Nonprofits serve a vital role in the community, making an impact in numerous, and with advanced planning, measurable ways. Yet, many nonprofit organizations need help in their data collection and measurement to improve their messaging and advertise their impact. In the 2025 State of the Nonprofit Sector Report by Forvis Mazars, nonprofit professionals weighed in on the state of their organizations.
57%responded that their organization’s ability to gather and report on performance metrics is slightly or significantly underfunded.
Making data collection and reporting a priority is an important step in taking nonprofit organizations to the next level.
Addressing the FP&A Gap in Nonprofits
The financial planning and analysis (FP&A) function and its ability to clearly communicate in metrics are ubiquitous in the for-profit sector. However, the FP&A function often remains overlooked in nonprofits, with administrative staff resources focused on accounting or technology, missing the crucial analysis area between those two functions. A staff resource or team focused on financial analysis and budget management can best communicate the impact of donor dollars. The absence of a structured FP&A approach can hinder a nonprofit’s ability to make informed financial decisions, risking inefficiencies and potentially compromising the organization’s mission.
Nonprofits face unique challenges, including fluctuating funding sources, donor restrictions, and a heightened need for transparency.
50% of organizations are concerned about their current financial condition
40% eliminated staff positions in the prior year to adjust due to reduced funding
-2025 State of the Nonprofit Sector Report
An FP&A team allows executive and board leadership to navigate changing funding and help the organization to proactively plan, monitor, and adjust its finances, ensuring sustainability even in volatile funding environments.
What FP&A Brings to Leadership
FP&A provides leadership with insights critical for strategic decision making. In contrast to traditional accounting, FP&A focuses on anticipating and planning for financial outcomes, transforming financial data into actionable strategies. With FP&A, the CFO and other leaders gain access to budgeting and forecasting tools, enabling them to set realistic financial goals aligned with their mission. FP&A’s financial models allow leadership to visualize various funding scenarios, assess their impact on programs, and make adjustments without jeopardizing operations.
The FP&A team also creates data-driven dashboards that enhance transparency, helping ensure that board members, donors, and stakeholders can quickly ascertain an organization’s financial and programmatic health. Reliable and frequent access to data allows stakeholders to remain confident in the leadership’s ability to spot fluctuations and respond quickly. The in-depth view FP&A brings to an organization helps empower leaders to make informed decisions that are both strategic and financially sound, allowing for sustainable growth.
Building a Functional & Effective FP&A Team
For nonprofits, building an FP&A team requires strategic planning to balance cost and effectiveness. The initial team structure may be lean, with roles that combine financial analysis, strategic planning, and operational insight. However, hiring individuals skilled in finance and who understand nonprofit goals is essential. In terms of tools, investing in financial planning software is critical. While the investment initially seems like a significant expense, this technology aids efficiency and accuracy in reporting and forecasting without relying on valuable time from organizational leaders to interpret accounting-focused reports. In addition, collaboration with other departments, such as program management and fundraising, ensures that FP&A activities are aligned with program needs and donor expectations. Cross-functional training helps FP&A members understand the full scope of nonprofit operations, allowing for more accurate budgeting and planning to support organizational goals.
Key FP&A Deliverables for Mission Success
An FP&A team provides nonprofits with several deliverables crucial for operational effectiveness and strategic planning. Annual budgets aligned with mission objectives give organizations a cohesive financial and programmatic road map for achieving long-term impact sustainably. Multiyear financial plans offer a broader view, helping to identify potential funding gaps and to plan for sustained growth. Regular and iterative forecasting reports keep leadership updated on economic performance, enabling proactive adjustments.
Donor and grant reports add another layer of transparency, demonstrating to stakeholders the impact of how funds are used, which is essential for donor retention and regulatory compliance. Scenario analyses prepare the organization for various challenges, from funding cuts to unexpected expenses, by providing contingency plans. Finally, FP&A establishes clear financial key performance indicators (KPIs), allowing leadership to measure performance and make data-driven adjustments to maintain fiscal health. These deliverables help a nonprofit remain financially resilient while advancing its mission.
How Forvis Mazars Can Help
In today’s complex funding environment, investing in FP&A is not merely beneficial—it’s essential for any nonprofit seeking long-term stability and growth. By establishing a structured FP&A function, nonprofits can hope to achieve greater transparency, improve financial decision making, and enhance their resources to drive mission success. FP&A can empower nonprofits to turn financial data into meaningful strategies through accurate budgeting, forecasting, and scenario planning, so that every dollar contributes to sustainable impact. If your nonprofit is ready to take the next step in creating data transparency in financial decision making, reach out to one of our professionals at Forvis Mazars.