Building Financial Resilience: Practical Takeaways for Nonprofit Leaders
Updated: Oct 21
Insights from the Financial Health & Resilience for Nonprofits seminar hosted by Community Foundation Santa Cruz County.
A nonprofit can have a balanced budget, growing programs, and strong community support, and still face financial challenges beneath the surface.
Perhaps grant reimbursements are arriving later than expected. A significant funding source is becoming less predictable. Or the organization is expanding its services without a clear understanding of how that growth will affect cash flow.
For nonprofit leaders, these situations are more than financial challenges. They can affect staffing, services, and ultimately, the communities that depend on their organizations.
That's why financial resilience matters.
On October 14, 2026, Michael Bryant, CPA, Co-Founder and Managing Partner of BryMar CPA, joined Sabine Dukes, Chief Finance & Operating Officer at Community Foundation Santa Cruz County, for the Financial Health & Resilience for Nonprofits seminar hosted by the Foundation.
The gathering brought nonprofit leaders, finance professionals, and board members together around an important conversation: how to strengthen financial understanding, recognize potential challenges early, and build practices that support an organization's mission for years to come.
One message from the presentation captured the heart of the conversation: Financial stewardship is mission work.
After all, even the most impactful programs need a financially healthy organization behind them.
Here are practical considerations and questions nonprofit leaders can bring back to their teams and boardrooms.
Financial Understanding Is Everyone's Responsibility
Financial oversight shouldn't rest solely with the CFO, finance director, or treasurer.
An organization's financial health depends on leaders and board members having a shared understanding of the numbers and, more importantly, knowing what those numbers mean for the mission.
That doesn't mean every board member needs to become an accounting expert. It means financial information should be understandable, accessible, and connected to the decisions leadership is making.
Consider two organizations reporting the same year-end operating surplus. One may have strong cash reserves and predictable funding. The other may be waiting on significant grant reimbursements while struggling to meet monthly obligations.
The results might look similar at first glance. Their financial positions tell very different stories.
Build a Consistent Financial Rhythm
One of the practical ideas Michael and Sabine shared was the importance of a repeatable monthly financial process.
Many nonprofits operate with limited staffing and competing priorities. Between managing programs, fundraising, supporting staff, and meeting reporting deadlines, financial management can become reactive.
But financial challenges rarely appear overnight. Often, the warning signs are visible months in advance when organizations consistently monitor the right information.
A simple monthly financial routine can make a meaningful difference:
Establish a documented monthly accounting close
Reconcile cash, receivables, and payables regularly
Prepare consistent, easy-to-understand financial statements
Track a manageable number of meaningful financial metrics
Share timely financial information with leadership and the board
Keep the process simple and build on it over time
The goal isn't to create more work. It's to establish a reliable process that makes financial oversight easier and helps identify challenges sooner.
A question for your next board meeting: Does everyone at the table understand what our financial reports are telling us about the organization's ability to deliver its mission?
Look Beyond the Budget
A balanced budget is important, but it doesn't tell the whole story.
Financially resilient organizations look beyond whether revenues and expenses are meeting expectations. They pay attention to liquidity, funding concentration, operating performance, and their ability to respond to unexpected changes.
The Nonprofit Finance Fund identifies liquidity and the resources needed to cover an organization's full costs as important considerations in assessing nonprofit financial health.
Six financial indicators highlighted during the seminar:
Days cash on hand: How long could we operate using available cash?
Operating surplus or deficit: Are recurring revenues covering recurring expenses?
Revenue concentration: How dependent are we on one funding source?
Operating reserves: Do we have a financial cushion for disruptions?
Debt and future obligations: What upcoming commitments could create financial stress?
Program sustainability: Can our organization financially sustain its programs?
For example, imagine a nonprofit with $600,000 in available operating cash and average monthly cash operating expenses of $200,000.
That's roughly three months of cash coverage.
Three months may provide flexibility to navigate a short-term disruption. But if a portion of that cash is restricted or committed to specific purposes, the organization's real flexibility could look very different.
The goal isn't to monitor every possible financial ratio. It's to identify the indicators that matter most to your organization's funding model and operating needs.
