Certain issues—visibility and efficiency, for example—are challenges all organizations face in their procurement practices. Nonprofit entities, however, must grapple with another unique set of considerations.
“Organizations need to maximize the impact of every dollar, and demonstrate that as close to 100% of resources as possible are used directly in service of their mission, as opposed to being consumed in the operations of the organization,” says Lisa Walker, principal, U.S. supply chain and network operations practice, at Deloitte. Necessary as it may be, these obligations can prevent nonprofit organizations from making material improvements in their procurement functions.
“It can be hard to justify making an investment to improve capabilities that could in the end actually give more back to that mission,” she says. “That includes investments in digital technologies to help improve efficiency and efficacy of spend, or managed services where they purchase access to leading-class capabilities, technologies, people, and expertise.”
Beyond simple cost savings, modern procurement is also charged with making sure a company’s suppliers align with the organization’s core values, whether in supplier diversity, sustainability, or beyond. This imperative can be even more pronounced in the nonprofit sector, “where organizations are driven by a mission, and understand how that mission is reflected in the suppliers they choose,” says Brent Griffith, managing director at Deloitte. “Being able to understand how to drive a diverse supply base, find local suppliers that support the community, and track the sustainability of their suppliers—it’s all especially important for nonprofits.”
Extensive experience working with major public health and veterans nonprofits has helped Sean Ullman, senior account executive, nonprofit, at Amazon Business, understand the potential benefits of aligning procurement with mission.
“Historically, the buck stops at the point of donation, but it doesn’t have to do so,” he says. “Nonprofits can force-multiply a one-time investment by ensuring there is a strategic procurement plan surfacing suppliers that align with the mission, such as veteran-owned businesses for nonprofits that serve veterans, or locally owned business for a community food bank.”
"We can help nonprofits set policies that help employees to purchase within established grant and donation parameters."
— Sean Ullman, Senior Account Executive, Nonprofit, Amazon Business
That combination of fiscal responsibility and values shapes the totality of a nonprofit’s mission around spending.
“It’s about having the capability to demonstrate you are making investments with the suppliers most aligned with your values and objectives, so organizations can prove they are the best wards of spend,” Walker says. It’s a big reason experts like Walker and Griffth agree that nonprofits, which often face tight budgets and limited staffing, must utilize digital tools that provide real transparency and measurable benefits to fulfill their missions effectively.
Finding the right solution is key.
Amazon Business, for example, provides nonprofits with access to competitive pricing on millions of products, opening avenues that maximize access to preferred, values-aligned sellers, in turn lowering reputational risk while maintaining efficiency and cost controls. “Flexibility is key, to allow and empower employees to make strong purchasing decisions,” Ullman says.
The ability to set standards and policies gives nonprofits the control to balance cost-based considerations against values-based considerations, and work to maximize both. “The employee still chooses what they want. They still have the price flexibility of the marketplace, but it allows the nonprofit to set policies,” Ullman says. “Amazon Business is providing visibility, which lets you shape behaviors.”
Digital procurement can also be a critical tool for helping nonprofits meet needs around compliance with internal purchasing policies, helping marry data with projects and informing where spend is consumed. “You need quality spend analytics to support and substantiate that you are being an effective manager,” Walker says.
Amazon Business, Ullman says, meets those needs through feature sets designed with compliance in mind. “For every grant, there are different qualifications, and therefore different expectations in procurement,” he says. “We can help nonprofits set policies with Guided Buying—a paid feature of Business Prime—that helps employees to purchase within established grant and donation parameters, which often have tight constraints.”
Tools like Donation Driver help expand on donor acquisition and retention strategies. “Nonprofits can create curated wish lists allowing donors to purchase needed items and ship them directly to end recipients,” Ullman says. Basic and intuitive capabilities like tax-free purchasing aid in navigating critical accounting and reconciliation challenges.
Ullman also notes that nonprofits can receive the benefits of Business Prime at various discounted rates, and for those seeking the cash flow benefits of an extended credit line, Amazon Business offers credit with net-30 day terms. And because most employees are familiar with the shopping experience on Amazon, adoption can be a more frictionless, intuitive experience.
Critically, Amazon Business helps nonprofit boards with their important role, Ullman says. “Members wear many equally important hats. They lead the organization and guide impactful mission work, and serve as individual donors and advocates for the mission to motivate others to invest,” he says. “Overall, the fiduciary responsibility for the organization falls upon their shoulders.”
Trying to meet those obligations without considering procurement, Ullman believes, misses a vital opportunity. “When discussing the annual budget with nonprofit leadership, board members should include a conversation about Amazon Business as part of a complete holistic cost saving solution,” he says.
Originally published on the Wall Street Journal.
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