We get it – you’re fully committed to delivering on your mission while somehow staying on budget. You just need the products and services to be available to you to help you get the job done - without hassle - and go home at a reasonable hour.
The difficulty is that change takes time and an organization’s ability to execute year-after-year is influenced by forces outside of it’s core competencies and specialized knowledge. These secondary considerations, such as expertly-managed spending, can actually help your organization reach its primary goals - making them worthy of renewed focus and attention.
Reviewing purchasing behaviour can lead to many positive outcomes. At a minimum, how your organization manages your supplier selection and management is something you should consider as an indicator (and enabler) of good governance. One area that we regularly find is regularily lacking within many non-profits is the use of good procurement processes and supporting policies. This article will discuss important reasons for examining these areas and why going without is no longer a viable option.
Five Reasons Why You Need Procurement Policies:
- To defend a decision:
Nonprofit and charitable organizations are well aware of the attention paid to how funds are spent. Board of Directors, Funders and Donors, auditors and the general public all care about how money is spent, which extends to caring about how the suppliers hired by a nonprofit were selected. Establishing (and enforcing) good procurement policy - based on best practices - gives nonprofit leaders the confidence to defend the decisions they have made regarding spending.
- To ensure quality:
Many different roles and responsibilities are required in order for a nonprofit to properly operate and deliver on its social mission. This results in many different perspectives on what resources are needed to do so efficiently and effectively. It’s impossible for a single person or unit alone to decide what’s best. Good purchase decisions require input from different stakeholders. Establishing good policy to orchestrate this input can increase decision quality and reduce risk.
- To protect reputation:
The expectations (and need) for fair and transparent selection processes are greater than ever. Donors, funders, government and the general public are unforgiving when it comes to scandals and corruption - real or perceived. How nonprofits select and manage suppliers can impact their public reputation and credibility. Having proper polices in place guides staff on how best to steward supplier relationships and uphold a professional code of conduct.
- To operate efficiently:
Finance professionals within your organization can support program staff on large or complex projects. These projects usually involve highly specialized activities such as researching suppliers, developing documents, creating evaluation tools and writing contracts that most staff rarely (if ever) perform. It’s more efficient for the same few individuals to manage this work across all projects - their expertise will add incremental value. Policiesdefine how and when to engage these “procurement leaders”.
- To expand your Network:
Establishing procedures and supplier evaluation processes help a nonprofit organization ensure that proposed solutions will meet its needs, principles and standards. These processes can help the organization “cast it’s net” further to discover alternative and possibly more appropriate opportunities for partnership. At the very least, gaining knowledge and understanding can increase confidence that existing suppliers are the best choice.
Procurement policy and procedure is an area of perpetual opportunity for non-profit organizations in Canada. Evaluating - and challenging - how your organization selects and manages suppliers and service providers today is the first step toward best-in-class governance.
We can help you define your policies and more!
Investments made today should benefit your organization for years to come. This includes the investment of time spent evaluating and establishing procurement policies - they should be designed to last!Our approach identifies and implements changes and ensures that benefits have staying power beyond the life of a single cost-saving project.