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The past few years have been no easy feat for many non-profits in Australia.
Tasked with delivering substantial programs to support vulnerable people during and after the COVID pandemic, the influx of grant money has been somewhat of a double-edged sword.
Along with the pressure of facilitating these programs, non-profit executives became responsible for allocating large sums of money well beyond their standard budgets. The rapid timeframes in which they were expected to stand up the programs only added to the stress – at a time when we also saw the loss of droves of human resources due to the “great resignation”.
As a result, dependency on consulting firms and other professional service providers grew significantly. Be it financial, technology, legal, human resources or others, outsourced partners became vital for bridging the gap between existing capability and what was needed to ensure delivery.
Yet not all contract arrangements went off without a hitch, as we have seen with recent media reports highlighting the dismal return on investment that some non-profits received.
There are several reasons why this can happen, and non-profit executives who understand them will be better equipped to prevent it happening to their organisation.
Reason # 1: The outsourced provider is genuinely dishonest
As in any industry, there are always a few genuinely dishonest companies that exploit situations where they can maximise profit with minimal effort.
In these cases, skilled salespeople may make grand promises to secure contracts. Once signed, their focus shifts to getting new contracts and very few resources are dedicated to those already won.
When deadlines approach, they quickly assemble whatever they can to meet the contract's basic requirements – which is usually a far cry from what was initially promised.
Reason # 2: The provider is not equipped to deliver
Not all outsourced providers that overpromise and under-deliver do so because they are dishonest. Often, they lack the necessary experience to fully understand their commitments which leads to significant frustrations and poor results.
This is particularly common with young consulting companies or mid-tier firms that struggle to attract quality experts in their field. Non-profit executives who are initially drawn to the consultants' vision and energy are left feeling exhausted and disappointed by the reality of lost opportunities, tense discussions, and ad hoc processes.
Reason # 3: Expectations between both parties are unclear
The majority of failures between a non-profit organisation and their outsourced providers stem from miscommunication. This is usually unintentional and can occur because:
- contract terms are too vague
- contract execution is poorly defined
- contract delivery is not monitored
- values are not aligned
Non-profit executives or boards may lack the experience to effectively engage with their advisors, leaving both parties feeling stranded. Even highly experienced consultants who recognise that this is happening may struggle to align on what’s needed and how best to deliver it, leading to friction and suboptimal outcomes.
Getting the most out of your outsourced providers
It's important to acknowledge how large sums of money can transform an organisation and shift the duties of its directors. Carefully selecting and managing outsourced providers is a vital skill in this context, because (despite any previous negative experiences) outsourcing will always have its place. Especially when delivering large-scale programs, quality consultants have much to offer by way of experience, insight, and practical support.
With this in mind, here are 5 steps to help you get the most out of your outsourced arrangements:
Engage carefully – Ask to review case studies or talk to clients in a similar industry. Proof of their ability to deliver is more valuable than a great sales pitch.
Make contracts crystal clear – While there's a trend to shift contracts to an outcomes-based approach, this can lead to vagueness. Ensure clarity around outputs, delivery, and how the company will fulfill its promises.
Maintain oversight – Hold regular stand-up meetings with your contracted party to discuss progress and next steps. This helps to quickly address issues and keeps everyone aligned towards success.
Expect reports – High-level executive reports will keep you informed about progress and provide assurance that you will receive what you paid for by the end of the contract period.
Let them do their job – Although oversight is important, try to avoid micromanaging consultants as this can hinder their ability to deliver results. Try to select someone in your organisation to manage the contractor relationship who is a sound strategic thinker with high emotional intelligence.
How RSM can help
As a leading consulting firm with a 100-year history, and a repeated track record of winning the Client Choice Awards for Best Accounting and Consulting firm, RSM is well placed to support your non-profit with its outsourcing requirements.
We can assist with:
- upskilling executives on procurement and contract management
- preparing contracts
- monitoring contract execution
- applying for grants and submitting acquittals
As a firm that attracts top professionals from various fields, including those with extensive expertise in the not-for-profit sector, we also offer a wide range of consulting services in areas such as financials, operations, technology, cybersecurity, risk management, and more.
FOR MORE INFORMATION
To speak with a not-for-profit specialist and award-winning certified accountant and business advisor, please contact Andrew Bowcher on (02) 6937 7001 or your local RSM office.
