What are the three pillars of nonprofit financial resilience?

Costa John, CEO of CFO Assignments, describes liquidity (the level of unrestricted funds), flexibility (months of cash operating expenses to absorb delays, usually set by the board) and the cash cycle (how long the organization must pay costs before funding arrives).

How do you calculate unrestricted days of cash for a board?

Start with unrestricted reserves, subtract amounts already committed, and divide by daily cash expenses. The result tells the board how many days the organization can operate on unrestricted cash

How should a nonprofit respond when a major funder cuts support?

Act early and in phases: delay contractors and non-essential capital spending, then replacement hires, then salary increases, then benefits such as 401(k) matches. Consider reductions in force only if those steps don’t buy enough time.

How can a nonprofit track restricted funds more easily?

Start with reliable timesheets, since staff time is what releases restricted funds, and integrate systems so tracking doesn’t depend on disconnected spreadsheets.

When should a nonprofit bring in a fractional CFO?

Once the books close cleanly. John advised keeping compliance and bookkeeping separate from the CFO role, so the fractional CFO can focus on forecasting, budgeting and fundraising support.

Building a Resilient Nonprofit Finance Function When Funding Is Unpredictable

Scrubbed

Building a Resilient Nonprofit Finance Function When Funding Is Unpredictable

At A Glance
The Nonprofit Spotlight was one of three industry spotlights at The Future Is Fractional 2026, hosted by Scrubbed on September 24, 2026. Laurence Ruelo, Director of Business Development at Scrubbed, spoke with Costa John of CFO Assignments, who has decades of CFO experience across nonprofit and for-profit organizations. They covered the three pillars of financial resilience, tracking restricted funds, what to do when a major funder pulls out, board reporting, and how to build finance capacity without overbuilding. The short version: watch unrestricted cash, act early and in phases when funding is cut, and give your board the forward look rather than the history.

For many nonprofits, the funding hasn’t disappeared, but its timing has become harder to predict. Grants arrive late. Proposals take longer to secure. Visibility six or twelve months out is thin.

At The Future Is Fractional 2026, a virtual conference hosted by finance and accounting advisory firm Scrubbed on September 24, 2026, Session 4 split into three industry breakouts running at the same time: real estate, nonprofit and technology. In the nonprofit track, Scrubbed Director of Business Development Laurence Ruelo asked veteran CFO Costa John how nonprofits can build a finance function that is resilient, useful to leadership and scalable when resources are already stretched.

Key Takeaways:
Resilience rests on three legs: liquidity, flexibility and the cash cycle.
Timesheets and integration drive restricted fund tracking. Programs are delivered by people, so staff time is what releases restricted funds.
When funding is cut, act early and in phases. The first cost reductions are the cheapest ones.
Don't hire strategy to fix bookkeeping. Get the books closing cleanly before bringing in a fractional CFO, or the CFO gets pulled back into reconciliations.
Give boards the forward look, not the history. Show the outlook, its impact and a range of decisions.
Watch operating cash flow, and show days of cash. “Reserves and profits are a matter of opinion. Cash is a matter of fact.”

What is nonprofit financial resilience? It’s an organization’s ability to keep delivering its mission when funding is delayed, reduced or withdrawn. In John’s framing, that depends on having unrestricted funds(money not tied to a specific grant or purpose) available, enough cash on hand to absorb delays and a clear view of how long the organization must pay its costs before funding arrives.

Meet the Speakers

Laurence Ruelo (moderator): Director of Business Development, Scrubbed.
Costa John: CEO CFO Assignments, with decades of CFO experience across nonprofit and for-profit organizations, including as CFO of Sapiens North America.

The Three Pillars of Nonprofit Financial Resilience

John frames resilience as a three-legged stool:

Liquidity: The level of unrestricted funds the organization can draw on.
Flexibility: The cushion to absorb a delayed grant or a slow proposal. The board usually sets it with the CFO as a target number of months of cash operating expenses.
The cash cycle: How many days the organization must cover rent, salaries, travel and office costs before funding arrives.

