Nonprofits are no strangers to navigating tough financial situations and demands. Each day, nonprofit financial teams are tasked with making sure every dollar is spent in a way that maximizes impact. This was certainly true in 2024, when uncertainty was a mainstay in the global economic landscape. And 2025 is shaping up to be no different.
From ongoing market unpredictability to coping with the fallout of the freezing — and subsequent unfreezing — of federal grants, 2025 has already presented nonprofits with numerous financial wrinkles and headaches to reckon with. Compounding this is the fact many nonprofits are attracting fewer donors since the pandemic — donations during the first half of 2024 had a higher year-over-year increase than the past four years.
With that in mind, now is the time when nonprofit professionals need to take a step back and ensure that their organizations are on the best financial footing possible. Here are three key questions that can help nonprofits assess their financial landscape as we move into 2025 and position them for success.
What Does Our Budget and Cash-Flow Management Look Like?
This may seem like a no-brainer, but it cannot be understated just how important having a firm pulse on cash flow and budget management can be, especially during periods of unpredictability. To deliver the most effective services, nonprofits need to strike a delicate balance between multiple cash-flow sources and various overhead constraints – something that is much easier said than done given how unpredictable cash flow can be.
Nonprofits are subject to multiple budget forces including operational and administrative costs and the notoriously difficult-to-forecast income from grants, among others. Nonetheless, organizations need to take the time to get a clear and accurate outlook of exactly what their fundraising, administrative and other overhead costs are. From there, they need to build a dynamically evolving forecast of incoming revenue and then pair this information together to create a comprehensive view of their financial picture.
Do Our Programs Make Financial Sense?
Dovetailing with overarching budget and cash-flow management is assessing which programs make the most financial sense for a nonprofit to continue to keep in their portfolio. Nonprofits pride themselves on being able to provide as many programs as possible. However, spreading themselves too thin, particularly in uncertain times, can directly impact an organization’s immediate and future financial viability.
Having a granular breakdown of the exact costs of what programs cost and their demand can help nonprofits better prioritize. This will allow them to deliver the most immediate impact and make smarter decisions about how to run existing programs more efficiently, opening the door to offer new programs in turn.
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ALEX ZHANG
Partner, UHY LLPManaging Director, UHY Advisors
Alex Zhang has over 20 years of comprehensive client experience in numerous industries, including two years of experience in accounting and auditing work with a CPA firm in Beijing, China. He specializes in attestation services for various entities in accordance with US generally accepted accounting principles (GAAP).