In today’s procurement landscape, most of what you read covers issues impacting for-profit organizations while non-profit procurement tends to get overlooked. For those looking to get into non-profit procurement, this can leave you feeling like you’re searching in the dark.
Before you jump into non-profit procurement, there are several things to consider. We walk you through some of the common problems encountered in non-profit procurement and the pros and cons.
This way, you can make an informed decision based on factual information. Let’s dive in, beginning with the bumps you might face along the road.
Solid procurement practices are vital for any successful enterprise to continue thriving, but this is particularly true for non-profits. This is because non-profit procurement poses its own unique set of challenges, much like all roles in any non-profit, to be honest.
Since non-profit procurement policy often relies on funding from the federal government and various grants, the regulations and guidelines that govern them are generally far more strict. Add to this the fact that non-profit organizations also desire to grow like their for-profit peers. You must keep close tabs on spending, ensuring funds are spent wisely in procuring goods and services to start and beyond.
Let’s look at a few of the problems that many non-profit procurement teams face today.
As we mentioned, many non-profits receive federal funding—with numerous rules and regulations attached. This can become even stickier since these strict guidelines are in constant flux.
The ever-changing nature of things makes it challenging to ensure your organization uses procurement practices that always remain in compliance with the most recent regulations. If it sounds exhausting, it’s because it can be!
With the majority of non-profit organizations tending to be on the smaller side, these entities’ purchasing power often pales compared to their larger, for-profit peers. Specifically, the combination of having a more limited number of vendors to work with and the inability to purchase certain goods or services in bulk because of a more limited budget can take a toll on an organization.
This is why some non-profits band together to form a GPO or group purchasing organization. This way, when wielded within a collective GPO, each organization has an increased purchasing power to negotiate for those coveted discounts.
Part of keeping everything running smoothly at a non-profit organization involves successfully integrating non-profit procurement with all other systems. This integration will allow you to easily move from RFP to purchase order through receiving goods and services and handling payment. While important, this process can also be stressful, especially if any unexpected issue or kinks arise.
So, after reading the woes that come with non-profit procurement, you might be wondering why anyone would opt for it. It may surprise you that there are many reasons—the big one being that you’re helping a worthy organization!
But beyond that altruistic advantage, there are other pros and benefits. These include having your own separate identity status as an LLC, having a lawful right to exist in perpetuity, gaining access to limited liability protection, enjoying tax-exempt status, and accessing near-endless grants, to name a few.
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