Nonprofit leaders are planning to expand programs while the finance, risk and measurement systems underneath those programs are still catching up. That is the central operating tension in BDO’s 2026 Nonprofit Standards Benchmarking Report, published October 26.
The judgment
- Implication: Program growth should be approved together with the finance, control and impact-measurement capacity required to operate it—not as a separate back-office discussion.
- What would change the conclusion: The risk is lower when expansion uses existing staff and systems, adds little working-capital exposure, and has committed multiyear funding with clear outcome measures.
- Management action: Attach a capacity schedule to every material program proposal showing funding timing, incremental finance workload, control ownership, reporting requirements and the decision point for slowing or stopping the rollout.
The survey points to a capacity gap
BDO reported that 74% of surveyed nonprofit leaders expect to introduce new programs without eliminating existing ones during the next year. At the same time, 59% said inadequate technology makes it harder to gather information on program impact, 50% cited insufficient staff for impact data collection, and 49% identified the lack of a consistent measurement and reporting framework as a challenge.
Those findings do not prove that most planned expansions will fail. The survey covered 250 nonprofit leaders and recorded expectations and self-reported conditions, not audited operating outcomes. But the combination is a useful warning: the demand for new activity may be rising faster than the organization’s ability to measure cost, cash and results.
The report also found that 52% are increasing spending on risk management and compliance, up from 38% in 2025, while half are increasing investment in finance and accounting systems, up from 40%. Those are constructive responses. They also indicate that infrastructure is not a settled question.
Program growth creates more than program expense
A new program rarely adds only the employees and direct services visible in its budget. It can add grant billing, restricted-fund accounting, procurement reviews, payroll complexity, insurance requirements, data collection, contract monitoring and board reporting. Some of those costs appear immediately. Others emerge after volume increases or a funder requests information the original system was not designed to produce.
That makes the relevant question broader than “Is the program funded?” Management should ask whether funding covers the full operating model, including indirect capacity and the timing difference between spending and reimbursement. A grant can support an economically sound program while still creating a cash problem if payroll must be funded months before claims are paid.
This is why a balanced annual budget can be misleading. As discussed in A Balanced Budget Can Still Hide a Cash Crisis, unrestricted liquidity and payment timing can produce a very different answer from the income statement.
A system purchase is not a capacity plan
Finance-system investment can improve transaction processing, reporting and control evidence. But software does not decide who owns a reconciliation, resolve inconsistent program definitions or establish which outcome measures belong in a board package. Technology increases capacity only when processes, definitions, staffing and accountability change with it.
The same principle applies to AI. BDO reported that 70% of respondents had formally adopted AI in at least one area, while 58% placed AI oversight within IT rather than with a dedicated owner or committee. IT ownership can be appropriate for security and architecture, but financial, legal and program risks still require cross-functional decisions. Adoption should not outrun governance.
Better reserves buy time, not permanent capacity
The share of respondents holding seven to 12 months of operating reserves increased from 24% to 32%, according to BDO. That is encouraging, but reserve balances alone do not show how much cash is unrestricted, how seasonal the organization is, or whether planned growth will consume liquidity.
Reserves are most useful when policy defines the conditions for using them and the path for rebuilding them. A Reserve Policy Needs Trigger Points explains why a target should be paired with authority, intervention levels and a replenishment plan. The free Board Finance Dashboard can help connect cash coverage, reserves, forecast pressure and board decisions in one view.
Put capacity gates into the growth decision
A practical approval process can stage expansion rather than treating launch as an all-or-nothing commitment. Before approval, management can identify the funding source, reimbursement cycle, staffing and system changes, control owner, outcome measures and reporting cadence. The board can then authorize an initial phase and define what evidence is required before the next phase begins.
The thresholds should reflect the program and organization; the survey does not provide universal limits. A small program funded in advance needs a different gate from a statewide reimbursable contract. What matters is that the stop, slow and continue decisions are explicit before commitments become difficult to reverse.
The deeper lesson is that infrastructure spending is not overhead in the dismissive sense. Finance, controls and measurement are part of program delivery. If they are treated as optional support, growth can make the mission harder to manage precisely when more people depend on it.
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