Common Problemsin Procurement for Non-Profits

1. Regulatory Changes

Many organizations know that once it receives federal funding, they must abide by the rules and regulations.

But these rules and regulations usually change which means that your processes will keep changing too. Non-profit organizations need to do this to keep everything in regulatory compliance. 

One of the regulations enforced by the Office of Management and Budget’s (OMB) Uniform Guidance is to formalize a procurement policy in writing. 

In the procurement policy, the non-profit organization must clearly address its micro-purchase threshold and above this threshold. 

Non-profit organizations need to identify purchases that exceed the threshold. This is due to the fact that purchases must follow a bid process and formalized solicitation.

If the organization uses sole procurement, it must justify its purchases by providing documents that will support it. Because non-profit organizations are expected to solicit quotes from various sources before it awards the contract. 

The procurement policy needs to address the buying of duplicate or unnecessary items as it is against procurement standards to use federal funds for that kind of purchase. 

These are some of the policies that are subject to change over time. That is why if the organization works to maintain compliance every time, regulatory compliance will not be an issue. 

The organization must know how to address the additional regulations. This will allow it to adjust its process before the given grace period ends. 

2. Limited purchasing power

Non-profit organizations are usually small operations. That is why it has limited purchasing power compared to larger organizations. 

Having limited purchasing power means that they can only work with a few suppliers. Additionally, it lacks the power to buy in bulk to secure discounts which are detrimental to the procurement process of the organization. 

Many organizations offset this by partnering with other non-profit organizations to create a group purchasing organization. Through this, they can increase their buying power which makes it easier to negotiate discounts with their purchases. 

Increased purchasing power can help non-profit organizations save more money. The money that the organization saved can be used in other areas of the organization. ‘

E-procurementfor Non-profits 

The process of procurement for non-profits is detrimental, especially when it still uses the manual process of procurement. 

E-procurement can help non-profit organizations speed up and streamline the entire procurement process. Here are some benefits non-profit organizations can gain from integrating e-procurement:

1. Budget and project support

We know that non-profit organizations have limited budgets and need to follow regulations to stay afloat. 

A non-profit organization needs to show where all its money is being spent as it relies heavily on donations and grants. 

E-procurement can help non-profit organizations by allowing them to see the expenses that impact their budget. 

Additionally, the e-procurement solution can send warnings when the organization has exceeded its budget limit. 

2. Transparency with all the procurement activities

E-procurement solutions offer full transparency into all the activities that the organization conducted. 

It also allows the employees to gain real-time insight into the status of the approvals and orders. 

3. More control

The organization needs to have tight control if it wants to stay compliant with all the rules and regulations circulating in the industry. 

E-procurement software offers extensive control that includes the workflows in the organization. It allows the organization to send documents quickly while maintaining security over confidential financial data. 

Additionally, the organization can configure the system or restrict certain purchases made by employees to control its expenses.