Charitable donors often reference the ‘administration costs’ of not-for-profit organisations as a measure of their cost-effectiveness – making the assumption that lower administration costs mean more direct flow-on to beneficiaries.
Back-of-house services are often treated as a burden, necessary but separate from the ‘real work’ of the organisation.
In reality, the effectiveness and efficiency of back-of-house services spell the difference between success and failure for a not-for-profit. Organisations should focus on the value created by an administrative service over its cost, for a far more accurate indicator of effectiveness.
So how can not-for-profit organisations increase the value of their back-of-house services?
Listening to your customers can be the fastest way to understand where your organisation is and isn’t delivering and how else you might be able to service the market. The same goes for your staff when it comes to optimising back-of-house services in not-for-profits.
Back-of-house services perform best when they equip an organisation to meet its specific needs. Often, it is staff members from across the organisation who are best placed to identify these needs. However, without the appropriate mechanisms in place to enable feedback, staff may continue to struggle with ill-suited technology, systems and processes, unaware of the solutions available.
High-performing back-of-house services are deeply curious about the rest of their organisation, engaging in regular discussion and pro-actively seeking feedback from all areas. This approach can quickly identify where your investment will give you greater efficiency, but requires:
Not-for-profit organisations share some similarities with start-ups in that they often have restricted resources and passionate staff. However unlike start-ups, not-for-profits are traditionally slow to adopt new technologies and ways of working.
There is one particularly important lesson that not-for-profits can learn from start-ups, that is putting the purpose of their organisation above all else.
In a start-up’s early days, a clear purpose may be the only asset the organisation has. This single-minded focus on purpose allows the staff of start-ups to ignore distractions and work collaboratively towards a well-articulated goal. By contrast, the work of many staff in not-for-profit organisations is dictated by process. The best way to achieve their organisation’s mission may have changed, but they are slow to adapt. Putting purpose ahead of process is a great step towards building momentum and efficiency in not-for-profits, particularly when it comes to optimising back-of-house services.
Another technique that can benefit not-for-profits is experimentation – often used by start-ups to test different ways of pursuing purpose. There are three important components that are essential to ensuring that experimentation is effective and worthwhile:
New and successful not-for-profit organisations are learning key lessons from start-ups and applying them to maximise success.
Nous Group has recently launched NFP Benchmarking, a free guide to what works in the back-of-house services of Australian not-for-profit organisations.
Since 2010, Nous Group has worked with Australian not-for-profit organisations across multiple states and sectors to benchmark back-of-house services. These organisations range in size from $5m to $80m in organisational expenditure per year.
Our data repository includes over 700 KPIs that explore the cost and quality of Human Resources, Finance, Information and Communications Technology (ICT), Fleet and Payroll service delivery.
NFP Benchmarking provides access to selected KPIs and shares some of the lessons that we have learnt from the benchmarking.
Get in touch for more information.