Nonprofit organizations face unique challenges in managing their finances. While inflation and tightening donor resources strain their budgets, they simultaneously have growing demand for their services.

Health and human service providers that rely on government funding face additional hurdles, including increasingly complex compliance requirements, stricter reporting mandates, and intensifying competition for limited funds.

To thrive in this environment while fulfilling their missions, nonprofits need robust financial operations that ensure transparency, promote good stewardship, and secure long-term sustainability.

This article summarizes the comprehensive eBook from BTQ Financial, offering insights into how nonprofits can strengthen their financial operations, which you can download below:

Breaking the Cycle of Poor Financial Governance

Health and human services nonprofits play a crucial role in addressing critical community needs, yet many find themselves caught in a cycle of poor financial governance due to several common factors:

• Emphasis on mission over administration: Decision-making tends to prioritize programmatic activities while viewing administrative functions as secondary
• Weak financial functions: Without robust financial infrastructure and professional expertise, organizations struggle to meet accounting and reporting demands
• Limited financial literacy: Knowledge gaps make discussions about fiscal governance intimidating or non-existent

To break this cycle, nonprofit leaders must shift their perception and recognize strong financial functions as strategic assets that:

1. Empower mission fulfillment
2. Build constituent and donor trust
3. Navigate complex regulatory landscapes

The Finance as a Service (FaaS) Solution

Nonprofits are increasingly adopting Software as a Service (SaaS) platforms and outsourced services to achieve greater efficiency, scalability, and enhanced capabilities. Finance as a Service (FaaS) extends this approach to financial management.

What is FaaS?

FaaS is a managed services approach that helps mission-driven organizations transform their financial operations while saving money, maximizing government funding, and minimizing risk. 

It provides access to a comprehensive, cost-effective suite of expert-driven financial management services, eliminating the need to build and maintain these functions in-house.

Fully Managed Solution Includes:

• Bookkeeping
• Accounts receivable management
• Accounts payable processing
• Internal audits
• Compliance assurance
• Medical billing
• Secure cloud-based technology infrastructure
• Data analytics
• Process automation
• Expense systems
• Credit card systems
• Grants management

How it Works: BTQ’s Approach

1. Assessment: Expert-led evaluation of financial processes to identify inefficiencies and improvement areas
2. Digital Integration: Implementation of specialized nonprofit accounting and reporting software
3. Billing and Accounts Receivable: Optimization of billing processes, including medical billing
4. Reporting: Customized stakeholder communications and compliance reporting
5. Oversight: Strengthened internal controls and audit preparation
6. Strategic Financial Planning: Data-driven insights for budgeting and decision-making

FaaS Benefits for Nonprofits

FaaS creates strong financial functions that support nonprofits’ missions and ensure responsible resource stewardship:

Operational

• Greater focus on mission: By outsourcing administrative and financial burdens to experts, nonprofits can reinvest valuable time and resources into program delivery
• Faster funds collection: Timely and accurate invoicing accelerates billing cycles and fund collection
• Improved cash flow: Efficient cash management increases working capital and enhances financial resilience
• Compliance assurance: Working with nonprofit regulation experts ensures organizations meet reporting requirements for government funding
• Timely and accurate reporting: Automation and streamlined processes provide accurate information for donors, stakeholders, and regulatory requirements

Strategic

• Enhanced operational efficiency: Financial professionals optimize processes and reduce strain on in-house leadership
• Reliable forecasting: Advanced software managed by expert eyes yields stronger insights for planning
• Greater transparency: Accurate reporting improves organization-wide financial visibility and literacy

Long-Term Impact of Strong Financial Management

Strong financial management secures nonprofits’ ability to fulfill their mission and maintain constituent trust. Properly implemented systems allow organizations to allocate resources to initiatives that align with core goals and contribute to lasting change.

• Maximized impact: Effectively managed finances provide the resources needed to deliver core services
• Long-term sustainability: Robust financial functions promote stability during economic and funding challenges
• Increased competitiveness: Financial stability enhances nonprofits’ ability to secure grants, contracts, and donations
• Enhanced scalability: Financial plans tailored to growth initiatives help organizations expand programs and introduce new services
• Strengthened stakeholder confidence: Solid finances and transparent reporting demonstrate good stewardship to donors and funders
• Secured operational continuity: Consistent cash flow ensures organizations can meet essential overhead costs

For a real-world example, explore how NYCSBUS used Finance as a Service to transform its financial management and maximize impact, and contact BTQ for a consultation to learn how we can support your organization.

