Nonprofits across Fresno and the Central Valley are facing another challenging year in 2025. Rising compliance requirements, increased audit scrutiny, and shrinking federal funding mean that financial oversight is no longer optional; it’s essential.
At DeMera DeMera Cameron, we’ve partnered with local nonprofits for decades. From schools and healthcare providers to faith-based and community service organizations, we understand the unique financial hurdles nonprofits face and how to overcome them.
Rising Compliance Burdens
Both federal and state governments continue to tighten nonprofit reporting standards.
- Federal Single Audit Requirement: Any nonprofit spending more than $750,000 in federal funds must undergo a Single Audit.
- California State Law: Nonprofits with $2 million or more in annual revenue must complete an independent financial audit and form an audit committee.
While these requirements are designed to protect accountability, they also bring significant costs, often landing hardest on nonprofits with limited resources.
The Local Reality in Fresno
Fresno County nonprofits serve some of the most vulnerable populations in California. Nearly 19% of Fresno County residents live in poverty, compared to the national average of about 11%. Cuts to federal programs, like the recent $11 million reduction in HRSA health grants, have already forced layoffs and program closures across the Valley.
These financial strains mean boards must balance transparency and compliance with cost efficiency. With audits averaging between $10,000 and $25,000, proactive planning is critical to avoid scrambling at year-end.
The Risks of Weak Oversight
Poor accounting practices can lead to consequences far beyond an audit finding:
- Loss of grant eligibility
- Jeopardized tax-exempt status
- Triggered state or federal reviews
Common pitfalls with nonprofits that we see include weak internal controls, inconsistent documentation, and miscategorized restricted funds. Even well-meaning practices, like unrecorded event donations or volunteer reimbursements, can create serious issues if not properly tracked.
Who’s Most at Risk?
- Small to Mid-Sized Nonprofits: Often lack in-house accounting expertise.
- Grant-Heavy Organizations: Dependence on government contracts makes them vulnerable to shifting compliance rules.
- First-Time Filers: Newly crossing audit thresholds can be unprepared for the costs and requirements of a full audit.
Leaders who juggle a lot on their plates often find that financial oversight is the first area to slip, creating unnecessary risks for their organizations.
Key Issues to Watch in 2025
Nonprofits should keep an eye on several developments this year:
- OMB Uniform Guidance Updates: Federal grant recipients need to monitor changes to the compliance supplement.
- IRS Focus on Governance: Greater scrutiny of executive compensation and potential conflicts of interest.
- California Reporting: Enhanced digital filing requirements and new disclosures tied to charitable fundraising platforms.
The more informed your board is, the better positioned you’ll be to adapt while keeping your mission in focus.
Steps to Strengthen Your Nonprofit
- Develop strong internal controls to reduce risk and ease audit preparation.
- Train board members in financial oversight to build accountability and transparency.
- Invest in grant tracking systems to properly categorize restricted vs. unrestricted funds.
- Schedule mid-year financial check-ins to stay proactive, not reactive.
Why Partnering with a Nonprofit CPA Matters
Nonprofit accounting isn’t business accounting; it requires specialized knowledge. From fund accounting and functional expense reporting to IRS Form 990 preparation, nonprofits need a partner who understands the unique rules they face.
At DeMera DeMera Cameron, we help Central Valley nonprofits:
- Prepare accurate, audit-ready financials
- Train boards on oversight responsibilities
- Navigate grant compliance and reporting requirements
- Build financial systems that scale as they grow
In 2025, the cost of falling behind in compliance is simply too high. Nonprofits that invest in strong financial practices now will be better positioned to weather funding cuts and continue serving their communities.
Let DDC help you stay audit-ready, compliant, and focused on your mission. Contact us today to start planning for the year ahead.
