Charity outsourcing – What to consider
Charities are increasingly seeking to outsource their internal function/services. It has become more urgent in the current difficult funding environment. We have been providing outsourced accounting and financial management solutions to charities for some times. While outsourcing has broadly benefited to all charities to reduce costs and improve efficiency. However, the level of gains from outsourcing varies. From our experience, here are few issues that you need to consider while outsourcing to ensure that you gain maximum from the outsourcing decision;
- Outsourcing motive: Why do you want to outsource? Cost reduction motive remains the prime reason, but it does not have to be the only one. By the way, outsourcing does not suit everyone, therefore, consider your circumstances carefully.
- Expectations: Make sure that you know what you expect from your outsourcing provider. For example, regarding your regular reports such as “Monthly Management Accounts”, be clear from the outset the format, contents and timetable for getting the report to you.
- What are you outsourcing? This is a fundamental aspect of outsourcing to remind all that you are outsourcing some activities, process but the overall financial management responsibility remains with you.
- Partnerships: Build a partnership with your outsourcer to achieve charity mission. If you just treat them a service provider then often the benefit is less for the charity.
- Charity knowledge and commitment to your cause: It is essential and indeed makes life much easier when they outsourcer have in-depth knowledge of charity operating environment as well as your charity’s specific operational challenges.
- Your named contact person: Make sure that you have named contact person to discuss any accounting or contract aspect of your charity. Do you have access to this person anytime?
- Regular meeting/interactions: How often you meet the outsourcer to review issues of your accounting (e.g. management accounts, etc) or services. This makes a big difference to the charities.
- Turnaround time frame: Make sure that the outsourcer turnaround timeframe are incorporated in the service level agreements. For example, when you have a query, what is the timeframe the outsourcer must respond?
- Contract lengths: It works well when you enter on a shorter contract. While a longer contract is good for outsourcer but it not often benefits the charity. A shorter contract always ensures a continuous effort from outsourcer to improve service. In this uncertain charity funding environment charity trustees need to minimise their exposure to liabilities.
- Terminating the contract: You need to have clear cuts understanding what happens when you terminate contracts. Are there any hidden costs or hindrance for you when you decide to terminate the contract? What happens to your records, documents, etc. and how they are handed back to you.
- Fixed Cost: Go for a fixed price contract, this is always good for the charity and force outsourcer to finish jobs without any fault.
- What extra benefit: Find you what additional benefits are provided by outsourcer free and make sure that you utilise them for your charity.
You can visit Charity Accounting Services for more details and further tips about your charity outsourcing.
Disclaimer: This article provides and overview of the relevant issues for charities not a specific suggestion for your organisation. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the author.