Across the United States, nonprofit organizations are confronting a deepening workforce challenge: hiring and retaining qualified finance and accounting professionals has become increasingly difficult and consequential. 

According to the National Council of Nonprofits’ (NCN) most recent Workforce Survey, 74.6% of nonprofits reported job vacancies, and 51.7% said their vacancy rates were worse than before the pandemic. The top recruitment barriers were salary competition (72.2%) and budget constraints (66.3%). 

This aligns with broader sector findings. The Center for Effective Philanthropy’s State of Nonprofits 2024 report noted that nearly 60% of nonprofit leaders identified staffing and workforce concerns as one of their biggest challenges, and almost half reported significant difficulty filling positions. 

A more striking signal comes from Candid’s 2025 workforce analysis, which found startling retention issues:

Candid’s analysis shows the top reasons for wanting to leave include:

These dynamics are particularly acute for finance and operations roles, where BTQ Financial’s 2025 Nonprofit Leaders Report found that 72% of nonprofit organizations struggle with turnover in finance and accounting at least occasionally, and 38% report “frequent” or “very frequent” turnover.

Why Finance and Accounting Roles Are So Hard to Fill

Sector research points to several structural challenges, including complexity, compliance requirements, and historically constrained administrative budgets, that make finance, accounting, and grants and contracts management positions especially difficult to staff: 

1. Restricted Funding Limits What Nonprofits Can Pay 

NCN emphasizes that nonprofits face hiring disadvantages because many grants and government contracts restrict the percentage of funding that can support overhead. This leaves little room to offer market-competitive salaries for finance professionals. 

2. High Workload Pressure 

Candid’s data shows that more than half of nonprofit employees considering leaving cite overwhelming workloads, which is especially true in finance and operations functions that manage: 

• Fund accounting 
• Government reimbursement processes 
• Grants and contracts vouchering 
• Audit preparation 
• Month-end close 
• Accounts payable and receivable 
• Regulatory compliance 

When these responsibilities fall on a very small team (sometimes one or two people) burnout follows. 

3. Private Sector Competition 

Nonprofits struggle to compete with the private sector’s compensation, benefits, and advancement pathways for accountants, controllers, and operational specialists. 

Sector-wide data from PNP Staffing Group (summarized by Social Current) reinforces this: 

4. Limited Growth Opportunities 

Candid notes that 54% of staff are considering leaving because they do not see clear growth opportunities — a particular issue for finance professionals in smaller organizations where the staffing structure is flat.

The Organizational Impact of Gaps in Finance Capacity 

When finance roles remain vacant or see high turnover, the impact extends far beyond the back office.

Delayed Financial Reporting and Audits 

Vacancies often lead to delays in closing the books or preparing audit materials — BTQ’s report found that nearly 1 in 3 nonprofit organizations cite timely and accurate financial reporting as their top financial challenge.

These delays can strain or jeopardize funder relationships; CEP also notes widespread concern about leaders’ ability to maintain organizational effectiveness under these conditions. 

Slower or Incomplete Grant and Contract Reimbursements 

Administrative bottlenecks can directly affect cash flow, especially in government-funded organizations.

BTQ’s findings show that nearly three-quarters of nonprofit leaders report dealing with cash flow problems at least occasionally, and 54% must reforecast and adjust budgets quarterly or more often.

Weakening Internal Controls 

Understaffed finance teams are at greater risk of error, delayed reconciliations, and inconsistent documentation — all of which affect oversight and compliance. In fact, 1 in 4 of BTQ’s surveyed nonprofit leaders cited establishing well-defined, consistent processes as a significant challenge.

Leadership Burnout 

NCN and CEP both highlight the burden placed on executive leaders who are forced to absorb finance tasks when positions remain unfilled. 

Reduced Organizational Agility 

Without stable financial processes, organizations lose the ability to make data-informed decisions or manage growth responsibly. BTQ’s research highlights that assessing financial sustainability and risk is the most commonly reported challenge among nonprofit leaders.

Collectively, these challenges create a capacity deficit that threatens both operational stability and programmatic mission. 

