Grant Thornton issues NFP financial sustainability guidance

The professional services firm has revealed many not-for-profit (NFP) organisations have been forced to reassess how they operate as public expectations rise, funding pathways are strained and operational costs climb.

Despite the pressure of these challenges being significant, Grant Thornton added that they also “created an opportunity to rethink collaboration, strengthen governance and build long-term resilience”.

The firm said this was reflected in the NFP Sector Development Blueprint which highlighted the importance behind creating an environment where NFPs could thrive, promoting a people-led and purpose-driven sector, as well as fostering an adaptive and dynamic sector.

“The NFP Sector Development Blueprint provides key structural and regulatory shifts impacting the sector and presents a vision to support capability and sustainability,” the firm said.

“However, meaningful progress will depend on how organisations respond – through clear, purposeful decisions around funding diversity, workforce strategies, and financial systems that allow agility without losing sight of mission.”

For an NFP, improving regulatory and operational environments is key to long term financial health and though compliance can be challenging, financial reporting can become a tool for stakeholder engagement and to demonstrate impact, it said.

Srengthening financial sustainability meant actively diversifying income with consideration to available grants, major donors, social expertise, corporate partnerships and long-term giving strategies, in conjunction with leveraging available tax concessions and reviewing commercial activity through a “mission-aligned lens”.

“Strong financial governance and forward planning are critical. Understanding your cost base and pricing structures enables more informed decisions, ensuring services remain viable, mission-aligned and financially sustainable,” the firm said.

“Strategic tools like cost allocation models, investment planning, and scenario analysis help inform decisions and give your organisation the confidence to act early, adapt quickly, and deliver tangible social outcomes.”

NFPs were recommended to build their internal capacity by investing in governance, financial management and technology such as payroll, automation and reporting.

Keeping “people front and centre” was linked in addition to financial resilience as one of the key components in ensuring the long-term sustainability and effectiveness of NFPs.

According to Grant Thornton, in the face of rising challenges, it was easy for NFPs to abandon their original mission, and this usually occurred when short-term funding demands, poorly aligned contracts, or reactive strategies forced an organisation to prioritise its survival over impact.

The firm said it was crucial to maintain strong governance to remain on course to fulfil community expectations and uphold trust and accountability to stakeholders.

“Keeping people at the centre is equally key. A people-led approach engages stakeholders at all levels, including board members, staff, volunteers and communities in shaping strategic direction and service delivery.”

“This not only ensures accountability but also strengthens trust and relevance. Delivering on purpose requires a skilled and engaged workforce – one that is supported by the right tools, technology and capital investments.”

A direct link between financial sustainability and achieving a purpose-driven mission was also identified, with NFPs urged to understand the financial enablers of impact, such as pricing to indexation and long-term planning.

Finally, Grant Thornton noted that the resilience of an NFP also relied on its ability to adapt and rapidly evolve.

The ability to evolve could come from the expansion of income streams, thinking differently about how resources are used, leveraging AI and automation, and having solid frameworks, strategies and an open-minded culture.

“Achieving financial sustainability in today’s environment takes more than just adapting to change. It demands a proactive, mission-aligned approach to planning, funding, and delivery,” Grant Thornton said.

“This means understanding your cost base, strengthening financial governance, supporting your workforce, and finding smarter, more sustainable ways to operate.”