If you’re a nonprofit leader trying to figure out whether your finance function is keeping pace with the rest of the sector, BTQ Financial’s 2026 Nonprofit Leaders Report has answers. BTQ’s Andrew Perumal and CPA.com’s Kate Serpe recently unpacked the findings in a live webinar, covering everything from cash flow pressure and board engagement to talent stabilization and the ongoing spreadsheet problem.
Nonprofit organizations continue to face a difficult financial environment. Funding delays, limited unrestricted reserves, growing demand for services, and pressure on internal teams are forcing leaders to make consequential decisions with little room for error.
Yet BTQ Financial’s latest nonprofit finance research also reveals encouraging progress. Finance teams are stabilizing, boards are becoming more engaged, and organizations are increasingly turning to strategic finance and accounting partners for stronger reporting, forecasting, audit preparation, and decision support.
The challenge now is to build on that progress. Nonprofits must move beyond reacting to immediate problems and develop finance functions capable of anticipating risks, protecting staff capacity, and supporting sustainable growth.
Cash Flow Timing Remains a Critical Vulnerability
“Payroll, rent, vendors and programs ultimately don’t wait for grant reimbursements.” — Kate Serpe, CPA.com
Many nonprofits are not struggling because of poor financial management. They are struggling because the timing of incoming funding does not align with the timing of outgoing expenses.
The survey found that 47% of organizations had drawn from unrestricted reserves to maintain operations. At the same time, 85% reported having less than six months of unrestricted reserves available.
Government reimbursement delays can quickly intensify that pressure. Forty percent of respondents said a delay of only 60 to 90 days would materially disrupt their operations.
These delays also consume valuable staff capacity. Organizations experiencing delayed payments reported that finance employees spend almost half their time following up on outstanding receivables.
Instead of analyzing trends or advising leadership, highly trained finance professionals may find themselves repeatedly chasing payments.
Nonprofits can strengthen their position by:
- Preparing rolling cash flow forecasts
- Submitting invoices and reimbursement requests promptly
- Monitoring reserve levels and cash requirements
- Modeling the effects of potential funding delays
- Establishing clear receivables follow-up processes
- Identifying expenses that can be adjusted if cash tightens
Cash flow forecasting should not begin when a crisis occurs. Leaders need enough visibility to understand what could happen several weeks or months in advance.
More Engaged Boards Are Raising Expectations for Finance
“Boards aren’t just asking, ‘How did we do?’ They’re asking, ‘What happens if funding changes?’” — Kate Serpe, CPA.com
Board members are taking a more active role in nonprofit financial strategy.
Seventy percent of organizations adjusted their budgets during the year, while 76% reported that their boards requested more detailed financial information. Nearly 80% said board members initiated conversations about long-term sustainability.
This engagement is a positive development. It creates an opportunity for finance teams to move beyond historical reporting and become strategic partners to leadership and the board.
However, more engagement also means finance teams must be ready to answer increasingly complex questions.
Boards may want to know:
- What happens if a major grant is reduced or delayed?
- How much unrestricted cash is available?
- Can the organization afford to expand a program?
- Which services are financially sustainable?
- What risks could affect the organization over the next year?
- Which investments should be prioritized?
Producing more reports is not enough. Finance teams must turn financial data into clear, timely insights that help board members understand their options and make informed decisions.
Finance and Accounting Partnerships Are Becoming Mission-Critical
“Finance isn’t just back office. It is mission-critical.” — Andrew S. Perumal, BTQ Financial
Nonprofits are increasingly using external finance and accounting partners for more than transactional bookkeeping.
According to the survey, 81% of nonprofits work with a finance and accounting provider. These organizations are seeking support with sophisticated responsibilities such as:
- Audit preparation and support
- Fund accounting
- Revenue recognition
- Account reconciliation
- Budgeting and forecasting
- Cash management
- Grant and contract compliance
- Financial reporting
These activities require both accounting knowledge and an understanding of the nonprofit sector. Fund restrictions, reimbursement contracts, grant compliance, and revenue releases often demand specialized experience that may be difficult to maintain internally.
The impact of these partnerships is significant. Ninety-eight percent of respondents reported at least moderate improvement from working with an external provider, while 59% described the impact as significant or transformational.
Stronger audit preparation was the most frequently cited benefit. But the value extends beyond compliance.
Seventy percent of organizations said their partnership gave internal leaders more time to focus on delivering the mission.
When executives are no longer pulled into daily accounting problems, they can devote more attention to programs, fundraising, strategy, employees, and the communities they serve.
Stable Teams Create an Opportunity to Improve the Finance Function
“Stable teams ultimately create better organizations.” — Kate Serpe, CPA.com
After years of widespread turnover and vacancies, nonprofit finance teams are showing signs of greater stability.
Seventy-six percent of organizations reported no voluntary turnover within their finance teams during the previous year. That stability can improve reporting consistency, retain institutional knowledge, and strengthen understanding of grant requirements and internal processes.
But retention alone does not guarantee an effective finance function.
Organizations should use periods of stability to improve the environment in which finance employees work. That means reducing repetitive tasks, documenting processes, clarifying responsibilities, and ensuring staff members have access to the tools and support they need.
Leaders should evaluate whether finance employees are spending their time on activities that create value.
An experienced finance professional should not devote most of the week to manually assembling reports, searching for documents, or following up on routine receivables.