Just as important: watch the trend.
Knowing you have three months of available cash is useful. Recognizing that your cash coverage has declined from five months to three may tell a more important story.
A question for your leadership team: If one of our largest funding sources were delayed for 90 days, how would we respond?
Strong Oversight Goes Beyond Reviewing the Audit
An independent audit is an important part of nonprofit financial accountability, but meaningful financial oversight happens throughout the year.
Board members and audit committees play an essential role in understanding financial risks, monitoring the organization's financial reporting processes, and maintaining appropriate oversight of the independent audit.
That creates an opportunity to make financial oversight more proactive.
Rather than focusing only on whether the audit was completed, consider what the financial statements and audit communications reveal about the organization's operations.
Financial Reports Should Tell a Story
During the seminar, Michael and Sabine emphasized that financial information should be meaningful enough to help board members recognize trends and potential warning signs.
Too often, financial reports arrive late, contain more detail than board members can easily interpret, or focus only on budget performance.
When that happens, important financial pressures may go unnoticed.
Warning signs that deserve attention include:
Repeated operating deficits
Declining operating reserves
Borrowing to cover payroll
Delayed financial reporting
Frequent budget revisions
Recurring financial emergencies
These signs don't automatically mean an organization is in financial trouble. They do indicate that leadership should better understand what's driving the changes.
Questions worth discussing with your audit committee and board:
Are financial statements and related reports being prepared accurately and on time?
Have significant accounting estimates, risks, or internal control concerns been discussed?
Does the board understand the difference between available operating resources and donor-restricted funds?
Have management and those charged with governance addressed recommendations from previous audits?
Are board members receiving the information they need to fulfill their oversight responsibilities?
The objective isn't simply to complete an audit. It's to use reliable financial information to strengthen accountability and governance throughout the year.
Plan for Uncertainty, Not Just the Budget Year
For nonprofit organizations, uncertainty can take many forms.
Government funding may change. Individual contributions may fluctuate. Expenses may increase faster than anticipated. A growing need for services may put pressure on already-limited resources.
Leaders can't predict every challenge. They can prepare their organizations to respond.
One important starting point is understanding cash flow.
A budget forecasts revenues and expenses. A cash-flow projection shows when money is expected to come in and when payments need to go out.
That distinction matters, especially for organizations that rely on reimbursement-based grants, seasonal fundraising, or large contributions.
An organization can report a surplus and still experience a cash shortage when funding hasn't yet been received.
Three Practical Steps to Strengthen Financial Resilience
1. Develop a rolling cash-flow forecast
Review expected receipts and payments regularly, especially over the next 13 weeks. This helps leadership anticipate upcoming obligations, recognize potential shortfalls, and decide when action may be needed.
2. Evaluate funding risks and plan for different scenarios
Identify major funding dependencies and consider how delays or reductions could affect operations. Michael and Sabine encouraged organizations to test scenarios such as a 10% or 25% reduction in funding, the loss of a major grant, or delayed reimbursements. Ask which expenses could be adjusted, which services must be protected, and what circumstances would trigger leadership action.
3. Establish or revisit your operating reserve policy
Operating reserves provide flexibility when organizations face unexpected expenses or funding disruptions. A thoughtful policy addresses how reserves are funded, when they may be used, who can authorize their use, and how they'll be replenished.
There's no universal reserve target that fits every nonprofit. The right amount depends on your mission, funding model, operating expenses, and financial risks. And you don't need to start with a large balance. Starting small and working consistently toward a realistic goal is a meaningful step.
Financial resilience isn't about eliminating uncertainty. It's about creating the visibility and flexibility to respond when circumstances change.
Turn Financial Information Into Better Decisions
Financial reporting becomes more valuable when it leads to informed conversations and action.
Think about the questions your leadership team and board regularly face:
Can we afford to expand a program?
Should we add a new position?
Do we have the resources to sustain an initiative beyond its initial funding?
What happens if anticipated revenue doesn't materialize?
These decisions require more than accurate historical financial statements. They require reliable information, thoughtful planning, and communication between financial and organizational leadership.
