Written by Marijn Overvest | Reviewed by Sjoed Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
Procurement for Non-Profits — 7-Step Process Explained
What is procurement for non-profits?
- Procurement for non-profits refers to acquisition of goods, or services it needs while complying with the rules and regulations in the industry
- Non-profit procurement prioritizes development perspectives rather than focusing on profit activities.
- This procurement type lets organizations leverage prices to resolve their procurement concerns.
Procurement Process for Non-Profit Organizations
The procurement process for non-profit organizations generally follows the same structured steps as for-profit organizations. Still, there are key differences in priorities, funding sources, compliance requirements, and supplier relationships. Below is a comparison of how the 7-step procurement process differs between for-profit and non-profit organizations:
Step 1 – Procurement Methodology for Non-Profit Organizations
A structured procurement methodology is essential for non-profit organizations to ensure transparency, efficiency, and alignment with funding and regulatory requirements.
Before detailing the methodology, it is important to distinguish between a procurement strategy and a procurement policy. A strategy focuses on specific objectives like cost efficiency, ethical sourcing, or supplier diversity, while a policy defines overarching guidelines ensuring compliance with legal and donor requirements.
The first step in procurement is defining clear requirements—identifying necessary goods or services, quality standards, budget constraints, and sustainability considerations. This ensures that all stakeholders are aligned with the organization’s mission and operational needs.
Once objectives are set, securing approval from leadership and key stakeholders is crucial to ensure budget alignment and smooth execution. A dedicated procurement team should then conduct a needs assessment, supplier evaluations, and market research to make informed and responsible purchasing decisions.
Recommended Course for Sourcing Methodology
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Junior Procurement Management Course This course covers the fundamentals of procurement for non-profit organizations, including how to establish a structured and transparent sourcing methodology to optimize resources and align with the organization’s mission. |
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This course helps in developing a sustainable and mission-driven procurement strategy for non-profit organizations, ensuring cost efficiency, transparency, and long-term supplier partnerships. |
Step 2 – Market Research for Procurement
Market research is a crucial step in procurement for non-profits, ensuring the selection of reliable suppliers and cost-effective solutions. Before making a purchase, procurement teams must assess existing supplier relationships, budget feasibility, and potential alternatives in case of supply disruptions.
Key considerations include:
- Does the organization have a reliable supplier for the required goods/services?
- Are there alternative suppliers if the primary one is unavailable?
- Is the budget sufficient for procurement?
- Are there market shortages, and how would they impact costs and timelines?
- Are there suitable alternatives if the preferred option is unavailable?
During market research, procurement specialists should evaluate supplier reliability, pricing, quality, and ethical sourcing practices. This phase provides critical insights that shape procurement decisions and ensure alignment with the organization’s mission and budget.
Recommended Course for Market Research
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Junior Procurement Management Course This course covers the fundamentals of market research in non-profit procurement, including supplier evaluation and cost analysis to ensure transparent and cost-effective sourcing. |
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This course helps non-profit procurement professionals analyze costs, market trends, and supplier pricing to make data-driven and mission-aligned procurement decisions. |
Step 3 – Request for Information (RFI)
For non-profit organizations, the Request for Information (RFI) is a key step in ensuring transparency, cost efficiency, and alignment with donor and regulatory requirements. Before committing to a purchase, it is crucial to gather comprehensive data from potential suppliers to ensure that the procurement process meets the organization’s mission and budget constraints.
Key considerations include:
- What goods or services are required? (e.g., medical supplies, food aid, educational materials)
- What quantities and procurement frequency are needed? (one-time vs. recurring orders)
- What is the budget allocation? (ensuring efficient use of donor funds)
- Are there reliable suppliers, or should new vendors be considered?
- Do suppliers meet quality, ethical, and sustainability standards?
Once this data is collected, an RFI is issued to suppliers to compare pricing, availability, and compliance with non-profit procurement policies. The insights from this step help in securing budget approvals and negotiating cost-effective, transparent supplier agreements that align with the organization’s mission and funding requirements.