Protecting staff capacity may involve:
- Automating repetitive workflows
- Documenting close and reporting procedures
- Improving coordination between finance and program teams
- Assigning clear ownership for grants and receivables
- Using an external partner to fill expertise or capacity gaps
- Creating development and succession plans
The objective is not simply to retain employees. It is to give them the structure and resources needed to perform more strategic work.
Spreadsheets Should Support the System, Not Become the System
“The challenge comes when spreadsheets become the system instead of supporting the system.” — Kate Serpe, CPA.com
Technology remains one of the clearest opportunities for nonprofit finance improvement.
Nearly 90% of surveyed organizations close their books within 11 to 20 days. That represents progress, but it may still leave leaders working with information that is several weeks old.
At the same time, 79% of respondents continue to rely primarily on spreadsheets.
Spreadsheets remain useful tools. The risk emerges when critical reporting, grant tracking, budgeting, and financial processes depend on disconnected files, manual entries, and individual employee knowledge.
As organizations grow, spreadsheets become harder to control. More programs, grants, entities, restrictions, and reporting requirements create more opportunities for errors and inconsistencies.
Technology can help finance teams:
- Automate routine data entry and reconciliations
- Standardize approval workflows
- Improve grant and fund tracking
- Produce reports more efficiently
- Reduce dependence on individual spreadsheets
- Give leadership faster access to financial information
- Spend more time analyzing data instead of assembling it
However, installing software alone will not transform a finance function.
People, processes, and technology must be considered together. A sophisticated platform cannot compensate for unclear responsibilities, poorly designed workflows, or insufficient staff capacity.
Before selecting a new system, organizations should identify the problems they are trying to solve and determine how processes will need to change.
Scenario Planning Must Become Proactive
“Are we thinking proactively, or are we just ready to respond to disruption?” — Andrew S. Perumal, BTQ Financial
Nonprofits have become faster at responding to financial changes.
Eighty-eight percent of organizations said they could model a funding-loss scenario within one week. Many could also prepare an updated cash flow forecast or board memo within 48 hours.
That responsiveness is valuable, but it is not the same as proactive planning.
A mature finance function does not wait for a funder to announce a reduction before considering the consequences. It regularly models potential scenarios and discusses them with leadership and the board.
Scenarios might include:
- A 60- or 90-day reimbursement delay
- The loss of a major grant
- Higher personnel or benefits costs
- Lower fundraising revenue
- Increased demand for services
- The launch or expansion of a program
- Unexpected compliance or facility expenses
The goal is not to predict every possible event. It is to establish a decision-making framework before the organization is under pressure.
Leadership should understand what actions may be required, which indicators will trigger those actions, and how different decisions could affect programs, staffing, and reserves.
Growth Ambitions Must Be Balanced With Operational Readiness
“The strongest organizations are the ones building that muscle of seeing what’s ahead.” — Andrew S. Perumal, BTQ Financial
Demand for nonprofit services continues to grow.
Eighty-eight percent of surveyed organizations reported increased demand, while 85% planned to expand their programs. More than half of boards had approved or expanded a program during the previous 12 months.
Those ambitions exist alongside considerable operational strain. Many organizations are drawing down reserves, waiting for reimbursements, and managing growing reporting expectations.
Expansion without the right financial foundation can place the mission at risk.
Before approving a new program or initiative, leadership should examine:
- The full cost of delivering the program
- The timing and reliability of related funding
- Working capital requirements
- Staffing and administrative capacity
- Grant restrictions and compliance obligations
- Reporting requirements
- Long-term financial sustainability
Growth decisions should be supported by realistic assumptions and scenario analysis rather than optimism alone.
Finance can help leadership determine not only whether an organization can launch a program, but whether it can sustain that program without weakening existing services.
Four Priorities for Building a More Resilient Finance Function
“These four strategic priorities actually work incredibly well in harmony.” — Kate Serpe, CPA.com
The webinar identified four connected priorities nonprofit leaders should consider as they plan for the coming year.
1. Adopt proactive and predictive modeling
Build scenario planning into the regular finance calendar rather than treating it as an emergency exercise.
2. Protect staff capacity
Reduce the time finance employees spend on manual, repetitive, or administrative activities that can be automated, redesigned, or supported externally.
3. Expand the strategic use of partnerships
Use finance and accounting partners for forecasting, program analysis, cash management, audit readiness, and decision support—not only compliance.
4. Move beyond spreadsheet dependence
Evaluate the combination of people, processes, and technology needed to create more reliable and scalable financial operations.
These priorities reinforce one another. The right technology can protect staff capacity. A strategic partner can support better modeling. Stronger processes can improve reporting and reduce spreadsheet reliance.
The result is a finance function that gives leadership the information and confidence needed to act before challenges become crises.
Build a Finance Function That Moves the Mission Forward
Nonprofit organizations have made meaningful progress. Teams are stabilizing, boards are more engaged, and leaders increasingly recognize that finance is central to mission delivery.
But persistent funding delays, limited reserves, outdated processes, and growing demand mean there is little room for complacency.
The 2026 Nonprofit Leaders Report shows the nonprofits pulling ahead aren’t the ones with the fewest challenges — they’re the ones with the financial clarity and partnerships to navigate them proactively.
Whether your organization is managing cash flow uncertainty, working through a talent gap, or ready to move beyond spreadsheets, BTQ Financial’s outsourced finance and accounting solutions are built specifically for mission-driven organizations like yours.
Request a consultation with BTQ Financial today to see how a dedicated finance and accounting partnership can free up your team’s time, strengthen your board reporting, and help your organization plan ahead with confidence.