Archive for January 12th, 2010

What Are The Basics Core Administrative Services?

Tuesday, January 12th, 2010

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Instead of fighting over what resources to allocate to any one core function consider outsourcing.  Time management can be well served with the right contracted services. 

 

With the intention of funders and donors to have 501 c 3 nonprofits be as effective and efficient as possible it is important to have the right infrastructure in place.  Those nonprofits that can clearly show that they meet the mission of their 501 c 3 status will match the economic climate where government is looking for more for less. 

To help level the playing field for non-profit 501 c 3 organizations outsourcing achieves the economies of scale larger organizations already realize without taking away the quality achieved in the existing small, specifically focused operation. 

A 501 c 3 nonprofit should have the core services:  payroll, accounts management, general accounting, bids, contracting, pricing, purchasing, and cost analysis.  These core services will provide the 501 c 3 organization with most of their day-to-day and strategic planning.  At the end of each year, the organization should develop the next year’s budget and will be able to plan labor and resources accordingly.  The core administrative services are to help plan the resources, providing estimates based on the organization’s historical data.  On a weekly basis, the 501 c 3 organization will be able to see how they are performing budget versus actual and month to date.  For the longer term, the core services should provide quarterly and annual planning and will provide longer-term analysis for resource and labor management.

While the core administrative services should provide the 501 c 3 management and Board the data necessary to manage the organization, the data must create certain reports pertaining to cash management, employment taxes and employee benefits.  The cash management should show what it takes to reach levels of 30 day, 45 day and 90 day cash flow.  The purpose of cash reserves is to enable the non-profit to have the ability to react to emergencies and growth without affecting day-to-day operations.

403B or 401K plans allow non-profit organizations to provide defined benefit pension plans to their employees, often with tax advantages to the employees and employer. 

The current economic outlook focus is to decrease the growth of government spending across the board, which means cutting funding to specific programs run by non-profits and the consolidation of others.  In order to maximize the money allocated to direct care/project results, government is forced to concede the benefits realized through a larger number of small, specialized non-profits and purchase services from larger organizations with an expectation of more efficiency.  In addition to this, larger organizations are able to weather a reduction in funding by diversifying the type of programs they offer and having larger credit lines, larger fund balances and assets that can be leveraged to offset deficiencies.