TT10 Controlling costs

Guide to Financial Management

Top Tips 10

Ten Top Tips for Controlling Costs

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.

'Look after the pennies and the pounds will look after themselves'

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. Check the budget

Before you buy anything, check the budget you have available. Make sure all staff are checking the budget.  If they know the budget, they can make sure they stick to it.

3. 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!

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. Join 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. Get quotes

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. Approved supplier list

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 losses

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/opentrainingprogramme

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

Mango: All about Money and NGOs
Mango helps NGOs to make more of their money by: running practical training, supporting people in finance roles, advising NGOs and donors, and publishing free tools and guides: www.mango.org.uk