In the challenging landscape of nonprofit management, financial stability is crucial for mission success. This case study explores how The Door, a renowned New York City youth services organization, strategically partnered with BTQ Financial to transform their financial operations during a critical organizational transition.

The Door’s financial transformation journey offers valuable insights for nonprofit leaders facing similar challenges in today’s fast-moving and resource-constrained environment.

The Door: A Beacon for NYC’s Youth

Since 1972, The Door has served as a vital resource for thousands of teenagers and young adults in New York City annually. This multi-service nonprofit organization provides comprehensive support services including:

• Health care and mental health services
• Education and legal assistance
• Workforce development
• Supportive housing
• Arts, sports, and nutrition programs

The organization’s innovative whole-person approach has gained worldwide recognition as one of the most effective models for delivering human services to young people.

The Challenge: Navigating Organizational Transition

In 2021, CEO Kelsey Louie joined The Door with the mission of leading the organization through a significant transition:

1. Ending a two-decade partnership with University Settlement
2. Rebuilding administrative functions
3. Establishing new systems while maintaining uninterrupted services

This transition presented unique challenges, particularly in financial management. The organization needed to maintain fiscal stability while implementing new structures and training staff—all without disrupting their essential youth services.

Solution: BTQ’s Finance as a Service (FaaS)

With 14 years of experience working with BTQ across two executive roles, Kelsey recognized the value of their Finance as a Service (FaaS) model. Driven by a “No margin, no mission” philosophy, he approached BTQ to strengthen The Door’s financial position.

Key Objectives for Financial Enhancement:

• Remain good stewards of public and private funding
• Build stakeholder confidence (staff, donors, partners)
• Promote greater fiscal transparency and accountability
• Gain better forecasting tools and financial visibility
• Maximize resources to serve community needs

Why Choose Outsourced Finance vs. In-House?

The decision to partner with BTQ instead of hiring an in-house CFO and finance team was based on several strategic considerations:

• Speed and Efficiency: BTQ offered immediate expertise without lengthy recruitment processes
• Cost-Effectiveness: The FaaS model delivered better value than maintaining an in-house department
• Talent Retention: Circumvented the challenge of finding and keeping qualified finance staff in a competitive job market
• Expertise: Access to a team of experts rather than relying on a single person’s knowledge

Change Management: A Thoughtful Implementation

Recognizing the sensitivity of financial transitions, Kelsey emphasized the importance of careful change management. BTQ’s people-first approach ensured a smooth process through a three-pronged strategy:

1. Reviewing audits and fiscal reporting
2. Building financial operating structures and systems
3. Implementing day-to-day operations

BTQ provided crucial guidance throughout the transition, helping prepare Kelsey for discussions with the board and staff while maintaining a comfortable pace of change.

Beyond Outsourced Finance: A Knowledge-Sharing Partnership

The relationship with BTQ has evolved beyond traditional outsourcing to become deeply integrated with The Door’s operations.

Current BTQ Services:

• Producing monthly financial reports, including cash flow forecasts and dashboards
• Conducting monthly spend review meetings with department heads
• Creating year-end spend projections for each department
• Continuously monitoring accounts receivable and cash flow
• Ensuring audit and tax filings remain up-to-date
• Providing regular reports to the organization’s finance committee

Additional Value:

• Strategic Partnership: BTQ serves as thought partners, not just financial advisors
• Subject Matter Expertise: Access to specialized nonprofit financial knowledge
• Knowledge Enhancement: Rather than relying on a single CFO’s experience, The Door benefits from BTQ’s collective expertise—a “brain trust” of financial and nonprofit professionals

Lasting Impact: Strengthened Mission Delivery

By partnering with BTQ, The Door has positioned itself for sustainable growth and enhanced mission delivery. The relationship has:

• Elevated donor and stakeholder confidence through improved fiscal management
• Enabled The Door to focus more resources on serving youth
• Provided tools for better financial forecasting and strategic planning
• Ensured financial stability during a significant organizational transition

As Kelsey notes: “The number-one reason The Door went with BTQ was their expertise and financial strength. But in a fast-moving landscape in which recruiting quality talent is hard and resources are difficult to access, the advantages of our partnership extend across our entire organization, securing our ability to thrive.”

About BTQ

BTQ, a division of Consero Global, provides quality financial management and medical billing services specifically for nonprofits. Since 2001, we have helped organizations build strong financial functions that support their missions and ensure sustainable operations.

Our approach combines decades of nonprofit financial management expertise with high-performing digital technologies, empowering organizations to thrive in today’s challenging landscape.

Get in touch for assistance with your organization’s financial transformation.