A Comprehensive Guide to Setting Your Nonprofit for Financial Success in 2025
Introduction
2025 has seen nonprofits having to navigate economic shifts, evolving donor priorities, and regulatory changes.
Setting your organization up for financial success means taking a holistic look across the organization and making some thoughtful adjustments. Financial planning and management are crucial, and by taking a proactive approach, nonprofits can build resilience, manage cash flow gaps, and position themselves for long-term success.
In This Guide...
Introduction
Section I
Section I:
Building Financial Resilience in an Uncertain Landscape
This year, we’ve already seen some unexpected hurdles for nonprofits, including grant delays, funding uncertainty, and rising costs. If your organization is feeling the pressure, you’re not alone. The good news is that by taking proactive steps to build financial resilience, your nonprofit can stay focused and continue to deliver on its mission, even in uncertain times. Check out our tips for optimizing the financial health of your nonprofit organization.
We’ve gathered some practical strategies that can help you prepare for whatever lies ahead:
Stay Informed About Funding Risks
As we’ve seen, funding landscapes can change quickly, so staying in contact with experts and consultants who can provide insights into financial risks is helpful. Regular conversations will help you update your knowledge so that you’re better positioned to identify potential threats to your funding sources.
Use Scenario Planning
Budget with Flexibility and Caution
Build Your Operating Reserves
Operating reserves should be a deliberate part of your financial planning. A strong reserve gives your organization some breathing room to weather funding delays, respond to unexpected expenses, and invest more confidently in future growth.
Keep an Eye on Cash Flow
Grow and Strengthen Key Relationships
By building flexibility into your budget, staying informed about funding risks, and nurturing key relationships, your nonprofit is better equipped to navigate financial uncertainty. Cash forecasting, scenario planning, and reserve building help you meet this moment while also building a more stable and sustainable operation in the long term.
Section II:
Scaling Strategically
Understand Resource Capacity
Diversify Revenue Streams
Evaluate Growth Opportunities
Practice Strategic Financial Discipline
Approach scaling with financial discipline. Be thoughtful with projections and cautious about new spending commitments. Long-term forecasting and scenario planning can help you stay ahead of potential challenges and make smart decisions that support your mission.
Section III:
Outsourcing for Flexibility and Expertise
Consider how outsourcing could help your nonprofit:
Allow Focus on Your Core Mission
Your team’s time and energy are valuable. By outsourcing non-core functions like accounting, your people can focus more on the core mission and programs that directly serve your community.
Manage Growth
Tap into Specialized Expertise
You don’t have to have every expert in-house—and it may not make sense to even try to hire internally for every specialty. When you outsource, you gain access to experienced professionals who are up to date on the latest regulations, tools, and best practices. Firms like Scrubbed offer dedicated teams who understand the nonprofit landscape and can help you navigate complicated financial challenges.
Stay Agile with Flexible Support
Nonprofit work isn’t always predictable. You may need extra help during peak periods but need a leaner team in quieter times. Outsourcing gives you the ability to scale services up or down based on your current needs so that you can manage costs effectively without compromising quality or responsiveness.
Improve Cost-Effectiveness
Hiring full-time staff for specialized accounting roles can be expensive, especially for smaller nonprofits. Outsourcing allows you to get high-quality support without the ongoing costs of salaries, benefits, and training expenses associated with full-time employees. Instead, you only pay for the services you need when you need them.
Enhance Risk Management
Outsourcing can help reduce the risks associated with compliance, security, and operational continuity. Professional accounting service providers often have robust systems and processes to ensure compliance with regulations and manage risks effectively.
Section IV:
Key Accounting and Finance Functions to Consider for Outsourcing
Leading a nonprofit means wearing many hats, but when it comes to accounting and financial management, outsourcing can be a smart way to lighten the load. You can decide which functions could be outsourced and which need to stay in-house depending on the organizational need. Some of the most commonly outsourced functions include:
Grant Management
If your organization receives grant funding, you know how important compliance and reporting are. Outsourcing this function can help ensure funds are tracked accurately, requirements are met, and funders receive clear, timely reports, which can lead to stronger relationships and future funding opportunities.