Together, they give the organization a stable footing. John acknowledged it’s hard for small nonprofits, but said building toward it should be a priority.

How to Track Restricted Funds without the Spreadsheet Wrestling Match

Restricted funds are grants or donations that can be spent only on a specific purpose or program.

Start with timesheets. Nonprofit programs are delivered by people, so releasing restricted funds and matching expenses to grants comes down to how staff time is spent. “If you cannot have a good on-hand grip of where and how your program people are delivering against the mission, you’re already on a slippery slope."

Integrate the systems. The more the organization’s systems connect end to end, the less restricted revenue tracking becomes “a wrestling match between confusing and sometimes broken spreadsheets.” Affordable, easier-to-integrate software has made that more realistic than it used to be.

Contingency planning when a major funder pulls out

Stay close to funders. Organizations with strong funder relationships can often see cuts coming, whether funders planned them or are reacting to their own budget pressures.

Have the outline of a plan ready. John described a phased response, from least to most disruptive:

Delay contractors and capital spending not required this year.
Delay replacements when people resign.
Delay salary increases.
Delay benefits such as 401(k) matches.
Only if those steps don’t buy enough time, consider reductions in force.

Act early. Once you know funding is going away, move. “Your first cost reduction steps are ironically your cheapest ones.” Hesitating can make the eventual response more painful and more expensive.

Board Reporting: Forward-looking Information, Not just data

“Data is not the same as information,” John said. Boards can drown in numbers. He recommended spending little time on historical statements beyond a status update. “It’s hard asking a board to govern an organization looking in the rearview mirror.”

Include in Board Updates What It Means
The forward look The outlook for the coming period
The impact If this happens, here's what it means financially
Decisions,plural A range of choices and their impacts, not a single option to approve or reject

Include in Board Updates	What It Means
The forward look	The outlook for the coming period
The impact	If this happens, here's what it means financially
Decisions,plural	A range of choices and their impacts, not a single option to approve or reject

Non-financial metrics, with the CFO at the table

John pushed back on the idea that non-financial metrics are outside the CFO’s lane. Measures like schools reached, children served or outcomes achieved all have financial drivers underneath, and the CFO can help program leaders see the dollar value of their impact.

He sees a missed opportunity with funders: payback. In one illustration, a program costing about $72,000 per school produces an estimated $112,000 per school in lifetime health and education benefits. Framed that way, funders hear two things: the program pays for itself, and more money would do more good.

Aligning boards on cash reserves

Reserves aren’t shareholders’ equity. John warned that board members without a finance background shouldn't read nonprofit reserves that way. Restricted reserves reported under GAAP are, in economic substance, obligations to deliver future programs, and the cash to deliver them needs to be available.

Deficits change the math. With $10 million in grant revenue and $12 million in expenses, every dollar of programming costs $1.20. Delivering more of it without a plan to close the gap can dig the hole deeper, so healthy-looking reserves can offer “a comfort that turns out to be razor thin.” Boards don’t need the calculations, he said, but they should know to ask.

Scaling Finance Capacity: Compliance vs. Value-added work

Executive directors already juggle fundraising, programs, people and operations. John divides finance into two parts, with different ways to resource each:

	Non-negotiable: compliance and reporting	Value-added: strategy and planning
What it covers	The Form 990, the audit, paying vendors, payroll	Forecasting, budgeting, support at the fundraising and budget tables
The risk	It “can become a self-consuming monster” without integration and automation	It gets crowded out if the CFO is pulled into bookkeeping
How John would resource it	Outsource it, or at minimum keep it separate from the CFO role	A part-time or fractional CFO, kept out of the bookkeeping weeds

Don’t hire strategy to fix bookkeeping. Bringing in a fractional CFO for strategic work while the books still don’t close cleanly means the CFO gets dragged back into reconciliations, “the most expensive way to solve the wrong problem.” Messy reconciliations also pull program leaders away from the mission.

