When you’re leading a mission-driven organization, your focus is naturally on impact. But behind every successful nonprofit is a solid financial foundation—and that requires more than just glancing at the bank balance. For nonprofit boards, staying engaged with the right financial metrics is essential to ensuring sustainability, accountability, and strategic growth.
In this blog, we’ll break down five essential financial metrics every nonprofit board should review on a monthly basis. We’ll also explain why these numbers matter, how to interpret them, and how they support better decision-making. Whether you’re a seasoned board member or just stepping into your fiduciary role, this guide is for you.
What it is:
Operating reserves represent how many months your nonprofit can continue operating at current expense levels without new revenue. It’s your financial safety net.
Why it matters:
A strong reserve protects your organization during times of uncertainty—whether it’s a funding gap, delayed grants, or unforeseen expenses. Board members should know how long the organization could sustain itself with no new income.
What to review:
Target benchmarks:
Three to six months is often considered healthy, but it varies based on the organization’s size and risk profile.
Red flag:
If the reserves are shrinking month over month, it’s a sign to revisit your cost structure, fundraising strategy, or revenue diversification.
What it is:
This compares actual income received to the budgeted expectations—both for the current month and year-to-date.
Why it matters:
Boards are responsible for financial oversight. Tracking budget vs. actuals ensures your organization is on track and that leadership can pivot early if income falls short.
What to review:
Helpful tip:
A consistent shortfall may not just indicate poor fundraising—it could point to unrealistic budget goals or overdependence on single sources.
Want a deeper dive on nonprofit financial tracking?
Check out our blog: Bookkeeping vs. Accounting: What’s the Difference and Which Do You Need?
What it is:
The percentage of total expenses that go directly toward mission-related programs vs. administrative or fundraising costs.
Why it matters:
This is a key indicator of how effectively a nonprofit is using its funds—and it’s often scrutinized by donors, watchdog organizations, and grantmakers.
How to calculate:
Program Expenses ÷ Total Expenses × 100
Typical expectations:
Board’s role:
Ensure the organization isn’t cutting corners on operations while chasing this metric—sustainable infrastructure matters, too.
What it is:
Accounts receivable includes any pledged donations, grants awarded but not received, or services rendered with outstanding payments.
Why it matters:
Delayed or aging receivables can cause cash flow constraints, which directly affect programming and payroll. Boards should ensure strong follow-up processes are in place.
What to review monthly:
Bonus Insight:
If you’re managing grants with complex reporting needs, your board should also review compliance logs—non-compliance could lead to clawbacks or missed future opportunities.
What it is:
Cash flow forecasting projects how much cash your nonprofit will have in the next 30, 60, or 90 days, based on anticipated income and expenses.
Why it matters:
While balance sheets show a snapshot, cash flow shows the movie. Board members should use it to prevent surprises like overdrafts, missed payments, or emergency cuts.
Review these elements:
Helpful habit:
Use a rolling forecast updated monthly—not just at budget season.
Want tips on planning better cash flow?
Check out: First 90 Days with an Outsourced Bookkeeping Team
While monthly reviews help stay agile, boards should also consider quarterly reviews of:
Explore how fractional finance leadership works in our article: From Bookkeeping to Boardroom: How DWG’s Fractional CFO Services Drive Business Growth
Financial oversight isn’t just the job of the treasurer—it’s every board member’s responsibility. By focusing on these five core metrics, your board can lead with confidence, support executive teams more strategically, and ensure your nonprofit’s mission is financially sustainable.
If you’re looking for a better way to monitor, interpret, and act on your nonprofit’s financials—DWG CPA PLLC is here to help. Our team supports nonprofits across Texas with tailored bookkeeping, tax planning, and fractional CFO services designed for mission-driven organizations.
Your nonprofit’s mission depends on your financial health. With the right metrics and a proactive mindset, your board can make informed, strategic decisions that support both your purpose and your people.
Let’s talk about how we can support your board’s financial clarity—schedule a discovery call today.
If you’re building something important and need a trusted financial partner to grow with you – we’d love to hear from you.
DWG CPA PLLC is a Texas-based accounting firm serving businesses and nonprofits since 2005. We specialize in virtual accounting, tax strategies, and personalized financial guidance across industries like healthcare, construction, real estate, and nonprofits.
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