Bookkeeping
Outsourcing bookkeeping ensures your transactions are recorded consistently and correctly, freeing up your staff to focus on strategic activities.
Financial Analysis and Reporting
Outsourcing financial analysis and reporting can provide insights into your organization’s financial health, helping you make informed decisions and plan for the future.
Payroll Processing
Payroll can be complex and time-consuming, especially with shifting labor laws and tax requirements. An outsourced partner can manage compensation, tax withholdings, and compliance, reducing administrative headaches and helping ensure your team gets paid on time, every time.
Tax Preparation
Nonprofit tax filings come with their own set of rules. A professional accounting partner can take the lead on tax preparation, helping you stay compliant, avoid penalties, and potentially identify opportunities to optimize your tax position.
For many nonprofit leaders, outsourcing these functions provides the breathing room needed to focus on advancing the mission. For smaller organizations, it can be a cost-effective way to access the kind of financial expertise that might otherwise be out of reach.
Section V:
Diversifying Revenue Streams for Long-Term Stability
Diversifying your income sources is critical for achieving long-term financial stability. A balanced mix of revenue sources helps your organization reduce reliance on a single funding stream, which mitigates the risks associated with changes in economic conditions.
Some practical steps for beginning or expanding your revenue diversification efforts might be:
Strategic Planning and Implementation
Understand Your Current Revenue Mix
Start by evaluating your existing revenue sources. Identify the proportion of income generated from grants, earned income, and charitable donations. This snapshot will help you spot any areas where you’re overly dependent on one source and highlight opportunities to grow in other areas.
Balance Grants and Earned Income
rue diversification involves balancing different types of revenue within each category. For example, you can diversify fundraising by securing grants from various sources, such as government agencies, private foundations, and corporate sponsors. Similarly, with earned income, you can explore opportunities to generate revenue through program fees, merchandise sales, or social enterprises.
Explore Donor-Advised Funds (DAFs)
Donor-advised funds are becoming increasingly popular as a source of charitable revenue. These funds allow donors to make contributions to a fund and recommend grants to nonprofits over time. Building relationships with donors who use DAFs and the financial advisors who manage them can lead to more consistent and long-term contributions to your funding.
Invest in Relationship Building
Cultivating and stewarding relationships with donors, grant funders, and corporate sponsors is essential for long-term revenue diversification. This process takes time and effort, but it is crucial for securing consistent support.
You should also look for opportunities to deepen connections with current supporters, as they might be in a position to open doors to additional types of support and explore new avenues for funding. For example, an individual donor might connect you with a family foundation or a corporate partner.
Diversifying revenue sources will help you manage economic uncertainties and ensure the sustainability of your programs and services.
Section VI:
Engaging Your Board in Financial Success
Board members play a pivotal role in an organization’s financial health, providing oversight, strategic guidance, and support for fundraising efforts. But they won’t necessarily be experienced or comfortable with their role. To ensure your board is effectively engaged in financial success, consider the following strategies:
Foster Open Communication
Create a space where board members feel comfortable asking questions, sharing ideas, and staying informed. Regular updates on financial health, opportunities, and challenges help board members stay connected and involved. Open communication and feedback build trust and encourage shared ownership of financial goals.
Set Clear Expectations
When board members know exactly what’s expected of them, they can step into their roles more effectively. Be upfront about their oversight and fundraising responsibilities, and ensure that board members understand their fiduciary duties and how their contributions impact your nonprofit’s financial stability. This could include attending financial discussions, reviewing reports, and participating in donor outreach.
Provide Financial Education and Training
Help board members feel confident in their financial oversight role by offering clear, accessible training. Cover the basics of reading financial statements, understanding the budgeting process, and recognizing what financial sustainability looks like for your organization. The right training will equip board members with the knowledge and skills they need to make informed decisions and contribute more effectively to the organization’s financial health.
Provide Tools and Resources
Make it easier for board members to contribute by giving them the tools and resources they need to succeed in their roles. This might include providing background information on attendees at fundraising events, sample scripts for donor conversations or guidance on how to review financial reports and analysis. Practical support can help board members feel more confident about engaging in financial activities.
