Led by Sonoma Valley Fund’s Non-Profit Services Initiative steering committee (NSI), a Stanford Business School pro bono Alumni Consulting Team (ACT) recently completed an analysis of $2.4 million of spend categories (insurance, office equipment and supplies, IT supplies and services and marketing expenses) of 14 Sonoma Valley non-profit organizations. The purpose of the study was to determine the feasibility of using pooled purchasing to reduce non-program costs. Through a combination of external research along with telephone and in-person interviews the team sought to identify those opportunities with the highest probability for savings. Final recommendations were presented to non-profit executive directors, board and finance chairs and were based on (1) the potential size of benefit; (2) ease of implementation; and (3) sustainability.
The steering committee and ACT felt strongly that findings could result in significant savings. Using a conservative prediction of 12% to 17%, combined savings could range from between $265,000 to $375,000 by use of pooled purchasing. The analysis indicated that the office/IT equipment, marketing and outside services categories had the highest potential; facilities (excluding rent) and some insurance categories had a low to medium potential; and the opportunity for savings on health insurance was low.
An implementation team made up of members of both the non-profits and the Sonoma Valley Fund NSI team continues to work with Valley non-profits via the Executive Director Roundtable and other one-on-one assistance. They have also developed a tracking process to determine the results of this initiative over the next two years. With this initial success, SVF expects to respond to other requests for assistance in other spend categories to our Valley non-profits.
“I think this is great project for Sonoma Valley. It does something that many of us as nonprofit leaders have been too busy to take on–helping our programs by working together and with other nonprofits to lower overhead costs, in this case, taking advantage of pooled purchasing opportunities. The project done by the Stanford Business Alumni team was helpful, and the follow up work that Arleen, Donna, and Karen have taken on tailors that work so it fits local non profits. Some of what they found is so simple, I can’t believe we weren’t all doing it already. Hopefully, this is just a start of this kind of collaboration, where nonprofits can all benefit as we draw on the experience and connections the Sonoma Valley Fund brings to our community.”
– Richard Dale, Executive Director Sonoma Ecology Center