Let’s face it: Running a nonprofit takes money. Sometimes a lot of it. Obvious point, you say. But let’s focus on where nonprofit leaders can effectively lower costs without harming the organization’s mission or programs.

Increasingly, the solution for many nonprofits is access to a group purchasing organization (GPO) that uses the collective purchasing volume of its participating members to negotiate discounted pricing on products and services they use in daily operations. While members still purchase directly from the vendor, standardized and discounted pricing is pre-established and agreed to by the GPO and the contracted supplier. GPOs and their group discounts can provide access to a level of pricing that typically is reserved for Fortune 100 companies.

Here are the facts that nonprofit managers need to consider when choosing a GPO:

  • Look for programs with substantial savings potential and minimal fees that will not cut into the overall cost-savings you experience.
  • Make sure that the vendors available through the program are reputable, meet your needs, and cover a large percentage of your overall purchasing.
  • Look for programs that have a proven track record.
  • Look for a program that is focused on nonprofits as a core market.
  • Seek a GPO that can be a partner to you in facilitating good vendor relationships; analyzing and identifying opportunities for decreasing operational expenses

Read the full article by Lee Sherman about group purchasing on BoardSource