Nonprofits across Fresno are facing a pivotal year in 2025. As state and federal financial reporting requirements increase, many organizations are struggling to keep up with compliance, transparency, and rising audit costs. Whether you serve in education, health, or social services, the challenges of accounting and financial oversight can threaten your mission if not proactively managed. At DeMera DeMera Cameron, we’ve worked with Central Valley nonprofits for decades, assisting with nonprofit accounting, nonprofit returns, and more. Our expertise can help your board navigate these complex demands with confidence.
The Rising Burden of Financial Compliance
In 2025, both federal and state governments will tighten nonprofit audit and reporting standards. Any nonprofit that expends more than $750,000 in federal funds must undergo a Single Audit, and California law requires nonprofits with $2 million or more in annual revenue to obtain an independent financial audit and form an audit committee, according to the National Council of Nonprofits. These evolving requirements, while designed to promote accountability, have increased the administrative burden on nonprofits of all sizes, especially in lower-resource communities like Fresno.
How This Is Affecting Fresno-Based Nonprofits
Local nonprofits in Fresno County already operate under significant economic strain. Nearly 19% of Fresno County residents live in poverty, compared to the national average of around 11%, and many depend on the services provided by community organizations. However, cuts to federal grant programs, such as the $11 million reduction in HRSA health grants in the Central Valley, have forced layoffs and reduced programming at several nonprofits in the region.
These challenges mean that nonprofit boards must balance financial transparency with cost-efficiency. With audit costs averaging between $10,000 and $25,000, depending on complexity and revenue size, proactive financial planning is essential to avoid scrambling during year-end compliance checks.
The Pitfalls of Poor Financial Oversight
Without adequate accounting procedures, nonprofits risk more than just audit findings. They may lose grant eligibility or jeopardize their tax-exempt status. Poor internal controls, inconsistent documentation, or miscategorized restricted funds can trigger federal or state reviews. Boards that lack financial expertise may struggle to distinguish between unrestricted and temporarily restricted funds or fail to establish the separation of duties that auditors expect to see.
Even common practices like cash donations at events or volunteer reimbursements can cause issues if not properly recorded and reported. These may seem like minor missteps, but for nonprofits in Fresno relying on tight budgets and grant funding, the consequences can be steep.
Who Is Most at Risk?
- Small to Mid-Sized Nonprofit Organizations: These nonprofits may lack in-house accounting staff, increasing the risk of reporting errors or audit findings.
- Grant-Heavy Nonprofits: Those relying on government contracts are especially vulnerable to shifting rules around allowable costs and indirect rates.
- First-Time Filers: New nonprofits or those that recently crossed audit thresholds may be unprepared for the scope and cost of an annual audit.
Nonprofit leaders who “wear too many hats” often find that financial oversight falls by the wayside, especially if board members lack accounting backgrounds or are unfamiliar with IRS Form 990 requirements.
What to Watch for in 2025
This year brings several developments that Fresno nonprofits should monitor closely:
- Changes to the United States Office of Management and Budget (OMB) Uniform Guidance: Federal grant recipients should watch for new updates to the compliance supplement.
- IRS Scrutiny of Executive Compensation and Governance: Increased focus on board oversight and potential conflicts of interest.
- New California Reporting Requirements: Enhanced digital filing mandates and new disclosures tied to charitable fundraising platforms.
Boards that stay informed and work with a nonprofit-savvy CPA will be in the best position to adapt to these changes while maintaining mission focus.
Why Partnering with a Nonprofit CPA Is Crucial
Accounting for a nonprofit is not the same as running the books for a business. From fund accounting and functional expense reporting to managing restricted gifts and preparing IRS Form 990, nonprofits need tailored support. At DeMera DeMera Cameron, we specialize in helping Central Valley nonprofits:
- Prepare accurate, audit-ready financials
- Train board members on financial oversight responsibilities
- Design internal control systems that scale with growth
- Navigate grant compliance, federal audits, and funder reporting
If you’re a nonprofit leader or board member in Fresno, 2025 is the year to take control of your financial future. With audit costs rising and compliance requirements tightening, there’s no room for error. Let DeMera DeMera Cameron help you stay focused on what matters most: your mission.