Start with the lightest system that works. John warned against buying the most sophisticated accounting system too early. A lightweight option such as QuickBooks with nonprofit modules usually serves growing organizations better, while complex systems can “grind the process to a halt.” Ruelo agreed, noting organizations that implement complex systems, don’t get the information they need and end up returning to simpler tools.

What to keep in-house

A dedicated CFO role, even a part-time or fractional one, onshore or offshore, kept out of the bookkeeping weeds.
Relationship-driven roles such as the grant accountant, who knows program leaders, funders and nuances that may not translate if outsourced.

The metric every Nonprofit leader should watch: Operating cash flow

“Reserves and profits are a matter of opinion. Cash is a matter of fact.” A balance sheet can look healthy while cash is tied up in grants not yet funded, and “you cannot make payroll with grant certificates or invoices.” John recommended practicing short-horizon cash forecasting, starting at 30 and 60 days, until it becomes muscle memory, especially as the funding environment for nonprofits shifts.

One Change to the Board packet: An Unrestricted Cash Schedule

What to cut: Liability-side schedules, such as an accounts payable aging report showing how long vendors have waited to be paid. John called that too operational to help a board make a decision.

What to add: a schedule showing how many days the organization can run on unrestricted cash.

Start with unrestricted reserves.
Subtract amounts already committed.
Divide by daily cash expenses.

The board then knows, at every meeting, how many days the organization can operate: 111 days, say, or 192. It's easy to focus on and easy to understand.

Ruelo’s summary of the conversation: resilience starts with visibility, good reporting translates information into decisions, and finance capacity is about access to the right expertise at the right time, whether internal, fractional, outsourced or a mix.

This session is part of The Future is Fractional 2026. For the themes that ran across every industry, read Own the Core, Access the Rest: What The Future is Fractional (TFIF) 2026 Revealed About How Finance Teams Are Being Rebuilt what finance leaders are rethinking about talent, AI and team structure.

Stop letting restricted-fund tracking crowd out your mission.

Grant compliance shouldn’t depend on spreadsheets and late nights. This is the work our nonprofit accounting professionals take responsibility for. We handle the close, restricted fund tracking, Form 990 and audit preparation, so your leadership team can spend its time on programs, funders and the board.