How Finance as a Service (FaaS) Helps 

A growing number of nonprofits are turning to the Finance as a Service (FaaS) model as a strategic solution — not a stopgap — to address persistent workforce shortages and rising complexity. As BTQ found, 30% of nonprofit organizations currently outsource their finance and accounting.

Considering that nonprofits working finance and accounting partner are over 6X less likely to struggle with scaling the financial function to support growth than non-partnered nonprofits, the benefits are compelling:

1. Access to Nonprofit Finance Expertise 

Because nonprofits cannot always hire competitively, outsourcing provides immediate access to trained accountants, controllers, and grants/contracts specialists who understand fund accounting and regulatory requirements. 

2. Stability and Continuity 

Turnover in the nonprofit sector is high — but turnover within a managed service team does not interrupt service. Processes, documentation, and institutional knowledge are preserved. 

3. Scalable and Predictable Costs 

Instead of the volatility of salaries, benefits, and hiring costs, outsourced models provide a predictable monthly fee. This is especially valuable in environments where administrative budgets are constrained or capped. 

4. Strengthened Internal Controls and Audit Readiness 

Outsourced teams bring structured workflows, segregation of duties, and systemized documentation — directly addressing challenges regarding underinvestment in financial infrastructure. 

5. Leadership Stays Mission-Focused 

With technical, transactional, and compliance-heavy finance tasks handled externally, leaders regain strategic bandwidth. 

When Nonprofits Should Consider Outsourcing 

Nonprofits often find outsourcing valuable when they experience one or more of the following conditions:

A New Strategic Path Forward 

The nonprofit workforce crisis is not slowing down — and finance and operations roles are among the most affected. The data paints a consistent picture: nonprofits face structural constraints that make it difficult to build and retain the internal finance capacity they need. 

FaaS offers a pathway to stability, compliance, and long-term resilience without relying on a single hire or overburdened team. 

At BTQ Financial, we have dedicated more than two decades to supporting nonprofits funded by government contracts, philanthropic grants, managed care arrangements, and complex regulatory frameworks. We know the pressures nonprofits face because we see them every day, and we’ve built a model that strengthens financial clarity and capacity where nonprofits need it most.

At the end of the day, outsourcing isn’t a cost — it’s an asset. 

Get in touch to learn more.

We recently outlined steps nonprofits can take to manage federal funding delays and uncertainty. Now, a related, and potentially longer-term,  trend is emerging: increased attention on how nonprofits manage and report on public funds.

While some of this scrutiny is already underway, much of it may evolve over the coming year as agencies adjust to new priorities, legal rulings, and policy directives. 

For nonprofits managing federal grants and contracts, it’s an ideal time to ensure that financial systems, compliance practices, and documentation workflows are ready for a new level of visibility.

What Could Be Driving the Next Wave of Scrutiny?

1. Federal Agencies May Re-Evaluate Funding Oversight

• Executive actions and shifting policy priorities suggest that agencies may increasingly assess how public funds are awarded and monitored. This could lead to closer alignment between spending and national policy goals, with nonprofits expected to document not just compliance, but impact.

2. The Single Audit Threshold Is Increasing — But Oversight May Shift

• With the Single Audit threshold rising from $750K to $1M (for fiscal years beginning October 1, 2024), smaller grantees and contractors may fall outside formal audit requirements. However, this could shift oversight to more discretionary or targeted reviews, including desk audits, site visits, or document requests from funding agencies or pass-through entities.

3. Pass-Through Entities May Increase Subrecipient Monitoring

• State and local governments (often acting as pass-through entities) are under pressure to demonstrate compliance with federal funding requirements. 
• Nonprofits serving as subrecipients on grants or contracts may experience increased monitoring, even in the absence of federal mandates.

4. Maintain Strong Compliance & Communication Practices

• Stay in close contact with program officers at federal and state agencies to track policy changes and funding updates.
• Review subrecipient agreements to ensure compliance with reporting and financial oversight requirements.

Questions Nonprofits Should Be Asking Themselves

1. Do we have the financial clarity to answer questions from funders quickly and accurately?

• Are our general ledger and reporting systems set up to clearly distinguish between federal and non-federal funds across both grants and contracts?
• Can we track allowable costs, indirect rates, personnel allocations, and match requirements at the project or funder level?

