Should Your Nonprofit Outsource Its Accounting?

Nonprofit leaders often face a common question: Should we keep our accounting in-house, or outsource? The answer isn’t one-size-fits-all. The right choice depends on your organization’s size, resources, and long-term strategy.

Below are some key points to consider when deciding whether outsourcing your accounting makes sense for your nonprofit.

When Outsourcing Makes Sense

 Limited Staff Capacity
If your nonprofit doesn’t have a dedicated accounting team or if the accounting team is one person juggling accounting along with other duties, outsourcing can provide the expertise and bandwidth you need without hiring a full-time staff member.

 Need for Specialized Expertise
Nonprofit accounting is complex. From grant compliance and donor restrictions to tracking in-kind donations and preparing for audits, an outside accounting firm with nonprofit expertise can help you avoid costly errors and ensure compliance.

 Growth or Transitions
When your nonprofit is expanding programs, adding federal or state funding, or experiencing staff turnover, outsourcing can help stabilize operations during periods of change.

 Cost Savings Compared to Hiring
Hiring and training an internal accounting team can be expensive. Outsourcing can often provide access to higher-level expertise at a fraction of the cost of a full-time CFO or controller.

 Focus on Mission
Many nonprofits choose to outsource accounting so that staff and leadership can focus on delivering services, fundraising, and achieving impact instead of managing the books.

When In-House Might Be Better

 Large, Complex Organizations
For nonprofits with multiple revenue streams, large budgets, or significant staff, having an internal accounting department may be more efficient. Daily decisions, budget monitoring, and quick turnaround on questions may be best handled by in-house staff.

 Desire for Immediate, On-Site Access
If your leadership relies heavily on real-time financial data or prefers to walk down the hall with a question, an in-house accountant may provide more convenience.

 Strong Internal Controls Are Needed On-Site
Organizations handling a high volume of cash transactions or sensitive data may need on-site staff to maintain tight internal controls. While outsourced firms build in controls, some nonprofits feel more comfortable with staff managing this directly.

Budget for an Accounting Team Exists
If your nonprofit has the resources to hire a qualified accounting staff and leadership prefers to build that capacity internally, keeping accounting in-house can provide more continuity and institutional knowledge.

A Hybrid Approach

Some nonprofits find success with a hybrid model, outsourcing higher-level functions like monthly financial reporting, audit preparation, or CFO-level strategy, while keeping day-to-day bookkeeping in-house. This approach balances cost, expertise, and access.

There’s no universal right or wrong answer when it comes to outsourcing nonprofit accounting. The decision should be based on your organization’s size, complexity, resources, and long-term goals. The key is to ensure your nonprofit has accurate, timely financial information to make good decisions, maintain compliance, and demonstrate accountability to funders and donors.