Recommended Course for Request For Information (RFI)
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Junior Procurement Management Course This course will guide you on preparing RFIs, gathering supplier data, and refining sourcing criteria to ensure transparent and efficient procurement for non-profit organizations. |
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Category Management in Procurement Course This course will guide you on structuring RFIs, identifying supplier categories, and refining sourcing criteria to enhance transparent and mission-driven procurement for non-profit organizations. |
Step 4 – Request for Quotation (RFQ)
The Request for Quotation (RFQ) is a crucial step in the procurement process for non-profits, ensuring cost-effectiveness, transparency, and alignment with budget constraints. At this stage, procurement teams formally request pricing and supply details from multiple vendors to secure the best terms while maintaining quality and compliance with donor requirements.
To ensure a comprehensive RFQ, procurement teams should gather key details from suppliers, such as:
- Availability of requested goods/services and storage capacity
- Manufacturing or sourcing location and distribution timelines
- Estimated delivery time for local and international suppliers
- Unit pricing and potential bulk discounts
- Market shortages that could impact procurement timelines
- Minimum order quantities (MOQs) and flexibility for smaller orders
- Payment terms and credit options for non-profits
Once supplier responses are received, procurement specialists analyze quotations, comparing prices, delivery conditions, and overall value. This phase ensures that non-profits obtain the best possible terms, maximizing the impact of available funds while maintaining ethical and sustainable sourcing practices.
Recommended Course for Request For Quotation (RFQ)
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Junior Procurement Management Course This course is essential for beginners to understand how non-profit organizations analyze and select suppliers, ensuring cost-effective, transparent, and mission-driven procurement. |
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Soft Skills for Procurement Course This course will teach you how to enhance communication skills, essential for clarifying RFQ details, conducting supplier negotiations, and ensuring transparency in non-profit procurement. |
Step 5 – Negotiation Phase
Negotiation phase is a critical step in non-profit procurement, ensuring cost-effective purchasing while maintaining quality and ethical standards. Beyond price, discussions should cover bulk discounts, flexible payment terms, delivery timelines, and long-term partnerships.
Procurement teams must ensure that suppliers can meet quality, compliance, and delivery commitments. Well-prepared negotiations, backed by data from market research and RFQs, help secure the best value, optimize budgets, and build reliable supplier relationships that support the organization’s mission.
Recommended Course for Negotiation Phase
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Junior Procurement Management Course This course introduces the fundamentals of negotiation for non-profit procurement professionals, helping them secure fair pricing, favorable terms, and strong supplier relationships. |
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Negotiation Course for Procurement Professionals This course provides essential negotiation techniques for non-profit procurement, helping secure the best pricing, quality, and payment terms while ensuring transparency and alignment with the organization’s mission. |
Step 6 – Contracting Phase
In the contracting phase, the non-profit procurement team formalizes agreements through contracts to ensure transparency and accountability. These contracts should clearly define pricing, delivery schedules, quality standards, and payment terms, whether upfront, in installments, or post-delivery.
To avoid disputes, agreements must include quality control measures and penalties for delays or non-compliance. Proper contract management—whether digital or manual—helps non-profits track procurement history and maintain efficient supplier relationships.
Recommended Course for Contracting Phase
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Junior Procurement Management Course In this course, you’ll learn the fundamentals of contracting in non-profit procurement, including drafting contracts, managing supplier agreements, and organizing procurement documents. |
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This course provides a detailed approach to drafting, reviewing, and managing procurement contracts in non-profit organizations, ensuring transparent and efficient supplier agreements. |
Step 7 – Supplier Relationship Management (SRM)
The final step in non-profit procurement is Supplier Relationship Management (SRM), ensuring long-term reliability and flexibility. Maintaining strong relationships with both selected and alternative suppliers helps mitigate risks from supply disruptions or price fluctuations.
