NFP sustainability in a complex financial landscape

Collins Hume
18 hours ago
4 min read

Against a backdrop of cost-of-living pressures and economic uncertainty, not-for-profits (NFPs) are operating in an increasingly complex environment.

Funding pathways are under strain, compliance expectations are rising and operating costs continue to climb.

While these pressures are real, they also present an opportunity for organisations to strengthen governance, rethink collaboration and build long-term financial resilience.

Key considerations

NFPs are navigating rising costs, funding uncertainty and higher public expectations, prompting a rethink of financial models, governance and internal capability
Sector-wide insights highlight the importance of diversified income, stronger financial oversight and smarter use of tools such as cost analysis, scenario planning and technology
A mission-led approach to financial planning – investing in people, systems and innovation – is critical to delivering sustainable impact.

Insights from the recently released Not-for-Profit Sector Development Blueprint underscore the scale of change facing the sector. The Blueprint outlines structural and regulatory shifts and sets out a vision for building capability and sustainability. What matters most, however, is how individual organisations respond through purposeful decisions about funding diversity, workforce strategy and financial systems that enable agility without losing sight of mission.

Creating an environment where NFPs can thrive

Regulatory and operational settings play a critical role in long-term financial health. Recent developments, including income tax exemption reporting for non-charitable NFPs and proposed liquidity and financial management reforms in aged care, reflect a broader push for transparency and accountability. When approached strategically, compliance and reporting can become powerful tools to demonstrate impact, build trust and engage stakeholders.

Many of the challenges highlighted in sector commentary – cost recovery, fair indexation and contract design – are not simply operational issues. They go to the heart of sustainability. Strengthening financial foundations often means actively diversifying income through a mix of grants, philanthropy, social enterprise, corporate partnerships and long-term giving strategies. Reviewing commercial activities through a mission-aligned lens, and making full use of available tax concessions, is equally important.

Strong governance and forward planning underpin NFP efforts.

A clear understanding of cost structures and pricing enables better decisions about service viability and impact. Tools such as cost allocation models, scenario analysis and investment planning give boards and executives greater confidence to act early, adapt quickly and maintain focus on outcomes.

Building internal capability for sustainable impact

Financial sustainability is closely linked to internal capability. Investment in governance, financial management and technology, particularly in payroll, automation and reporting, can significantly reduce administrative burden and free teams to focus on service delivery.

Many NFPs are also streamlining operations, renegotiating supplier arrangements and exploring shared services to manage rising costs more effectively.

Just as important is maintaining a people-led, purpose-driven culture. Mission drift can occur when short-term funding pressures or poorly aligned contracts push organisations into reactive decision-making. Strong governance helps keep purpose front and centre, supporting accountability to communities, funders and other stakeholders.

Engaging boards, staff, volunteers and communities in shaping strategy strengthens relevance and trust. A skilled, supported workforce backed by appropriate systems, technology and capital investment is essential. Reviewing payroll processes, strengthening attraction and retention strategies and designing roles that align individual aspirations with organisational goals all contribute to long-term sustainability.

Fostering an adaptive and resilient NFP sector

With the operating environment continuing to evolve, resilience depends on adaptability. Expanding income streams through innovation in social enterprise, corporate engagement or philanthropy can help smooth funding volatility and future-proof operations. Rethinking how resources are used – from shared assets to technology-enabled service delivery – can also unlock efficiencies.

Automation and emerging technologies, including AI, are increasingly being used to reduce manual work in finance and payroll, improve reporting and support better decision-making. This allows teams to spend more time on mission-critical activities.

True resilience is not just about surviving change, but being prepared for it. Solid risk frameworks, adaptable strategies and a culture of continuous improvement position organisations to learn, evolve and thrive.

Where to from here?

Achieving financial sustainability today requires a proactive, mission-aligned approach to planning, funding and delivery. Understanding your cost base, strengthening governance, supporting your workforce and embracing smarter ways of operating are all part of the equation.

If your NFP organisation is reassessing funding models, navigating regulatory change or exploring how technology can reduce pressure on your team, specialist NFP advisory support can make a meaningful difference. From financial modelling and payroll assurance to governance, systems and strategic reviews, the right advice helps NFPs build resilience and stay focused on impact, even during uncertain times.

Collins Hume’s Not-for-Profit Advisory Services

Collins Hume provides practical, sector-focused advisory services to help not-for-profits strengthen governance, improve financial sustainability and build organisational capability. Working closely with boards and leadership teams, we support strategy, risk and performance through tailored planning, financial modelling and governance support. Our collaborative, impact-driven approach helps NFPs navigate complexity, make confident decisions and deliver sustainable outcomes for the communities we serve.

Take our NFP Risk Survey now and start making more informed, confident decisions for your NFP organisation’s future at https://www.collinshume.com/nfp or contact Nathan McGrath on 02 6686 3000.