Your nonprofit may have started with a simple accounting setup. Then came another program, a few restricted grants, new reporting requirements, a larger team, and a board asking more detailed financial questions. Suddenly, the system that worked a few years ago no longer gives you what you need.
We see this happen a lot. Nonprofits often manage more financial complexity than for-profit organizations of a similar size, while working with fewer administrative resources. Your team chose the mission, not accounting, and you shouldn’t have to become an expert in fund accounting to understand where your organization stands.
Choosing the right accounting firm can make that complexity much easier to manage. The key is knowing what to look for beyond someone who can keep the books accurate.
You may also be interested in: 15 Financial Tips for Nonprofits: Practical advice from Pillar
1. Look for real nonprofit accounting experience
Nonprofit accounting has requirements that don’t show up in a typical small business. You may need to track restricted and unrestricted funds, report expenses by program, manage multiple grants with different requirements, prepare financial information for your board, and get ready for an annual audit.
For example, imagine you receive a $500,000 restricted grant that can be used across two programs over 18 months. Your accounting team should be able to track how much has been spent, what it was spent on, what remains available, and whether those expenses align with the grant restrictions. You shouldn’t need to rebuild that information manually in a spreadsheet every time the funder asks for a report.
Ask a prospective accounting firm how much experience it has working with nonprofits like yours.
2. Find out what you’re getting beyond accurate books
Accurate accounting is the starting point, but your financial information also needs to help you run the organization. The right accounting partner should help leadership understand what the numbers mean and what deserves attention, helping you answer questions such as:
- If a reimbursement is delayed by 60 days, can we still make payroll?
- Can we afford to expand this program?
- Are we spending a restricted grant at the right pace?
- What happens to cash flow if a major funding source changes?
3. Ask how they handle fund and grant accounting
Grant accounting deserves its own conversation because this is often where nonprofit financial systems start to show strain. Ask how the firm tracks restrictions, grant periods, allowable expenses, indirect costs, and reporting deadlines. You also want to know whether your accounting system can produce useful grant-level information without hours of manual work.
This is especially important when reimbursement-based funding affects cash flow. Among organizations receiving government funding in Nonprofit Finance Fund’s 2025 survey, 55% reported being paid late, and 11% said average delays exceeded 90 days. A delay like that can create a serious cash problem even when the organization looks financially healthy on paper.
Your accounting partner should help you see those risks early through accurate grant tracking, cash flow projections, and scenario planning.
4. Understand the difference between accounting and audit services
One question we recommend asking early is: Who will perform our audit, and who will manage our ongoing accounting? An independent CPA may audit or review your financial statements, while another accounting team manages your day-to-day financial operations and prepares the organization for that process.
The IRS also distinguishes an audit from a review or compilation. For organizations with audited financial statements, Form 990 includes specific reconciliation and reporting requirements.
Your ongoing accounting partner should maintain organized records and supporting documentation throughout the year so audit preparation is part of the normal accounting process, rather than a frantic exercise in finding documents from eight months ago.
Ask prospective firms how they work with external auditors and what they do throughout the year to support audit readiness.
5. Make sure the technology makes your life easier
Accounting technology should reduce manual work and give you better access to information.
If your team is exporting reports from one system, updating spreadsheets by hand, emailing documents back and forth, and trying to reconcile different versions of the same numbers, the problem may be the accounting infrastructure rather than the people using it.
Ask a prospective firm to explain how your accounting system will work in plain English.
At Pillar, for example, we build accounting around cloud platforms such as QuickBooks Online or Xero, and then integrate the right tools and workflows so the system works together. The goal is a financial infrastructure that gives your team reliable information without creating more administrative work.
6. Pay attention to the questions they ask you
A good accounting firm should want to understand how your nonprofit operates before telling you what you need. They should ask about your funding sources, grant restrictions, programs, reporting deadlines, board expectations, current accounting systems, audit requirements, and where your team loses the most time.
Pay attention if the conversation focuses almost entirely on transaction volume and monthly reconciliations.
Remember, you’re choosing the people who will help build and maintain your financial infrastructure, so they need to understand the organization behind the numbers.
7. Ask what happens when your nonprofit grows or changes
The accounting firm you choose today should be able to support the organization you’re becoming. Maybe you have a $1 million operating budget today, but you’re pursuing a grant that could add $600,000 and a new program next year. That growth could change your reporting, staffing, cash flow, grant management, and technology needs.
Ask what support is available beyond your current scope.
Find out if the firm can help with:
- Budgeting and forecasting
- Cash flow planning
- Board-level reporting
- Internal controls
- Technology changes
- Financial scenario planning
You may not need all of those services today, but knowing they’re available means you’re less likely to outgrow your accounting partner every time the organization reaches a new stage.
Choose an accounting partner that helps you see what’s ahead
Knowing how to choose the right accounting firm comes down to one question: Will this firm give your nonprofit the financial infrastructure and insight it needs to manage the mission with confidence?
Look beyond whether they can close the books each month. Ask whether they understand nonprofit accounting, whether their technology reduces work for your team, whether they can support grants and audits, and whether they can help you make sense of the numbers when an important decision lands on your desk.
You may also be interested in: The real benefits of outsourcing accounting services
What to expect from Pillar
Where most firms offer one piece of the puzzle, we see accounting as a complete system. We work as an outsourced accounting partner, building the systems and processes your organization needs so you can spend less time piecing together financial information and more time using it. For nonprofits, that can mean:
- Clean and reliable financial records
- Fund and grant accounting
- Board reporting
- Budget support
- Cloud accounting technology
- Audit readiness
- Advisory that helps leadership understand what the numbers mean
We also know that many nonprofits come to us after their financial infrastructure has fallen behind their growth. There may be manual spreadsheets everywhere, grant reporting may take far too long, and the board reports may not answer the questions leadership is asking.
We’ve seen all of it before.
If your current accounting setup is generating more questions than answers, let’s talk about what you need. Pillar Accounting & Technology can help you explore outsourced or cloud accounting solutions that fit your organization, without pressure or judgment. Talk to Pillar Accounting & Technology today.
Your job is to move the mission forward. We’ll help make sure the financial infrastructure can keep up.