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As Zafar put it, 'It's not as simple as, the customer signed a $12,000 contract, my revenue is $1,000 a month.' Studycast groups customers into cohorts by the year they went live, because cohorts tend to behave consistently over time. Cohort Year Typical growth, in Zafar's experience Why Year 1  Partial year Customers go live partway through the year Year 2  Roughly 70% to 100% The first full year of revenue Years 3-4 onward  Around 4–5% a year Growth declines sharply, then settles Forecasting each cohort separately is more reliable than projecting the whole customer base at once. Separating enterprise and small-business customers to handle outliers The outliers at Studycast, single customers growing 100% or more a year, were mostly enterprise customers who went live at one site, then rolled out to others, compounding revenue month after month. The team now forecasts SMB and enterprise customers separately. Finance can’t forecast enterprise accounts alone, he added. Customer success and sales know whether an account is at capacity or has room to expand, which turns the forecast from “just a number on the paper” into a strategic decision. AI in Finance: Faster automation, Higher stakes for Data integrity Zafar sees AI making finance both easier and harder. It already helps automate bank and account reconciliations, reporting and financial decks. But deeper uses, such as combining data points to analyze a customer fully, depend on data that lines up across systems. Without that common hook, “it’s essentially garbage in, garbage out,” and AI may point you the wrong way. His team has also implemented third-party tools that automate accounts receivable (AR) and accounts payable (AP), significantly reducing processing time. They aren't cheap, he said, but they're 'not the Mercedes of the brands.' He spends two to four hours a week learning AI himself and encourages his team to practice and fail with it. “If you don’t do it, you’re gonna get left behind.” Managing Cash Flow with Payment Terms Predictable cash starts with predictable payment terms. “You live and die with your collections.” Net 20 means payment is due 20 days after the invoice date. Customer Terms (receivables) Vendor Terms (payables) Target   Net 20     Net 45, sometimes settling at net 30 How it’s held    Sales can’t change terms without finance approval; about 95% of customers are on net 20 Negotiate everything with vendors Exceptions Mostly larger customers or trades for something else Varies by vendor Support Dedicated people or systems chase late payers AP automation reduces processing time At those terms, collecting at net 20 and paying at net 30 to 45 works out to a cushion of 10 to 25 days. Not every customer pays on time, he acknowledged. The goal is for most (60–70%) to pay promptly and to have people or systems chasing the rest. M&A Due Diligence: Evaluating a Back office Zafar has been on both sides of deals. As the buyer, he starts with the P&L and balance sheet, but he spends most of his time on customer data. He pulls customer, contract and billing data and tries to merge them. If they tie out easily, revenue evaluation is straightforward. If not, the gaps tell him how much to trust the reported revenue. Most of the time the revenue is real, he said; the hard part is pinpointing the contract and customer behind it. As the seller, he makes sure the customer-to-billing chain is as accurate as possible, even if it lives in Excel, so the company can show the strength of its data. Just as important, finance, sales, customer success and the CRO should all tell the same story. Post-acquisition integration: don’t rush the systems The most common trap, Zafar said, is rushing to merge financial systems. The better move is to understand how data flows from customer to contract to billing, then move the acquired customers into your existing process. “If we are acquiring a business, we’re acquiring revenue.” Don’t break a process that works just to force systems together. Before closing, he said, the one thing finance leaders should understand is the target's billing process, from identifying a customer to signing a contract to sending an invoice. Finance is usually more involved before a deal closes, so it can then guide sales and revenue operations on how to bring that data across. Vendor data, by comparison, is 'a pretty easy lift.' M&A readiness checklist, drawn from the session Can every customer be traced across customer, contract and billing records with one common key? Would your customer-to-billing data tie out if a buyer tried to merge it? Do finance, sales, customer success and revenue leadership tell the same story about customers? Are payment terms consistent, and are exceptions approved and documented? Before closing a deal, do you understand the target’s billing process end to end? Rogador’s closing thought: getting financial systems and data right doesn’t start when the deal shows up. It’s what makes you ready when it does. This session is part of The Future is Fractional 2026. For how deal readiness connects to the wider shift in finance team design, read Own the Core, Access the Rest: What The Future is Fractional (TFIF) 2026 Revealed About How Finance Teams Are Being Rebuilt   what finance leaders are rethinking about talent, AI and team structure.

Tax, Insurance and Cash Flow: Finance Lessons for Multi-Property Real Estate Portfolios

