Outsourcing for Charities: A Blessing or a Curse?

Outsourcing

Outsourcing is still a new, yet growing, area for many not-for-profits. Many organisations are beginning to explore innovative ways of being cost efficient and time effective, which is why outsourcing works favourably for many. Yet in order to capitalise on the benefits of contracting, charities must be aware of what it entails.

Outsourcing is the process of using external suppliers to complete tasks. By contracting certain work to suppliers it can often work out cheaper than completing that work in-house. For growing charities, it can be a great way to lower costs and reinvest funds into other departments or areas. Many not-for-profits not only outsource as it saves money, but it can also:

  • Promote better utilisation of internal staff: By contracting tasks out, charities are able to free up the time of internal staff and allow them to focus on work that better meets the aims and objectives of the organisation.
  • Increase targeted efforts: Appointing an outsourcing company gives organisations the ability to take on and complete projects aimed at fulfilling its purpose that would not be possible if completed in-house. It also exposes organisations to more opportunities and activity as they can often benefit from the knowledge and contacts of the outsourced supplier.
  • Reduce and share risks: Managing and reducing risk is imperative to an organisation’s survival. Outsourcing tasks allows threats to be reduced as part of the risk is mitigated and controlled by the company.
  • Access to quick, skilled and quality specialists: By contracting out work, charities are able to improve the performance of the organisation as they have access to skills that they would normally not have access to on a day-to-day basis. This also means that work is done to a better quality and standard, and completed quickly.

Outsourcing Charity Finances
It is becoming more common for not-for-profits to contract out their finance function as a way to improve confidence in their organisation. The sector has seen a backlash on the lack of transparency and truthfulness, particularly when it comes to submitting annual audits and accounts. With charity pressures growing, finance directors are turning to outsourcing as a way to improve the quality and reliability of their accounts. Commonly, organisations will contract out:

  • Bookkeeping
  • Management accounts
  • Payroll­
  • Charity Commission reporting
  • Grant reporting
  • Board reports

When should outsourcing not be considered?
The role of a charity is to meet the public benefit and charitable purposes stated in the organisation’s governing document. Where this is not being met, contracting work out should not be considered. Furthermore, functions that contribute to the individuality of the charity, such as customer service and fundraising should ideally be kept in-house. This is because it involves staff being personable and these roles need people that have a significant understanding of the charitable aims. Charities should be aware that outsourcing, if not managed correctly, can cause a loss of control. As a result, an effective outsourcing management procedure should be introduced.

Outsourcing your charity finances to Raffingers gives you access to a highly trained and experienced finance team.

To find out more about the services we offer, contact suda.ratnam@raffingers.co.uk or go to https://www.raffingers.co.uk/sectors/charity-and-not-for-profit/ for more information.

https://smallbiztrends.com/2017/02/advantages-and-disadvantages-of-outsourcing.html
https://www.theguardian.com/society/2002/may/15/charities.conferences