2. Are our internal controls not only documented, but actually working as intended?

• Do we have clear approval workflows for disbursements, procurements, and contract billing?
• Are we confident that our processes for time allocations, subawards, and cost allocation are being consistently followed and tracked appropriately?

3. If a funder or auditor asks for documentation today, are we ready?

• Is our backup documentation for drawdowns, invoices, and cost justifications organized, up-to-date, and easily retrievable?
• Have we conducted any internal reviews or walk-throughs to test our preparedness?

4. Are we prepared for more informal or discretionary oversight?

• Even if we’re under the new Single Audit threshold, are we ready to respond to funder inquiries, reconciliations, or desk reviews?
• Do we understand the unique compliance expectations tied to each grant or contract – especially those with newer or more politically visible funding streams?

Looking Ahead

Increased scrutiny, whether formal or informal, is becoming part of the new normal for nonprofits managing federal funds. 

Those with disciplined systems, real-time visibility, and clear documentation will be well-positioned to navigate reviews and maintain funding with confidence.

How BTQ Financial Can Support You

BTQ Financial delivers finance, grants, and contracts management services through an integrated model that combines strategic oversight with cost-effective processing. 

We help nonprofits:

• Maintain funder-aligned GL structures for grants and contracts
• Track expenditures and compliance
• Organize documentation for rapid response to funder inquiries
• Prepare for audits, desk reviews, or increased subrecipient monitoring

As scrutiny increases, your finance systems must do more than just function — they must demonstrate readiness, resilience, and reliability.

Federal funding has long been a critical revenue source for nonprofits. However, recent legal and policy shifts have introduced delays, uncertainty, and administrative challenges – particularly for organizations receiving funds through state and local pass-through grants.

While it is difficult to predict how long this uncertainty will last, proactive financial management can help nonprofits maintain stability and avoid disruptions.

With over 20 years of experience helping nonprofit organizations achieve financial excellence, BTQ Financial recommends nonprofits take the following steps to navigate federal funding uncertainty.

1. Identify Exposure to Federal and Pass-Through Funding

• Review all current and pending grants to determine whether federal funds are the ultimate source, even if received through a state or local agency.
• Confirm with funders whether any expected disbursements are at risk of delay.

2. Prioritize Cash Flow Management

• Submit outstanding drawdown requests immediately to minimize delays.
• Update cash flow forecasts regularly—consider shifting from quarterly to monthly or weekly projections.
• Develop a contingency budget outlining tiered spending reductions in case of prolonged funding delays.
• Engage your board in scenario planning discussions to prepare for different funding outcomes.

3. Expand Funding Diversification Strategies

• Reassess relationships with private funders: Engage with foundations and donors who may offer flexible funding or bridge support.
• Explore financing options: A line of credit or bridge loan can provide short-term liquidity while awaiting delayed grant reimbursements.
• Evaluate unrestricted revenue sources: Expanding earned income strategies or mission-aligned partnerships can reduce reliance on government funding.

4. Maintain Strong Compliance & Communication Practices

• Stay in close contact with program officers at federal and state agencies to track policy changes and funding updates.
• Review subrecipient agreements to ensure compliance with reporting and financial oversight requirements.

Looking Forward

Federal funding cycles are often unpredictable, but nonprofits with robust financial systems and proactive funding strategies will be better positioned to adapt. Now is the time to:

• Strengthen financial oversight through clear reporting and compliance processes.
• Ensure cash flow resilience with frequent forecasting and diversified funding streams.
• Engage with both public and private funders to create financial flexibility.

BTQ Financial has worked alongside nonprofits for over 20 years, helping organizations navigate funding uncertainty through outsourced financial and grants management, financial strategy, and compliance oversight.

By ensuring efficient financial operations, nonprofits can focus on their mission while staying financially strong. Connect with us to discuss how we can help your organization.

Additional Resources for Nonprofits

The following resources provide updates and guidance on federal funding, compliance, and financial strategy:

• National Council of Nonprofits – Executive Order Tracker
• White House Presidential Actions Website
• Federal Funds Information for States (FFIS) – Grant Funding Updates
• Grants.gov – Federal Grant Applications Tracking
• OMB Uniform Guidance (2 CFR 200) – Federal Grant Compliance