The Real Estate Spotlight was one of three industry spotlights at The Future Is Fractional 2026, hosted by Scrubbed on September 24, 2026. Scrubbed partner Ejie De Jesus moderated a conversation with Geraldine Serrano, Director at Specialty Tax Group; Alex Gilmete, commercial property and casualty advisor at USI Insurance Services; and Blake Peters, founder and principal of Peters Specialty Tax Services. They covered cost segregation and bonus depreciation, R&D tax credits for real estate, insurance availability and replacement costs, and shared and layered coverage for portfolios. The short version: bring tax and insurance specialists in before decisions are made, check that your coverage reflects today’s replacement costs, and look beyond a general CPA for specialized incentives. Real estate finance is rarely one entity with one set of books. It’s multiple properties, multiple entities and often multiple jurisdictions, in a tax and risk landscape that keeps shifting. At The Future Is Fractional 2026, a virtual conference hosted by finance and accounting advisory firm Scrubbed on September 24, 2026, Session 4 split into three industry breakouts running at the same time: real estate, nonprofit and technology. In the real estate track, Scrubbed partner Ejie De Jesus brought together three specialists in cost segregation, tax incentives and commercial insurance to talk about the strategies owners most often miss. Key Takeaways: Timing is the biggest gap. Tax incentives and cost segregation are often considered after key decisions are made, when the options have already narrowed. Cost segregation accelerates depreciation. Splitting a building into shorter-lived components lets owners take larger deductions sooner, and 100% bonus depreciation, restored by 2025 tax law, can pull those deductions into year one. R&D credits reach further than most owners think. Engineering, structural and energy design work on a property may qualify. Insurance has changed fast. Some properties can’t get standard A-rated coverage, and replacement costs may have outrun policy limits. Portfolios can share coverage. A shared primary layer with excess layers on top can cost less than insuring every property to full value. Bring in specialists early, keep the decisions. Specialist advisors fill in the picture; the owner makes the call. Meet the Panel Ejie De Jesus (moderator): Partner, Scrubbed. Geraldine Serrano: Director, Specialty Tax Group, known as the “Cost Seg Queen,” specializing in cost segregation and tax strategy for real estate investors.  Alex Gilmete : Commercial Property and Casualty Advisor, USI Insurance Services, helping businesses manage and transfer risk.  Blake Peters : Founder and Principal, Peters Specialty Tax Services, specializing in R&D tax credits and other incentive programs. Timing and Visibility Gaps in Portfolio Finance Awareness comes too late. Blake Peters said the largest gap he sees is awareness. Incentives such as investment tax credits, R&D credits and energy efficiency deductions are buried in the tax code, and when owners do know about them, they’re often “looked at a little too late in the process.” Evaluating them at the start of a project can improve returns, help finance it and give investors clearer visibility. Risk has shifted fast.  Alex Gilmete said insurance has changed dramatically in just a few years. Supply chain issues, tariffs and, in California, wildfire risk have reshaped how carriers, lenders and investors view a property, and how much liability an owner carries. Property risk and insurance volatility Standard carriers, non-admitted carriers and the FAIR Plan Some properties can no longer be insured by standard A-rated carriers, Gilmete said. Location, fire exposure and crime all affect what carriers will take on. Coverage Route What The Panel Described   Standard A-rated carriers Increasingly selective; may decline older or un-upgraded buildings   Non-admitted carriers An option when standard carriers decline, at higher cost   California FAIR Plan A fallback in California when other options aren’t available That’s why Gilmete talks with investors while they’re still comparing properties. What a carrier thinks of a location affects rates and coinsurance terms (the clause that penalizes owners who insure for less than full value). He said many investors are looking at Nevada as an alternative to California, while Texas carries its own fire and flood challenges. Are you really fully insured? Gilmete warned that long-time investors may not realize how tariffs and supply chain costs have raised replacement values. A building insured for $10 million might now cost $14 million to $15 million to rebuild after a total loss, leaving the owner to cover the gap. Shared and layered coverage for portfolios Rising premiums reduce net operating income, and lower NOI lowers property value. For portfolios, Gilmete described a shared and layered approach. Take 10 properties worth $10 million each. The owner may not need $100 million of primary coverage, since a total loss on every property in one policy period is unlikely unless they share a fire or flood zone. Instead, a shared primary layer, perhaps $30 million, covers all 10, with excess layers stacked on top from different carriers. Each higher layer is less likely to be used, so it costs less per dollar of coverage. Insurance review checklist, drawn from the panel Does the policy limit reflect today’s replacement cost, not the original value? How old are the roof, HVAC, plumbing and electrical systems, and what fire suppression and egress are in place? Is everything disclosed to the carrier accurate? Carriers may