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Social Impact Insights

Our blog provides insights for social impact professionals in business and nonprofits. We offer advice on making the greatest impact in your organization by giving clear real-world advice on important topics of today.

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Save Money by Hiring a Consultant vs. a Permanent Staff Member

5/10/2023

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Hiring a contractor or consultant to perform work for your company or organization could result in significant cost savings while also providing a high level of expertise you may not be able to afford otherwise. The cost savings associated with hiring a consultant versus a permanent staff member can vary depending on several factors such as the level of expertise required, the length of the project, and the specific scope of work. Here are some potential cost savings that organizations may experience by hiring a consultant rather than a permanent staff member:

Lower Overhead Costs:
  1. When an organization hires a permanent staff member, it incurs various overhead costs such as salaries, benefits, office space, equipment, and training. These costs can be significantly higher than hiring a consultant who typically works offsite and uses their own equipment.
  2. Consultants are typically self-employed and are not entitled to employee benefits such as health insurance, retirement plans, paid time off, or other perks that permanent staff members may receive. This can result in significant cost savings for organizations that would otherwise have to pay for these benefits. 
  3. When an organization hires a permanent staff member, they are responsible for paying certain payroll taxes such as Social Security and Medicare taxes, unemployment taxes, and workers' compensation insurance. These costs can add up and increase the overall cost of hiring a permanent staff member. In contrast, consultants are responsible for paying their own taxes, which can result in savings for the organization.
  4. Consultants typically handle their own administrative tasks such as invoicing, record-keeping, and other administrative duties. This can reduce the administrative burden on the organization and result in cost savings.

Reduced Hiring Costs:
  1. The process of hiring a permanent staff member can be costly and time-consuming, including advertising the position, conducting interviews, and performing background checks. Hiring a consultant eliminates many of these costs and streamlines the process, allowing organizations to focus on their core business activities.
  2. A consultant typically has specialized expertise and experience in a specific area, which may be more cost-effective than hiring a permanent staff member with similar expertise. This is particularly true for short-term projects or specialized tasks that do not require a full-time staff member. With their expertise, consultants are usually senior-level leaders who you would likely be unable to afford to hire in a full-time, in-house position.
  3. Consultants can be hired on a short-term or as-needed basis, providing organizations with greater flexibility in terms of budget and staffing needs. In contrast, hiring a permanent staff member requires a long-term commitment and may not be feasible for organizations with limited budgets or fluctuating staffing needs.

Hiring a consultant instead of a permanent staff member can provide significant cost savings for organizations, particularly for short-term or specialized projects. However, it is important to carefully evaluate the costs and benefits of each option before making a decision.
Sample Budget to Hire a Full-Time Emloyee
Sample Budget to Hire a Consultant
+$75,000 Annual Salary
+$75,000 Annual Fee
+$7,500 Payroll Expenses
 
+$5,000 Office Sapce and Equipment
 
+$10,000 Portion of Employee's Manager Salary (@ 3 hr/week)
 
$37,500 Lost Productivity Due to 6 mos. Onboarding
 
+$18,750 Lost Productivity Due to 3 mos. Hiring Process
 
TOTAL COST TO YOU: $161,750
TOTAL COST TO YOU: $75,000
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  • For Businesses
    • Philanthropy Management
    • Corporate Social Investment
    • C-Suite Philanthropy
    • Social Impact Measurement
    • Cause Marketing
    • Public Relations
  • For Nonprofits
    • Fundraising Help
    • Marketing Communications
    • 501c3 Formation
    • How to Start a Nonprofit
  • Insights
    • Blog
    • Digital Tools for Business
    • Case Studies
    • Resources
    • Researching Nonprofits
  • About
    • Our Approach
    • Our Team
    • LinkedIn
    • Contact