Ten Top Tips for Controlling Costs

“Look after the pennies and the pounds will look after themselves”

All NGOs strive to make the most of their money – keeping costs down, so they can help more people and partners. The current economic conditions and rising prices make it all the more important. Here are ten practical ideas to help you keep your costs low:

1. Set realistic budgets. If you think carefully about costs, then you are much less likely to spend more than you should. Involve staff in setting their own budgets – they are much more likely to take ownership and manage budgets responsibly and seriously. Involve beneficiaries too, to build up their ownership and empowerment.
   
2. Review expenditure against the budget every month. Monitoring expenditure will highlight any issues when they arise, giving you the chance to take actions to control your costs. Make sure that managers and decision-makers have access to accurate and useful information – and then look at it carefully! Better still, present financial reports to beneficiaries / partner organisations – they really have an incentive to make sure costs stay low.
   
3. Check the budget you have available for any particular items, before you buy them – and make sure all staff are checking the budget. If they know the budget, they can make sure they stick to it. So staff will only buy what they need – not what they want.
   
4. Plan expenditure in advance – last minute purchases cost more and limit choices. For example, this works well for flights and accommodation.
   
5. Build relationships with suppliers – pay your bills on time – and negotiate discounts for bulk or regular purchases. For example, bulk printing of stationery or publications. When times are hard, suppliers value regular customers who pay on time.
   
6. Get together with other NGOs to set up purchasing groups – this will allow you to access bulk discounts on products you would not usually buy large quantities of for yourself.
   
7. Avoid ‘budget games’ – for example, unnecessary spending towards the end of the financial year to ‘use up’ unused budget lines. Managers and trustees should always review budgets carefully.
   
8. For large items of expenditure always get at least 3 quotations from different suppliers. It may be useful to set up a Procurement Committee to ensure best value for money. You could include representatives from your partner organisations or beneficiaries on the Committee. Shop around for smaller items too – don’t just take the first price you are offered.
9. For regular purchases, like stationery supplies, carry out a regular tendering exercise to find out who offers the best value for the products you need. The supplier can invoice on a monthly basis which will help to avoid high processing costs for your NGO.
   
10. Avoid waste and pilferage. Clarify and implement your organisation’s policy on staff members’ (private) use of vehicles, telephones, photocopiers...etc. Re-use single-side printed paper for draft copies. Photocopy large reports as double-sided to save paper and postage costs. Lock up your stationery and store cupboards and make one person responsible for stock control.

Want to learn more?

Mango have developed a number of Financial Management training courses to help NGOs make the most of their money. Join us on a Mango training event and have your fear taken out of finance! See our calendar of courses around the world: www.mango.org.uk/training/calendar.aspx

Mango’s Guide to Financial Management for NGOs includes free advice and tools, including a section on cost-effectiveness. There’s also a whole section on financial reporting to beneficiaries. See: www.mango.org.uk/guide.

Archive

1. Ten Top Tips for Grant Management
2. Warning Signs of Fraud
3. Budgeting
4. The Secrets of Financial Sustainability
5. Reading Budgeting Monitoring Reports
6. Cashflow Forecasts
7. Tips for Finance Trainers
8. Reporting to Beneficiaries
9. Integrating Financial Management into Programme Management
10. Controlling Costs

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