Inventory Process Insight

SOURCE often deals with the nonprofit donation process. Since nonprofits often receive large quantities of physical or monetary donations, it is crucial to structure an efficient donation inventory system.

In the Fall of 2017, SOURCE successfully revamped a local nonprofit’s donation inventory system. While this specific project dealt with physical donations instead of monetary donations, there are many important takeaways that may help nonprofits evaluate and improve any type of inventory system.

Creating a sound inventory system is crucial because it:

  • Makes donation distribution more efficient.
  • Increases the accuracy of financial records for nonprofit and donor tax purposes.
  • Allows the nonprofit to track who donated and how much they donated.
  • Makes it easier to keep in contact with donors to secure future donations and foster long-term relationships.

SOURCE’s first step to improving the inventory system was identifying its current stress points. Nonprofits often notice operational issues without having an in-depth understanding of how the issue fits with its entire donation system. Small glitches or complications might result from system-wide inefficiencies that must be addressed at a macro level. The team gained a complete understanding of the system by exploring the digital and physical components.

Next, SOURCE conducted research on inventory system best practices. Online research will often present costly inventory software that nonprofits cannot afford; however, this does not mean that the research is unsuccessful. Exploring different types of software can reveal concepts that a nonprofit can more simply implement on their own.

After considering different technology options and drafting a new inventory process, SOURCE simulated the process in a closed environment. Testing allows the nonprofit to identify bottlenecks and other inefficiencies before fully investing in the new system. Combining new practices with the current system builds upon positive aspects that do not need to be discarded. Simply tweaking key components may yield dramatically different results.

When implementing a new system:

  • Implement at a time when donation rate is low.
  • Ensure that new employees are fully informed about how to manage the system.
  • Document how and why decisions were made
  • Feel free to make necessary changes as time goes on. The system is never perfect.

If you have further interest in learning about the details of inventory system restructuring, please contact us at

by benjamin wolters