Donors Want Value: How Logistics Can Help

When people think of a nonprofit, it's usually of a small office with a minimal staff, advocating for social good or helping the less well-off with specific problems. But nonprofits often work on just as large of a scale as businesses do when it comes to logistics.

They may handle millions of dollars worth of goods, like donated food, clothing or medical equipment. For example, Yad Sarah, where I serve on the board and oversee international fundraising efforts, handles more than 385,000 pieces of medical equipment each year, and nearly $400,000 worth of prescription drugs, distributing these items across populations throughout Israel, and ultimately saving the local healthcare system (and taxpayers) more than $1 billion.

That's a lot more turnover than many for-profit organizations experience — and it requires the same warehousing, shipping and logistics strategies that successful businesses use and can quickly adjust. In fact, an efficient distribution and logistics system is essential for a nonprofit that distributes or lends out goods — and nonprofits need to operate those systems even more efficiently than private businesses do, as their budgets tend to be more limited. Without such systems, nonprofits will likely struggle.

Therefore, having a proper logistics plan is essential to motivate donors, who largely carry the organization – and are increasingly interested in what I call “value giving,” or seeing their money used as effectively as possible, for the best outcomes. Beyond seeking to support a nonprofit's vision, donors and members want to make sure that their money isn't being wasted, that they can trust a nonprofit to operate as cost effectively as possible. Nonprofits need to show that — and ensuring that the goods, equipment, food, clothing or other items they handle and distribute are getting to their destination is a basic building block in creating that trust.

How, then, should a large nonprofit handle logistics? What can they do to ensure maximum efficiency — and thus maximum trust with donors? Here are some ideas.

Plan Around Need

The first step in ensuring efficiency is determining the market. Review things like:

• Who will use your products or services?
• Where do they live?
• What level of accessibility is needed to serve them?
• What is their income level?
• What are their hours of availability?

Distribution and logistics need to consider factors like geography, including the location of workforce and volunteers and those who receive the services. A warehouse or distribution location can’t only be based on rent or property prices, as the money you save on warehouse rent or expenses could be lost in transporting equipment and goods. 

For example, in Yad Sarah’s case we first located our main distribution hub for natural reasons of space and local management in Jerusalem, where we have our main office, and got the model working well. We later chose to build more distribution hubs around our existing service hubs, recreating the original Jerusalem model in multiple places that made sense for various reasons. We then use these to supply satellite locations that serve local populations. Ensuring that the system worked properly in Jerusalem, and only then expanding to other distribution hubs was key to success and efficiency. 

In addition, organizations need to consider their staff — both paid and volunteer. Just as a corporation sets up facilities in areas where they can ensure access to talented staff, nonprofits need to ensure that the people they rely on to run their programs and facilities can get to them easily. Despite good intentions. nonprofits won’t be able to accomplish much without access to personnel.

Use Data to Ensure Proper Operations

A plan can't be set in stone. What works in one place might require tweaking in another. That's why directors need to have their ears to the ground. Using data to keep track of items and needs can help. 

Perhaps there is a plethora of people suffering from a specific disability in one location, while there is a preponderance of other needs in another city. And then there are other considerations, like age differences and accessibility. For example, do most of the potential customers live in high-rises, buildings with elevators? Is there sufficient parking for organization vehicles to drop off the equipment? Are there enough volunteers in the area? 

In addition, having that data can ensure that organizations don't lose track of items — and that they know at any given time where the equipment, food or packages they distributed are.

Data can be drawn from a variety of external or internal sources and analyzed using advanced analysis systems to anticipate future needs, budgets and other issues organizations need to plan ahead. Such analysis helps organizations build realistic projections based on need, and enables them to go to donors with solid expansion plans — providing clear data on why new facilities or services are needed, whom they are going to serve and how much they will cost. 

This, too, is part of the “value giving” donors and members seek out, and further helps organizations build trust with them.

Be Flexible in Operations

Among the important issues when considering logistics is anticipating need and adjusting to accommodate it. For example, at Yad Sarah, we knew — even before the government realized it — that there had been an uptick in a COVID-19 wave because we received increased requests for oxygen concentrators, which provide supplemental oxygen for those with breathing difficulties. Realizing what that meant — and what the implications to care would be — we not only alerted the authorities, but also increased acquisition of other equipment, like oxygen tanks, along with increasing services COVID-19 patients would likely need. 

It works the other way around as well. Israeli health maintenance organizations recently started providing breast pumps to new mothers, so fewer people now need to rely on Yad Sarah for this service. As a result, we have modified our inventory, freeing up precious resources and warehouse space for more immediate needs. It's important to stay ahead of the curve and predict needs, incorporate supply chain lead-time and adjust operations to accommodate them.

Communication Is Key

The last thing a manager wants to hear is that something was lost or items are missing from the inventory. Item tracking, databases, location technology and clear lines of communication among organization members, volunteers, suppliers, managers and transportation personnel are essential to logistics success. 

For example, if there is a shortage of items in one area and a surplus of those items in an out-of-district warehouse, management needs to be informed quickly, and then rapidly find and transport the items needed. This too is part of what donors are seeking in value donation opportunities.

Data shows there are 1.8 million nonprofits in the United States, and the sector is responsible for 5.6% of gross domestic product. About half of Americans contribute at least once a year to at least one nonprofit. While many donate based on ideology, concerns over specific issues or other subjective criteria, most of those who donate want to make sure that their money is being used wisely (opens as a pdf) — and isn't being wasted. Efficiency in logistics and distribution is one important way to ensure that donors who seek out value investing opportunities find them — at your nonprofit.

Editor’s Note: This is the second installment of Donors Want Value. Read the first, “Donors Want Value: How Nonprofits Can Deliver More.”

The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.