Active collaboration through regular communication, performance reviews, and feedback ensures suppliers meet expectations in quality, delivery, and pricing. Building trust-based partnerships instead of transactional relationships can lead to better pricing, priority service, and long-term procurement stability, ultimately supporting the organization’s mission.
Recommended Course for Supplier Relationship Management (SRM)
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Junior Procurement Management Course This course is an excellent starting point for those new to supplier relationship management in non-profit procurement, helping build transparent and sustainable supplier partnerships. |
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Supplier Relationship Management Course In this course, you’ll learn how to manage supplier performance, build long-term partnerships, and foster trust in non-profit procurement to ensure transparency and reliability. |
What Makes Procurement for a Non-Profit Unique?
Procurement in non-profit organizations follows a structured process similar to for-profit entities but is shaped by unique constraints, priorities, and objectives. The fundamental difference lies in the mission-driven nature of non-profits, which prioritizes transparency, compliance, and social impact over profit maximization. Here’s what makes non-profit procurement distinct:
1. Mission-Driven and Ethical Sourcing
- Procurement decisions prioritize social impact, sustainability, and ethical sourcing over profit.
- Suppliers may be chosen based on fair trade practices, environmental responsibility, or local economic support, even if costs are slightly higher.
2. Strict Compliance and Transparency
- Non-profits must adhere to donor, grant, and government regulations, ensuring every purchase aligns with funding guidelines.
- High levels of accountability are required, with strict auditing and reporting to maintain trust with stakeholders and avoid conflicts of interest.
3. Budget Constraints and Cost Optimization
- Operating on limited budgets, non-profits focus on maximizing value through discounts, donations, or pro-bono services from suppliers.
- Cost-effectiveness is critical, but without compromising quality and mission objectives.
A Career in Procurement for Non-Profits
A career in procurement for non-profits offers a unique blend of strategic sourcing, cost management, and ethical decision-making, ensuring that organizations acquire the necessary goods and services efficiently while maximizing their social impact. Unlike for-profit procurement, where the focus is on cost reduction and profitability, non-profit procurement prioritizes compliance, donor transparency, and mission-driven purchasing.
Key Skills for Success
- Regulatory Compliance & Grant Management (Understanding funding restrictions)
- Cost Optimization & Ethical Sourcing (Balancing affordability and mission alignment)
- Stakeholder Communication (Working with internal teams, donors, and suppliers)
- Negotiation & Contracting (Securing discounts, donations, and fair agreements)
Potential Employers
- International NGOs (Red Cross, UNICEF, World Food Programme)
- Humanitarian Aid & Relief Organizations
- Educational & Healthcare Non-Profits
- Government-Funded Social Programs
A career in non-profit procurement is ideal for professionals passionate about making a difference while ensuring operational efficiency. It provides opportunities for impactful decision-making, supplier collaboration, and long-term strategic planning, contributing to an organization’s ability to serve communities effectively.
Procurement Roles Overview
Click on a role to learn more
Common Problems in Procurement For Non-Profits
The following are some of the common problems 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-procurement For 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.
Conclusion
Procurement is essential for non-profits to efficiently use funds from donations, grants, and federal funding.
They face unique challenges, such as navigating regulatory changes and limited purchasing power. Collaboration through group purchasing organizations can enhance buying power, and e-procurement solutions provide transparency and control over workflows.
Adopting these practices leads to increased efficiency, transparency, and financial control, fulfilling their mission while ensuring responsible use of resources.
Frequentlyasked questions
What is procurement for non-profits?
Procurement for non-profits is the acquisition of goods or services it needs while complying with the rules and regulations in the industry.
What is the difference between procurement for businesses and for non-profit organizations?
Procurement for businesses prioritizes profitability. On the other hand, non-profit organizations are more focused on developing communities.
Is it effective to integrate e-procurement in non-profit organizations?
Yes. E-procurement can help non-profit organizations to streamline their process resulting in the reduction of costs and faster procedures.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
