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Change Elemental

The Eugene and Agnes E. Meyer Foundation funded the Management Assistance Group (MAG) (now Change Elemental) to assess the back-office needs of Meyer grantees and to identify alternative back-office services that could strengthen operations, relieve pressures on executive directors, and lead to greater efficiencies, particularly in this difficult economy. The study’s report, Outsourcing Back-Office Services in Small Nonprofits: Pitfalls and Possibilities found that the back-office needs of small nonprofits are urgent but largely unmet.

Small organizations (those with annual budgets under $3 million and fewer than 20 employees) play critical roles in the nonprofit sector – whether they’re creating new ways of politically engaging constituencies or providing innovative services that meet a community’s particular needs.  Smaller nonprofits bring a diversity of constituencies, voices, and approaches that are essential to fostering cross-fertilization and innovations that can advance their fields.

As vital as these small nonprofits are, their leaders must often divide their time and energy between developing the programmatic work and managing a wide array of back-office needs, including administration, finance, human resources, and information technology.  Unlike larger nonprofits which typically hire staff with expertise in these areas, smaller nonprofits’ leaders must often learn as they go and are often dissatisfied with their own performance, with pro bono services, and with outsourced providers whose business models are not tailored to the nonprofits’ needs. 

The impacts of not finding better solutions for back-office needs are many – inefficiency and burnout, high staff turnover, cash flow crises, loss of funding, missed opportunities, diminished impact and threats to growth and sustainability. At best, these are enormous challenges for leaders of small nonprofits. At worst, the lack of adequate back‐office infrastructure is responsible for their ineffectiveness in achieving their mission and incalculable human and financial waste.

This study focuses on outsourcing as a potential solution and reveals the structural constraints and possibilities in outsourcing to small nonprofits.