeasuredbythefollowing: a. DeclineinissuesraisedwithinManagementLetter b. Decreaseinyear endclosingjournalentriesbyauditor 3. IncreasedaccessibilitytofinancialreportsandtemplatesbyBoardofDirectors Fundraising: 1. Increasednumberofrevenuestreams 2. IncreasedBoardinvolvementinfundraisingasmeasuredbythefollowing: a. IncreasednumberofBoardmemberscontributingtotheorganization b. IncreasedtotalrevenuecontributedbytheBoard c. IncreasedBoardmembertimedevotedtofundraising 3. Increaseduseofsolicitationstrategies 4. Improvedfundraisinginfrastructure IT: 1. Declineinorganizationaldisruptions 2. ImprovedaccesstoITtools/services Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 14
15 Marketing&Communications: 1. Increasednumberofrevenuestreams 2. Increasedrecruitmentofnewvolunteers 3. Increasedalumni/clientengagement 4. Increasedsupportfromcommunitymembers 5. Increasedactivepartnerships 6. Achievementofanewadvocacyorlegislativegoal 7. Increaseduseofsolicitationstrategies HumanResources: 1. Improvedemployeemorale,productivityorjobsatisfactionasmeasuredbythefollowing: a. Declineinemployeeturnover b. Increasedemployeeattendanceand/orparticipationatmeetingsandorganizationalevents c. Decreaseinemployeecomplaintssincesigningwithavendor 2. Increaseduseofemployeeandlabor relatedlegalexpertise 3. ImplementationofnewHR relatedpoliciesandprocedures 4. Protectionfromatleast1sourceofliabilityandlossbyretainingathirdparty,therebymitigating risk LegalServices: 1.Improvedabilitytohandleregulatorycompliancematters 2.Implementationofnewpoliciesandproceduresresponsibleformitigatinglegalrisk RiskManagement: 1.Declineinreportedlosses/insuranceclaims 2.Improvedabilitytohandleregulatorycompliancematters 3.Implementationofnewpoliciesandproceduresresponsibleformitigatinglegalrisk Purchasing: 1.Improvedaccesstogoodsandservices 2.Declineinlogisticalerrors Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 15
16 Chapter7: ConclusionandContacts Outsourcingisanincrediblyusefultoolthatcanhavenumerouspositiveimplicationsfornonprofit organizations.throughthenocprogram,wehavewitnessedstrongpreliminaryresultsfromour programparticipants(finalresultswillbepublishedinareportinmid 2013).Outsourcinghashelped theseorganizationsbuildsustainablerevenuestreams,cutcosts,enablestafftofocusonprogrammatic versusadministrativetasksandimprovenumerousotheraspectsoforganizationalperformance.we lookforwardtobuildinguponandexpandingthisprograminthefuture. Pleasefeelfreetocontactuswithanyquestionsorcomments: AmyKarson MarciaBrown NOCProgramManager DirectorofPrograms ,ext27 Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. Nonprofitsarewelcometolinktothisguide( photocopyitforunpaiddistribution.however,nopartofthisdocumentmaybereproduced eitheronlineorinprintwithouttheexpresspermissionofthenonprofitcoordinating CommitteeofNewYork. NonprofitCoordinatingCommitteeofNewYork 1350Broadway,Suite1801,NewYork,NY10018 phone: fax: www.npccny.org Copyright 2012NonprofitCoordinatingCommitteeofNewYork,Inc. 16
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