Accounting & Finance Tips for Nonprofits in 2025

Written By Daniel Francavilla

​As the landscape of non-profit accounting continues to evolve, understanding how to read financials statements and leverage the power of people, process and technology to generate timely and accurate information is crucial for organizational success. In this session, we will explore three core areas essential to today's non-profit finance professionals.

​Non-profit financial statements differ significantly from those of for-profit organizations, with a focus on accountability over profitability. Artificial intelligence is transforming workflows across industries, and non-profits are no exception. ​A modern non-profit finance framework integrates cloud-based tools and automation to optimize financial management. These are all topics covered in our session on Accounting & Finance for nonprofits.

Accounting and finance may not be the most glamorous topics, but they are essential for the success and sustainability of social purpose organizations.

In the final 10 Things Series session of 2024, Moez Bawania, founder of AMLB, shared practical tips to help nonprofits and charities enhance their financial literacy and streamline processes.

From understanding financial statements to leveraging technology, Moez delivered actionable advice tailored to mission-driven organizations.

Below, we’ve outlined the top takeaways from the session, including key audience questions and Moez’s insightful answers.

10 Things Social Purpose Organizations Need to Know About Accounting & Finance

  1. Financial literacy is essential. Many nonprofit leaders shy away from finance, but strong financial practices lead to better outcomes. Understanding budgeting, audits, and reporting is key to long-term sustainability.

  2. Know Your Revenue Recognition Method. Nonprofits can use either the deferral or restricted fund method for accounting. Moez demonstrated how to identify these methods on financial statements and emphasized choosing the one that aligns with your organization's needs.

  3. Develop Clear Financial Policies. Organizations must implement policies for spending, procurement, and reserve funds. Tools like ChatGPT can help draft policies quickly and effectively.

  4. Leverage Cloud-Based Workflows. Platforms like Dext and QuickBooks Online simplify processes like invoice management and expense tracking, saving time and reducing errors. Moez shared a case study showing how automation can cut monthly finance hours by up to 70%.

  5. Understand Restricted and Unrestricted Funds. Moez discussed strategies for managing restricted grants while emphasizing the importance of securing unrestricted funds for operational flexibility.

  6. Prioritize Contingency Funds. Aim to build a reserve equal to six months of operating expenses to weather unexpected challenges. Start small and work toward this goal over time.

  7. Make Budgeting a Useful Tool. Budgets should guide decision-making throughout the year. Moez shared prompts to create a budget development plan, ensuring alignment with organizational priorities.

  8. Be Strategic About Audits. Understand the thresholds for requiring audits and plan for their cost. If eligible, opt for a review engagement, which can save significant funds.

  9. Invest in Financial Management. Allocate 3% of revenue to finance functions, which may include bookkeeping, payroll, and strategy. Investing in this area pays dividends in efficiency and compliance.

  10. Engage Your Treasurer Effectively. Use terms of reference and onboarding resources to clarify the treasurer's role. Moez also recommended CPA Canada's guides on nonprofit financial management for board members.

Your Questions, Answered

During the session, attendees posed thoughtful questions, contributing to a lively discussion:

Which parts of financial statements are most important for executive directors?
Moez emphasized understanding the statement of financial position (balance sheet) and statement of operations. He recommended paying special attention to revenue recognition, liabilities, and cash flow notes.

How are budgets created for grant applications?
Accurate bookkeeping is the foundation. Moez suggested always having a second set of eyes review budgets and involving experienced grant writers in the process.

Are there tools to reduce errors in grant reporting and tax filing?
Moez recommended using cloud-based tools like QuickBooks Online and leveraging automation to ensure accuracy in documentation.

How can nonprofits utilize AI to improve financial management?
Moez highlighted tools like ChatGPT for policy drafting and Otter AI for meeting transcription and summarization. He advised being cautious about data privacy and ensuring outputs are fact-checked.

What risks are associated with AI tools in financial management?
Moez warned against inputting sensitive client data, recommended investing in a team account to allow for organization-level controls and spot audits of prompts and having a clear policy regarding AI tool usage. He also stressed the importance of validating AI-generated content to avoid errors.

How can financial management efficiencies free up time?
Automating workflows, like invoice approvals and expense tracking, can save hours each month. Moez shared an example of reducing finance management from 15 hours to just 3-5 hours monthly using cloud technology.

What should nonprofits consider when choosing between audits and reviews?
Moez detailed thresholds under the Ontario Nonprofit Corporations Act and the Canada Nonprofit Corporations Act. He recommended opting for a review engagement, which costs 60-75% of an audit, if eligible.

What’s next?

This session underlined the importance of robust financial practices for social purpose organizations. Moez reminded attendees that financial literacy is not just a "nice-to-have" but a critical factor in achieving and sustaining impact.

For those who missed the live session, recordings and additional resources are available to members. Join our mailing list for upcoming sessions, including topics on community development and data analytics.

Resources & References

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Daniel Francavilla http://danieldoes.co
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