Do Small Nonprofit Organizations Outsource? : A First Look

Nonprofit organizations (NPOs) serve a unique purpose, filling gaps left by governments and for-profits. NPOs have the potential to do significant good in their communities. These organizations are often resource constrained, both financially and in terms of human capital. For that reason, personnel in small NPOs are often diverted from the organization’s mission to administrative functions. Outsourcing, as research has shown in for-profits, offers the opportunity to refocus human capital to the mission cost effectively. However, there is little research on outsourcing for small NPOs. This study focuses on small NPOs in regard to outsourcing administrative functions. Not surprising, small NPOs often use staff time and board resources on administrative functions to save money and may not understand the benefits of outsourcing. Most surprising was the finding that as the organization grows in revenue, employees, and annual budget, and even more functions are brought in-house.