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How Back Office Cooperative Saves Chicago Nonprofits Money

Article courtesy of Crain's Chicago Business 

Linda Zager of Back Office Cooperative

 One Hope United, a social services agency for children who have been abused or otherwise traumatized, ended 2016 with a small surplus. David McConnell, its chief financial officer, credits Back Office Cooperative.

One Hope United saves some $250,000 a year by outsourcing accounting services to EXL, a firm in Bangalore, India, it found through Back Office Cooperative. It saves $350,000 more by group-buying office supplies, janitorial products, energy, health insurance, food and other necessities via Back Office Cooperative, too. "If this didn't exist, we'd try to make it exist," McConnell says.

One Hope United is one of seven nonprofits that launched Back Office Cooperative six years ago, using $400,000 in loans and grants from Chicago Community Trust, United Way of Metropolitan Chicago and other entities. Membership at the cooperative, which has a budget of about $200,000 a year, has doubled to 72, according to Linda Zager, its executive director. Members to date have saved a total of about $3.5 million.

Back Office Cooperative can save money in 32 expense categories. The most popular are office supplies, energy, food supplies, cleaning services, and copying and printing; other options include health care, travel and waste management. Savings average 20 percent and can be as high as 50 percent.

Savings happen in two ways. Back Office Cooperative offers group plans that harness the buying power of all members. Expense Reduction Analysts, a for-profit global firm with its U.S. headquarters in Dallas, also handles individual procurement projects for co-op members. Zager, a Chicago-based consultant at Expense Reduction Analysts, oversees those projects. 

Nonprofits must have annual budgets of at least $1 million to join. Annual dues start at $350 a year and rise to $2,500 a year for organizations with budgets of $50 million or more. New members receive a complimentary assessment of their purchasing situation and pay no dues the first year.

Northwestern University Settlement Association, which has a $14 million budget, joined the cooperative two years ago. "It's a painless way to be more efficient with our resources," says Dan Alexander, chief operating officer at the Chicago-based agency. Before enlisting, each department purchased office supplies from vendors they liked, with staffers sometimes jumping in the car to head to Staples or another store when items ran low. Now, by buying through the cooperative, the association has saved about $20,000 a year, and taken pressure off employees to be their own procurement officers. 

Membership has its benefits.

 

Posted By: Stephanie Fallara

On: March 24, 2017

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