A strong financial management culture connects the numbers to the decisions that shape the organization's future.
A 15-Minute Exercise for Your Next Board Meeting
Set aside 15 minutes to discuss three questions:
What do we know? Identify the financial trends, risks, and strengths visible in your current reporting.
What do we need to understand better? Highlight gaps in financial information, unanswered questions, or assumptions that may need revisiting.
What action should we consider? Identify one practical next step and assign responsibility for following through.
Even small, consistent improvements in financial conversations can help organizations make more confident decisions over time.
Ready to take it one step further? Try answering the three questions Michael and Sabine closed the seminar with:
How many months could we operate if revenue stopped today?
What is our greatest financial risk?
What are we doing now to prepare for the next disruption?
These questions shift financial oversight from reviewing what has already happened to preparing for what may come next.
Continue the Conversation
To help nonprofit leaders put these ideas into practice, we're sharing resources from the seminar:
Watch the Seminar Recording: listen to the full conversation and explore the topics in greater detail.
Download the Seminar Presentation (PDF) [below in sources section]
Frequently Asked Questions
How do you calculate days cash on hand for a nonprofit?
Divide your unrestricted, available cash by your average daily cash operating expenses. To get the daily figure, take annual operating expenses, subtract non-cash items like depreciation, and divide by 365. Exclude donor-restricted cash and amounts already committed, since those can't cover general operations. Tracking the result monthly shows whether your cushion is growing or shrinking.
Do restricted funds count toward a nonprofit's operating reserves?
Generally, no. Operating reserves are unrestricted, liquid resources the board has set aside for the organization's general needs. Donor-restricted funds must be used for the purpose or time period the donor specified, so they typically can't be used to cover a funding gap or unexpected expense. Board-designated funds can usually be redirected by board action.
Does a California nonprofit need an audit committee?
Under California's Nonprofit Integrity Act, charitable corporations with $2 million or more in gross revenue must obtain an annual independent audit and appoint an audit committee. Government grants that require an accounting of how funds were used don't count toward that threshold. Staff, the CEO, and the CFO or treasurer can't serve on the committee.
How often should a nonprofit board review financial statements?
Most boards benefit from reviewing financial statements at least quarterly, with the finance committee or treasurer looking at them monthly. What matters more than frequency is timeliness and clarity. Reports that arrive months late, or that the board can't easily interpret, make it hard to spot changes early enough to act.
Strengthening Our Nonprofit Community Through Shared Knowledge
At BryMar, we believe that when nonprofit leaders have access to meaningful financial information and practical education, they're better equipped to focus on what matters most: serving their communities.
We're grateful to Community Foundation Santa Cruz County for bringing nonprofit leaders together for this important conversation, and to Sabine Dukes for sharing her financial leadership perspective alongside Michael.
Opportunities like this reflect what we value most about working with mission-driven organizations: building relationships, sharing knowledge, and supporting the people doing meaningful work in our communities.
Financial resilience begins with reliable information and a clear understanding of where your organization stands.
At BryMar CPA, financial statement audits, audit preparation, and Form 990 preparation are core to our work with nonprofits.
Whether your organization is preparing for its first audit, navigating more complex reporting requirements, or looking to establish more consistent financial processes, our team understands the environment nonprofits operate in, and we support your reporting needs while maintaining the independence required of our audit services.
Know where you stand. Know what could change. Build the flexibility to respond.
Connect with the BryMar team to talk through your organization's financial reporting needs and upcoming audit.
Sources & Further Reading
Financial Health & Resilience for Nonprofits Seminar Materials:
Community Foundation Santa Cruz Count: A prominent grantmaking public charity headquartered at the Jack & Peggy Baskin Center for Philanthropy in Aptos, California. The foundation manages $283 million in total assets and has awarded nearly $300 million in grants since its inception to help the local community thrive.
AICPA & CIMA: professional accounting and auditing guidance, including resources on nonprofit financial reporting, independent audits, and audit committee oversight.
BryMar CPA — Insights: more articles for nonprofit leaders on financial reporting, audit preparation, compliance, and oversight.
