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Nonprofit outsourcing seen as helpful, pricey

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As nonprofits struggle to do more work with fewer resources, many consider outsourcing back-office functions like accounting and human-resources management.

While there are benefits to be gained through outsourcing, the cost can be prohibitive for smaller organizations, says a new report from the Management Assistance Group and the Eugene and Agnes E. Meyer Foundation.

A survey of Meyer Foundations grantees says financial planning, communications and finding and retaining qualified staff are the areas in which they most need help.

Their “most pressing” need is improving their marketing and communications plans, including updating their publications and marketing materials.

One in three respondents say they are not satisfied with their financial planning and do not have the resources to raise money to overcome their fiscal problems.

Many smaller nonprofits say human-resources functions are handled poorly or not at all, resulting in poor performance, burnout and turnover.

Outsourcing provides nonprofits with access to professional skills they likely do not have in-house, and can free up overworked nonprofit executives, but existing business models do not work well for group with budget of under $3 million, the report says.

That mismatch between need and affordability creates a market niche for entrepreneurs to serve the nonprofit market, assuming they can offer creative business models with lower costs-of-service.

While many nonprofits spend little on back-office activities, they likely have much to gain over the long-term in improved operations and cost-savings.

To help nonprofit executive directors gain the skills they need to outsource well, the report says, organizations such as nonprofit associations should create reference and training materials and facilitate networks of service providers that cater to smaller nonprofits.

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