Procurement Industries

3 Things To Look For In A Procurement Software for Nonprofit Organizations

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15 minute read

Posted by

Alan McPhaul

Having IT procurement software is essential to running a streamlined, compliant and cost effective non-profit business. Father Joe’s Village, a non-profit serving the homeless in San Diego, was able to cut purchasing costs in half using nonprofit management software. You can check out their case study on how they accomplished this feat here

We will explore the most important features to look for in a software for nonprofit organizations below to ensure you too have the opportunity to run a worry free and cost effective nonprofit organization. 

Before we go into the details, let’s list out the features you want to see in an IT procurement software.

  1. Spend management tools in the IT procurement software to prevent overspending
  2. Workflow management tools in the IT procurement software to avoid mistakes
  3. Supplier management tools in the IT procurement software to ensure optimal relationships

When looking for a nonprofit management software, below you will see exactly why you should look for these 3 things. 

1) SPEND MANAGEMENT TOOLS IN THE IT PROCUREMENT SOFTWARE TO PREVENT OVERSPENDING

The key to nonprofits is to ensure every penny is accounted for. This is important for both ensuring cost effectiveness as well as ensuring compliance to legal and financial statutes.

An IT procurement software enables nonprofits to track every dollar and report on that spend. This ensures that you are always within budget as prices and the direction of the organization change.

IT Procurement

Exceeding the budget can cause negative consequences. You may get into trouble with:

  1. Donors where they may choose to stop supporting your nonprofit and donate to a similar or totally different organization
  1. Beneficiaries where you aren’t effectively helping the cause you set out to help

       3. Employees where they may lose trust in the organization and leave

       4. Government or worse the IRS where they may find money has been negligently mismanaged

Responsible budgeting is essential for a nonprofit organization's success. By ensuring every dollar is accounted for in an IT procurement software, you can ensure compliance and the happiness of your key stakeholders. 

A software for nonprofit organization can avoid negative impacts to/from these stakeholders by helping stay within budget by:

  1. Approvals - Ensure that you give the OK on dollar amounts spent. Spending limits can be configured by dollar amount, department, role or person
  2. Budgeting - Forecasting and planning dollar amounts for specific time periods
  3. Tracking - Detailed information to review how you are trending versus your historical purchases
  4. Reporting - Create, save, and download reports on your spend to track where each dollar is going. Can get as detailed as individual buyers, departments, locations, categories and items so you have full visibility into your spend

According to Raj on donorbox.org in, A Guide to Nonprofit Budgeting, he states, “Budgeting should ideally become a part of your nonprofit’s organizational culture, something everyone is aware of and contributes to.” With the correct nonprofit management software, you can excel at budgeting especially as it relates to workflow management. 

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2)  WORKFLOW MANAGEMENT TOOLS IN THE IT PROCUREMENT SOFTWARE TO AVOID MISTAKES

According to Lawshelf, nonprofit organizations must maintain their nonprofit status by adhering to all IRS rules pertaining to their missions. A nonprofit management software can help with this adherence through workflow management. 

With your mission in mind, you can abide by your rules and principles by using IT procurement software. It is perfect for this as it can intuitively allow you to put checks in place to ensure compliance. 

You can structure workflows for approvals from managers or even peers to ensure adherence to your unique legal and financial rules. This feature is a safeguard within your software for nonprofit organizations. This way mistakes are less likely to happen. 

nonprofit management software

Your nonprofit management software has the ability to block certain users from taking certain actions or limit their actions within the scope of your organization that could otherwise jeopardize your nonprofit. 

For example, your IT procurement software can: 

  1. Restrict Purchaser A from approving items from Account B without Manager C’s approval
  2. Restrict a purchase of $XXX unless approved by Manager C
  3. Allow Purchaser A access to approve all items from Account B except those exceeding $XXX. Anything exceeding this amount would then need approval of Manager C
  4. Restrict all approvals from Account B due to a high risk to your business
  5. Restrict visibility of parts of the software so Department D can not see for security purposes or get confused at parts of the software they do not need to worry about

Your nonprofit management software’s abilities to establish approval hierarchies will serve your organization. With customization for projects and departments, this will further ensure all business impactful decisions are being looked at. 

Workflow management from an IT procurement software can revolutionize your business. It gives you, your stakeholders and even your employees a piece of mind. You can see more about what an IT procurement software can do for your team here

3) SUPPLIER MANAGEMENT TOOLS IN THE IT PROCUREMENT SOFTWARE TO ENSURE OPTIMAL RELATIONSHIPS

According to Jennifer Devon in her article Identifying and Developing Strong Relationships for Nonprofit Success, “Whether it is relationships within your organization, external partners, donors, clients, or volunteers, success is dependent on the support from others. Nonprofit organizations rely on the engagement of constituencies to ensure successful delivery of mission and sustainability for the future.” 

Utilizing nonprofit management software, you can successfully navigate relationships with external partners. 

software for nonprofit organizations

Specifically for nonprofits you have to stay financially and legally compliant. More than not, this means your external suppliers will have to maintain such compliance as well. 

In an IT procurement software, you can maintain a list of approved suppliers with contact information and evaluations to ensure such compliance.

The nonprofit management software can also keep records of supplier scorecards. This way you can ensure you are getting the best service and prices compared to other options. 

Also software for nonprofit organizations can allow for full visibility into transactions with external partners for full disclosure and accuracy. Actions are logged and recorded by each one of your employees to track and monitor each transaction. 

Furthermore, IT procurement software has the ability for keeping records of communication. By using the native messaging function, you can keep track of your collaboration with suppliers ensuring any future employees or stakeholders have access to necessary conversations. 

On the same note, all relevant documentation and files can be stored within the nonprofit management software. This allows for easy reference points and a centralized source of truth so you always have something to go back to.

Some important documents the IT procurement system can store are:

  1. Vendor contracts in which you can also apply to relevant transactions. You can also set time limits for when the contract is set to expire to make sure you are always operating with the most up to date terms
  2. RFP/RFQ forms that the nonprofit software will create for you. It will also serve as a place for completed forms to be stored for your records
  3. Purchase orders that can be automatically populated from RFP/RFQ forms as well as sent automatically through the system to your partner. You can then upload other important documentation that relates to the PO into your nonprofit management software for safekeeping. Such things can include certifications, bill of lading, etc. which can also be uploaded at the supplier level

As you can see, an IT procurement tool can be a very important part of managing your supplier relationships. You can easily ensure partnerships that are in line with your mission statement and budget by tracking vendor relationships through the software. 

Any red flags will be documented and quickly seen to ensure you do not have relationships with bad actors. By ensuring you have upstanding partnerships, a nonprofit management software can uphold the legal and public standards of your business.

CONCLUSION

Managing your procurement can be tricky, and as a non-profit, this business essential function is even more delicate especially without software for non profit organizations. 

According to Don Simkovis, in his article How to Run A Non-Profit Organziation, “Nonprofit organizations, like businesses, succeed in their mission by refining operations inside the organization and relating well outside the organization.” 

Using an IT procurement software for your management of spending, workflow and suppliers, can take your business to the next level. 

With the nonprofit management software having layers of both internal and external management tools for business essential tasks, it can save you money and stress.

A nonprofit management software can afford you the piece of mind that other solutions may not. You can read through the feasibility of managing procurement outside of an IT procurement software here

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