State of the non-profit finance function

This report aims to define the non-profit finance function through the lens of both non-profit organisations and their stakeholders, and examines its role within the changing operating and funding landscape.

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Findings from the research show that there is recognition across non-profit organisations that the finance function should play a driving role, as it does in the commercial sector.

Despite this, the finance function is currently subject to underinvestment, with resources directed towards short-term planning and objectives.

The findings also indicate that

  • There is a sporadic business support network for non-profits across the UK.
  • The low priority given to the finance function in the non-profit sector - for reasons related to capacity, funding, staff and management skill sets, and even culture - ultimately reduces the organisation’s ability to fulfil its social mission.
  • The two are closely tied, and good financial management enables and preserves the social function.

A number of factors will help non-profit organisations develop a robust and embedded finance function; proactive, internal cultural change towards prioritising finance and making management decisions that are based on financial planning is core to this.

Industry bodies can offer support, through strengthening knowledge-sharing networks and training opportunities.

Funders and government, driving much of the environmental change for the non-profit sector, could also simplify their requirements (such as reporting), to enable non-profit organisations to operate more efficiently.

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