inspect, and can cancel if it isn’t. How do the location’s fire, flood and crime exposure affect which carriers will quote? For a portfolio, would a shared and layered structure fit your risk tolerance? Cost Segregation: Accelerating Depreciation for Cash Flow What is cost segregation? Cost segregation is a tax strategy that separates a building’s components into shorter depreciation periods. Instead of depreciating the whole property over 27.5 years (residential rental) or 39 years (commercial), owners can deduct shorter-lived components faster, lowering current tax liability and increasing cash flow. The Lego analogy Serrano’s explanation: picture a house built of Legos. The IRS treats a residential rental as wearing out over 27.5 years. But not every piece lasts that long. Carpet, floor coverings, cabinets and countertops are five-year pieces. Driveways and landscaping are 15-year pieces. A cost segregation study takes the house apart and sorts the shorter-lived pieces into their own buckets. Bonus depreciation under the One Big Beautiful Bill Act The One Big Beautiful Bill Act, signed in July 2025, restored 100% bonus depreciation and made it permanent for qualifying property acquired after January 19, 2025. Combined with cost segregation, that lets owners deduct the full cost of those shorter-lived components in the first year. Serrano told the story of a client she called “Mr. I Hate the IRS,” who was about to mail a $100,000 check to the IRS. Cost segregation studies on his 12 Denver-area rentals eliminated the liability. His CPA hadn’t recommended it because she believed it applied only to commercial property. Results depend on the owner's situation. Rules on passive rental losses and depreciation recapture when a property is sold can change the math. She also pointed to manufacturers. A newer provision allows qualifying manufacturing buildings to be fully expensed rather than depreciated, so those owners may not need a cost segregation study at all. Before or after construction? Before, Serrano said. “The sooner we talk about the project, the better.” She cited an owner who built an Oakland office from shipping containers and welded them together because it was cheaper. Bolting them, so they could be taken apart, might have qualified far more of the building as five-year property. That may not have changed his choice, but he would have made it knowing the tax impact. He also demolished an existing structure without his CPA setting up a general asset account, and missed a tax benefit as a result. For cost segregation, she noted, what matters is when a building was bought and placed in service, not its age. Insurers look at age. Planning has to account for both. R&D Tax Credits for Real Estate and Construction Peters called the R&D credit “one of the worst named credits out there.” For tax purposes, it can cover work involving analysis, alternatives and design, not just scientists and software. In real estate, that can include: Engineers evaluating structural methods depending on contract terms HVAC and energy design to meet efficiency or LEED requirements Custom engineering to improve a building’s performance Manufacturers building capital-intensive facilities Investment in AI, built in-house or subcontracted, across industries His advice: don’t ask “do we do R&D?” Ask where the money and effort are going. What changed recently. From 2022 through 2024, research expenses had to be spread over five years or more instead of deducted right away, research expenses had to be amortized rather than deducted right away, which made the credit less attractive. Peters said the One Big Beautiful Bill Act fixed that going forward and, for some businesses, retroactively. Companies that stopped claiming the credit should reassess. Cost segregation vs. the R&D tax credit. Header Header R&D Tax Credit What it does Accelerates deductions, which lower taxable income A credit that reduces the tax owed dollar for dollar What can qualify, per the panel Shorter-lived components: flooring, cabinets, countertops, driveways, landscaping Structural engineering, HVAC and energy design, custom building systems, capital-intensive facilities When to look Before construction or acquisition decisions At the front end of a project Overlap - Custom HVAC and energy work often touch both, so owners can address them together Capital Improvements: Tax benefit and Insurability Do roof or HVAC upgrades lower insurance costs? Not directly, Gilmete said. But major carriers may refuse to quote older buildings that haven’t been upgraded. He described a Santa Clara property where the roof had to be replaced before A-rated carriers would consider it. On the tax side, Peters said custom engineering for HVAC or energy performance can qualify for the R&D credit. Keep the Decisions, Bring in the Experts The panel’s closing advice was about what to keep in-house. General CPAs may be excellent but lack this level of specialization. Serrano offers clients a second review by another CPA when their current CPA is unfamiliar with cost segregation. Bringing in specialists early to review tax incentives, cost segregation, contracts, insurance policies and risk tolerance lets the owner decide with a full picture. As Gilmete put it, the experts “fill out your dashboard, and then the owner gets to make decisions based on that dashboard.” This session is part of TFIF 2026.  To see how planning connects to talent, AI and team design, read, read Own the Core, Access the Rest: What The Future is Fractional (TFIF) 2026 Revealed About How Finance Teams Are Being Rebuilt   what finance leaders are rethinking about talent, AI and team structure.