Navigating Financial Challenges and Opportunities: Key Insights for Non-Profit Leaders in 2025
Published on by Brianna Kempe in Client Accounting & Advisory, Not-for-Profit
The non-profit sector faces a complex financial landscape in 2025, with economic pressures, staffing shortages, and evolving compliance requirements creating significant hurdles. A recent survey conducted by BTQ Financial, in collaboration with Cascade Insights, sheds light on the pressing financial challenges faced by non-profit leaders and the transformative role that finance and accounting partnerships can play in overcoming these obstacles.
The state of non-profit financial management
BTQ Financial surveyed 100 non-profit leaders—including CEOs, COOs, executive directors, and founders—operating in large metro areas across the United States. These organizations, with annual revenues ranging from $3 million to $200 million, span diverse sectors such as human and health services, animal welfare, and social services. The research highlights a striking disparity between non-profits that leverage third-party finance and accounting services and those that manage their finances internally.
Key findings from the report include:
- 100% of non-profit leaders outsource at least one business function, yet only 30% work with a finance and accounting partner.
- Non-profits working with a finance partner are six times less likely to struggle with scaling financial operations to support growth.
- 72% report challenges with turnover in their finance departments, impacting operational efficiency.
- 36% frequently or very frequently face cash flow issues that hinder financial planning.
- 93% of non-profit leaders must reclassify funds multiple times a year, adding to financial complexities.
- The biggest reported benefit of outsourcing financial functions is freeing up leadership time for mission-driven activities.
Workforce and operational pressures
Economic headwinds, including rising inflation and an affordability crisis, have exacerbated financial strains across the non-profit sector. In addition to funding stagnation, workforce shortages remain a key issue.
- 76% of non-profits report flat or declining funding.
- 60% of leaders cite recruitment difficulties, with an average hiring time of five months to fill finance roles.
- 38% experience frequent turnover in finance teams, further disrupting financial continuity.
The report emphasizes that financial instability and staffing shortages can lead to operational inefficiencies. On average, it takes non-profits 19 days to close financial reporting cycles, delaying critical decision-making.
The role of finance and accounting partners
Outsourcing financial operations is an underutilized strategy in the non-profit sector, despite its potential to alleviate many of these challenges. Finance and accounting partners bring expertise in:
- Budgeting and financial forecasting
- Compliance and audit preparation
- Revenue recognition and fund allocation
- Grant and contract management
- Strategic financial planning and risk assessment
Non-profits that partner with financial service providers experience fewer regulatory hurdles, improved financial accuracy, and enhanced financial sustainability. For example, only 23% of partnered organizations struggle with financial reporting accuracy, compared to 35% of those managing finances internally.
Strengthening financial sustainability
One of the most pressing challenges that busy non-profit leaders face is assessing financial sustainability and risk, an area where outsourcing can make a significant difference. Organizations with third-party financial partners are far better equipped to scale operations, adapt to changing regulatory environments, and ensure long-term viability.
Fractional solutions offer non-profits an integrated approach to financial management, combining skilled finance professionals, technology-driven automation, and process optimization. These services not only mitigate risks but also empower organizations to pursue their missions more effectively.
Non-profit leaders who have turned to financial service providers cite several key benefits:
- More time for leadership to focus on mission-driven work (45%).
- Streamlined financial processes, saving valuable administrative time (42%).
- Improved accuracy and timeliness in financial reporting (42%).
- Access to specialized non-profit financial expertise (39%).
- Cost savings from reducing in-house staffing and financial system expenses (35%).
Bringing it home
The findings from BTQ Financial’s report make it clear that navigating financial challenges in 2025 requires strategic action. As non-profits continue to play a critical role in serving communities, adopting financial best practices and leveraging expert partnerships will be key to thriving in an increasingly complex economic environment. While non-profits are accustomed to outsourcing various operational tasks, finance and accounting remain largely underutilized as a resource for stability and growth.
For organizations struggling with financial reporting, cash flow management, and regulatory compliance, our fractional advisory team works with hundreds of organizations in the Cincinnati, Dayton, and Indianapolis markets, and can help you connect the dots.
Our fractional team covers every role from CFO to staff accountant – but how do you determine what best fits your needs? First, we’ll work with you and create a customized plan. But it’s helpful to have an overview of who does what. Check out the roles and responsibilities of each member of your fractional team here.
For more insights and to explore how financial service partnerships can transform Non-profit operations, contact the fractional team at Barnes Dennig for a free, no-obligation discussion into how our team could help your organization thrive. We’re here to help.