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Considering Outsourcing to Solve Understaffing Challenges

04/04/2023 Dalena McGrew

What should you do if your nonprofit organization is short on employees and you either don’t have the funds or you are lacking the confidence in long-term future cash flow to return to full staffing? What if you have specific grant needs but, the grant term is finite, and you need specialized financial reporting? Outsourcing may be the answer.

Skip Steps One and Two

Most nonprofits initially respond to a staff shortage in one of two ways:

  1. Pile extra work on the desks of remaining staff or
  2. Enlist volunteers to pick up the slack, who may or may not have the needed expertise.

Although these may work as temporary solutions, eventually both paid and unpaid workers will get burned out and leave for work-life balance, more autonomy, or greener pastures.

Also, if you’ve been forced to lay off employees with specialized skills, those who remain may not be capable of assuming their duties. It’s probably fine, for example, to replace paid exhibit guards with trained volunteers, as some art museums have. But don’t assume a marketing staff member can manage your website after you lose the person who designed it. More likely, the site won’t get monitored, updated, or maintain the former level of security and, you’ll miss opportunities to reach potential supporters, or worse, lose your online presence.

Look Outside

If your nonprofit is likely to remain either short staffed, or missing key staff for an extended period, consider outsourcing. For-profit companies have outsourced for years to reduce benefit costs and balance-sheet burdens of long-term commitments associated with keeping full-time employees. But nonprofit organizations have not always recognized the benefits of temporary help, including greater flexibility and possible cost savings. The cost-benefit can be great long term as well, as outsourced staff are often able to utilize best practices they see across the industry and implement changes or efficiencies that result in savings of time and money.

You may be surprised to learn that the kinds of workers available to fill project-based or short-term positions aren’t limited to administrative staff. Many nonprofit professionals, including executives, fundraisers, accountants, project managers, human resources, and public relations experts, can be found to assist on an interim basis, either as independent contractors or via employment agencies. In recent years, several agencies specializing in nonprofits and, even in specific roles such as development personnel, have emerged.

Best Uses

The current “Hustle Culture” of entrepreneurs makes some tasks and positions especially better for outsourcing than others. For example, smaller nonprofits can usually do without full-time IT specialists — particularly when there are managed IT service firms and a marketplace full of technology contractors. And you can easily send out creative projects, such as social media graphics, newsletters, invitations, solicitations, or any other digital and print files, to creative agencies or freelance writers and graphic designers.

Many financial functions can be outsourced, too. In fact, if your staff or board members aren’t qualified to manage your nonprofit’s investments, you should turn your portfolio over to a professional finance manager you trust. Accounting jobs, including payables, payroll, receivables, and even controllership can also be handled by a third party.

Practical Issues

It may not be practical to outsource tasks that require extensive knowledge of your organization, its niche and constituents. Development staff members who have close, longstanding relationships with major donors or community leaders, for example, aren’t easily replaced with temps.

What’s more, the right short-term employees aren’t always easy to find — particularly when it comes to workers with specialized skills or nonprofit experience willing to work at rates you can afford.  It’s an employee market right now; hiring top talent can be challenging. The time and money you spend searching for and training temporary help could end up costing you more than retaining a full-time staff member would; the full picture has to be considered.

Appropriate Solution?

In today’s quickly changing economic environment, it may be some time before you feel confident enough to hire. Look for creative ways to work with a tighter budget in the meantime. Outsourcing may be a solution if you have work that must get done but you can’t make a long-term financial commitment.

VonLehman provides assessments of your current systems, determinations, and discussions on whether outsourcing any function of your organization is right for you. VonLehman offers full outsourcing for all your accounting and human resource needs. For any questions related to this article, contact Dalena McGrew at dmcgrew@vlcpa.com or 800.887.0437.

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