Make Time for Role-Playing and Practice
Fundraising isn’t second nature to everyone. Help board members gain confidence by creating opportunities to practice role-playing donation asks, walking through event scenarios, or reviewing how to make a compelling pitch. Even a short practice session can make a big difference.
Offer Ongoing Support
Ongoing support and guidance can include regular check-ins, additional training sessions, and access to expert advice. You can help board members stay engaged and committed to their roles by providing continuous support.
Leverage Board Members' Networks
Board members often have valuable connections and networks that can be leveraged for fundraising and partnership opportunities. Invite them to think about who in their network might be open to learning more about your mission. Offer support on how to approach potential donors or partners and provide talking points to help them feel prepared.
Recognize and Celebrate Their Contributions
A simple thank-you, a mention at an event, or a spotlight in your newsletter can go a long way in showing appreciation. Celebrating contributions reinforces the value of their involvement and encourages them to continue participating.
When board members feel informed, empowered, and supported, they become even stronger champions for your organization and its financial health. Investing in their growth and engagement helps build a more resilient and effective board and, ultimately, a more sustainable nonprofit.
Bonus Tip: Don't Be Afraid to Ask for Help
Every nonprofit leader faces financial challenges at some point, but you don’t need to navigate them alone. Whether you’re dealing with limited staff capacity, interpreting complex regulations, or planning for long-term sustainability, reaching out for support can open doors to fresh perspectives, new tools, and expert guidance.
Here are some key considerations and strategies for effectively asking for help:
Be Honest and Clear When Reaching Out
When asking for help, clearly explain what you need, why it matters, and how external support will impact your organization’s needs and goals. People are more likely to say yes when they understand the purpose and value of their involvement.
Pinpoint Your Areas of Need
Start by assessing your organization’s current financial situation and identifying areas where external support could make a difference. This might be financial planning, budgeting, grant management, or compliance with regulations. Knowing where you need help allows you to ask for relevant, targeted assistance.
Learn from Peer Networks
You are not alone in this work, and connecting with other nonprofit leaders and organizations to share knowledge, resources, and best practices can be valuable. Join peer networks, attend sector conferences, or participate in local coalitions. These connections can become trusted sources of advice and encouragement.
Invite Board Members to Contribute in New Ways
Many Board members have professional skills, connections, or resources that could support your financial goals. Some may be willing to underwrite a specific need, like a financial audit or technology investment. Others may be able to introduce you to people in their networks who could be additional partners or funders.
Bring in Professional Advice When Needed
Some financial challenges need greater expertise. Don’t hesitate to seek professional advice from financial consultants, accountants, and legal advisors who specialize in nonprofit finance. These experts can provide guidance on complex financial issues, help you develop effective strategies, and ensure compliance with regulations.
Take Advantage of Pro Bono Services
Many professionals and organizations are eager to support nonprofits by offering services at no or low cost. Look for opportunities to engage with accounting firms, legal advisors, and consultants who are willing to donate their time and skills to support your mission.
Explore Capacity-Building Grants
Some funders offer grants specifically to help nonprofits strengthen their organizational capabilities. These capacity-building grants can be used to fund financial consulting, staff training, technology upgrades, and other initiatives that enhance your financial management. If your organization could benefit from stronger financial infrastructure, this type of funding might be a great fit.
Reaching out for support is a smart and proactive move. Whether you’re drawing on community partnerships, board expertise, or professional services, seeking help is one way to build a stronger, more sustainable future for your nonprofit.
Conclusion
Building financial strength and resilience starts with thoughtful planning and steady, intentional action. The strategies in this guide—from managing cash flow and diversifying revenue to empowering your board and tapping into the right expertise—are designed to help you take practical steps toward greater stability, from managing cash flow and diversifying revenue to empowering your board and tapping into the right expertise.
Remember, financial success doesn’t happen overnight. It’s a process that takes time, attention, and a willingness to adapt as things change. By staying informed, nurturing your funding relationships, and creating a strong support system, your nonprofit will be better prepared to meet challenges, identify new opportunities, and continue delivering the programs and services your community counts on.
If your organization could benefit from additional support, Scrubbed is here to help. Our nonprofit outsourced finance and accounting services are designed to give you the tools, insights, and flexibility you need to plan ahead, operate efficiently, and grow with purpose.