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Pooled purchasing programs can trim costs for nonprofits

Nonprofits looking to stretch their dollars should check out the U.S. Communities National Buying Program, a purchasing pool that helps state and local governments save money on printers, paper, furniture and more.

Nonprofits looking to stretch their dollars should check out the U.S. Communities National Buying Program, a purchasing pool that helps state and local governments save money on printers, paper, furniture and more. Nonprofits that provide a public benefit also are eligible to use the program.

U.S. Communities, a California-based nonprofit, started more than a decade ago with help from Hennepin County. It has negotiated multiple contracts with private vendors. The pool generates roughly $1.5 billion in annual sales, and nonprofit organizations account for 7 percent to 8 percent of the total.

Mike Johnson oversees purchasing for Minneapolis-based Plymouth Christian Youth Center, which includes an alternative high school. The center uses the U.S. Communities contract to buy office supplies, toilet paper, soap, garbage bags and other supplies, he said. Prices run well below retail and 5 and 10 percent below the large warehouse stores.

The system has intangible benefits, saving staff time, Johnson said. The center gets free delivery for orders more than $25. The ordering is streamlined. Staff members place a preliminary order online with Office Depot, which in turn sends Johnson an email asking him to approve it.

“From an accounting point of view, we are paying three to four invoices a month, as opposed to having 40-50 receipts floating around with employees saying, ‘I need to be reimbursed for this,’ or, ‘Can you cut me a check? I am going to get this,’ ” he said.

Learning curve
I learned about the U.S. Communities contracts from Jan Berry, president of MACC Alliance of Connected Communities. The conversation interested me not just because it pointed to potential nonprofit cost savings, but because of what it said about nonprofit psychology.

MACC is a partnership of 24 community-based human service organizations in the Twin Cities, including Plymouth Christian Youth Center. When the alliance was getting started, Berry was looking for an “easy win” to build organizational momentum. She proposed that member agencies join U.S. Communities to save money.

Some organizations jumped in right away, but more than half did not. That made Berry curious. She made copies of how much each organization was saving and distributed the list to all members. The competitive spirit kicked in and other member organizations signed up.

The experience triggered a conversation about why some organizations had hesitated. Members identified three barriers. In some cases, nonprofits were buying from vendors who also were donors. Those organizations worried that switching contracts would risk long-standing relationships.

The second reason has to do with the relatively few employee perks in the world of many human services nonprofits. Some employees simply liked to shop, and some organizations used the shopping trip as a form of reward.

Last, some employees felt strongly that their job was to save the nonprofit money. If they were not out shopping for bargains, they felt they were not valuable to the organization.

Switching buying habits required a cultural shift in some organizations, Berry said. Staff members had to rethink what it meant to be valuable to the organization. “There is a savings beyond the cost of items,” she said. “Shopping for an individual box of pens is inefficient.”

Hennepin County instrumental in startup
U.S. Communities started in 1996, with the help of Hennepin County.

Kevin Juhring, U.S. Communities’ national program manager, said Hennepin County had one of the four original advisory board seats. Michael Scanlan, Hennepin County senior buyer, has been involved since the beginning.

At a time when the concept of a national buying cooperative was unheard of, Hennepin County “was instrumental in building the credibility and helping get the program off the ground,” Juhring said.

Nonprofits can sign up online with no obligation to buy. Agencies create individual contracts with Office Depot, Home Depot, Tech Depot, Auto Zone, Ricoh and other suppliers. Juhring said savings tend to be greater for printers and furniture, less so for copy paper.

Prices are all based on competitively bid contacts. For those looking to do a quick calculation on the back of an envelope, you’re out of luck. U.S. Communities doesn’t post prices online. Juhring said suppliers sit down with individual nonprofits, find out their needs, and give them the pricing. (Some prices vary based on volume purchases.)

There are other national purchasing pools. The U.S. Communities website lists several.

Locally, the Minnesota Council of Nonprofits has a purchasing program for members through Office Max.

Check them all out and get the best deal for your group.