Operating Costs

All businesses big and small. For-profit and nonprofit need to ensure that they have enough cash flow to cover operating expenses. There is often a misunderstanding out there that nonprofits cannot make money. Nonprofits 501 c(3) and 501 c(6) like Chamber of commerce still have operating expenses.

Operating costs include things like:

  • Rent or building leases
  • Utilities
  • Salaries (include annual pay raises and benefits)
  • Office supplies
    • Paper
    • Toner
    • Office equipment
  • Marketing
  • Building maintenance and repairs

The formula to calculate operating costs is:

Operating Cost = Cost of Goods Sold + Operating Expenses

In the magic valley alone, it can be extremely challenging to ensure that all operating costs are covered, especially with the constant rise in the cost of living in today’s economy. I have lived in 2 countries, 5 states and 9 different communities all ranging in size from small communities of a few thousand to large mega metropolis centers of a few million people. Each place I have lived in the prices for basic commodities fluctuate drastically. Idaho, for example, has a gas tax which drives up the cost of our gasoline compared to other states. Housing costs are very different depending on where you live. When I moved to the Midwest, my grocery bill doubled for daily commodities like milk, the price per gallon almost doubled.  Businesses want to attract and retain good employees who will stay with the organization. The constant turnover of employees is expensive for companies, one of the important items to include when calculating operating costs is annual pay raises and good benefits.

Nonprofits often have a revolving door with employees, they struggle to retain talented employees largely because too many people misunderstand that nonprofits must follow the same operating expenses as for-profit organizations.

One of the main benefits for for-profit companies to partner with nonprofits is aligning the company with a worthwhile cause.

The Chamber of Commerce provides the local businesses with the opportunity to partner by offering sponsorship opportunities for a variety of events, things like Business After Hours, Chamber luncheons, sponsoring the annual chamber banquet, Holidayfest etc. Investing in the local Chamber shows community investment and support but also brings the for-profit company an additional level of marketing and impressions above the traditional sales ads. These partnerships also increased customer brand and loyalty to the for-profit business and attract new business partners and relationships. It truly is a win-win for both the nonprofit and for-profit to build these partnerships.

Bruce Burtch, a renowned marketing expert who has a background in helping for-profit and nonprofits develop win-win partnerships said:

“There is nothing in business today that provides as much economic and social benefit… as a strategic partnership between nonprofits and for-profits… Nothing else comes even close.”

Top 10 benefits are:

  1. Increase sales of products or services
  2. Increase employee engagement, morale, and retention
  3. Increase customer and brand loyalty
  4. Draw media attention and coverage for free
  5. Provide a motivating purpose for their company and employees
  6. Increase shareholder return
  7. Increase employee skill development, team building, leadership
  8. Attract new business partners and relationships
  9. Generate recognition for the good they create in society
  10. Receive a tax donation for contributions.

By: Cheryl Viola, Executive Director