7 ways to cut nonprofit costs rather than staffers
It wasn’t long ago that the not-for-profit sector was struggling to find enough staffers to hire. Now that many organizations are losing federal grants and facing budget shortfalls, they may be considering layoffs. If you’re in this situation, you probably don’t want to lose valuable employees — and the mission-critical programs they help run.
There may be another option — cut expenses. Here are seven ideas to consider:
1. Suspend benefits and wages. Before laying off workers, consider reducing hours or suspending some employee benefits. You might trim wages or management-level salaries. Staffers may object to such measures, so be careful to explain that you’re trying to prevent layoffs. If possible, provide a timeline or benchmarks that will potentially trigger a “return to normal.”
2. Send staffers home. Allowing employees to work remotely may lower overhead costs for the leased space, utilities, insurance and maintenance you’ll no longer need to pay for.
3. Renegotiate your lease. If you rent and need your workers on-site, approach your landlord about renegotiating better lease terms, especially if you’re nearing the end of the lease’s term. Many commercial real estate markets have failed to recover from COVID-19 vacancies, and landlords may be more amenable to rent reductions, abatements or holidays.
4. Consolidate sites. Nonprofits that run more than one site might be able to consolidate facilities into a single location and shutter the rest.
5. Monetize real estate. If your nonprofit owns office buildings or other facilities, consider selling, downsizing or renting unused space to other organizations.
6. Review vendor contracts. If you’ve consolidated worksites or shifted to remote work, your organization may have less need for some goods and services. But before you terminate any contracts, check for penalty or fee provisions that could make canceling costly. Look into consolidating purchases of goods and services with fewer vendors to obtain discounts. Also, be assertive and ask vendors to offer nonprofit discounts or donate their services.
7. Partner up. Think about entering cost-sharing agreements with other organizations, nonprofit or not. You might also want to merge with another charity that shares or complements your mission and programming.
Ready to protect your mission and your team? Let’s talk.
If you’re facing funding cuts and a possible budget shortfall, now isn’t the time to go it alone. Wardy & Davis’ Not-for-Profit Services team can help you slash expenses as well as find new revenue sources. Contact your W&D advisor at 847-267-9600 or [email protected].
Legal Notice: The materials communicated in this transmission are for informational purposes only and not for the purpose of providing accounting, legal or investment advice. You should contact your accountant or advisor to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an accountant-client relationship between Warady & Davis and the user or browser. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. Any accounting, business or tax advice contained in this communication is not a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, Warady & Davis would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services. © 2025 All Rights Reserved