Nonprofit organizations operate in an increasingly complex environment, balancing mission delivery with heightened financial stewardship, compliance requirements, and stakeholder transparency. Limited internal resources, evolving accounting standards, and increased grant oversight often strain finance teams and distract leadership from strategic priorities. For many nonprofits, outsourcing accounting functions or engaging a fractional chief financial officer (CFO) has become a practical and strategic approach.
This article outlines key benefits of these models, with a specific lens on the unique financial realities nonprofits face.
- Industry experience is an invaluable asset to your finance processes. An outsourced accountant or fractional CFO with nonprofit experience will have the knowledge to help ensure that grant tracking, net asset classification, and functional expense allocations are following best practices and maintain compliance. As an additional benefit, the annual audit and Form 990 preparation may likely become a smoother process if managed by the outsourced professional.
- Having a dedicated team can mitigate issues related to frequent turnover in the accounting department. Furthermore, the teams are often cross-trained and can seamlessly cover tasks during vacations and other planned time off. Day-to-day tasks such as bill pay, invoicing, and reconciliations are minimally impacted, allowing the nonprofit to continue operations and focus on program delivery.
- The ability to scale up or down can be incredibly valuable to a nonprofit. If the nonprofit experiences seasonality or is facing a significant change in activity from year to year, the outsourced function can scale with them. The nonprofit will benefit from the ability to quickly change, if needed, without needing to make permanent staffing adjustments. Scaling tends to work better with an outsourced function already in place, but it can also spark the exploration of outsourcing options.
- Speed and accuracy are crucial to the functionality of an accounting team, and outsourced professionals are well positioned to excel in these areas. A team with experience in month-end and year-end close processes will schedule out a standardized, repeatable close process and can help with process improvement and documentation. In addition, there is often a level of review to the work that increases accuracy and enhances a big picture analysis of the data.
- Technology experience is an attribute many outsourced accountants and fractional CFOs have specific to nonprofits. Not all software solutions are a good fit for nonprofits, and an experienced outsourced accounting team will be able to consult and recommend software solutions based on their prior experience. In addition, the outsourced accounting staff is often accustomed to learning new software quickly while onboarding a client, which helps to make the transition smoother.
The Strategic Value of Fractional CFO Services for Nonprofits
A fractional CFO offers strategic guidance without the expense of a full-time leader. This includes long-term financial planning, cash flow forecasting, scenario modeling tied to funding uncertainty, grant sustainability analysis, and strong board partnership through clear financial communication.
For many nonprofits, combining outsourced accounting with fractional CFO support offers both strong day-to-day operations and strategic financial leadership, allowing internal teams to stay focused on mission delivery.
Is Outsourced Accounting Support Right for Your Nonprofit?
Nonprofits often consider these models during finance staff turnover, increasing grant complexity, periods of growth or restructuring, or when leadership needs stronger financial insight for decision making. It’s important to consider the accounting tasks and cycles that would be beneficial to outsource.
How Forvis Mazars Can Help
Understanding communication, shared expectations, and timelines is critical for successful outsourced accounting for nonprofits. Forvis Mazars can help with financial reporting, project management, fractional CFO services, and more. Our experienced nonprofit advisory services and outsourced accounting services teams tailor their approach to help meet your unique needs and are here to help you prepare for what’s next. If you have any questions or need assistance, please reach out to a professional at Forvis Mazars.