Navigating the New Reality: What Nonprofit Leaders in Minnesota Must Do Now

With the recent restrictions on disbursements and the looming threat of funding cuts under the Trump administration, nonprofits across Minnesota face an urgent need to reassess their financial strategies. If these changes take effect, many nonprofits will find themselves competing for a much smaller pool of funding. Granting agencies and government bodies will likely scrutinize financials more than ever, and compliance will no longer be optional—it will be a survival necessity.

1. Recalibrate Your IRS Form 990 Compliance

Form 990 is no longer just a tax filing—it is a public document that funders, watchdog organizations, and government agencies use to assess your nonprofit’s financial health, governance, and legitimacy.

• Review your 990 filings from the past three years to ensure accuracy, consistency, and compliance.
• Address any discrepancies or potential red flags that could be used to justify funding reductions.
• Work with an expert accounting partner to ensure future 990 filings are airtight, transparent, and strategically optimized.

2. Keep Your Books and Spending Sparkling Clean

Every dollar your nonprofit spends should be justifiable, mission-aligned, and well-documented. Poor financial record-keeping could result in funding denials, reputational damage, or even legal consequences.

• Conduct an internal audit of your books to ensure transactions are properly categorized and documented.
• Implement stronger internal financial controls to prevent misallocations.
• Ensure fund restrictions are properly tracked—grant dollars must be allocated exactly as intended by funders.
• Regularly reconcile financials to be audit-ready at all times.

3. Build a Rock-Solid Grant and Compliance Strategy

If federal and state funding pools shrink, funders will prioritize organizations with the strongest compliance records.

• Prepare detailed financial packages that showcase your nonprofit’s impact and fiscal responsibility.
• Ensure your spending ratios align with best practices.
• Work with an expert accounting firm to optimize grant tracking and financial reporting.

4. Compete Smarter for Scarce Funding

With more nonprofits fighting for fewer dollars, those demonstrating financial efficiency and accountability will win out.

• Differentiate your nonprofit with flawless financial reporting and transparent governance.
• Leverage data-driven impact reporting to show funders how effectively their dollars are being used.
• Partner with a local accounting firm to strengthen your financial positioning in grant applications.

Prudent Accountants: Your Partner in Protecting Your Mission

At Prudent Accountants, we understand the urgency of this moment. We help nonprofits:

• Ensure 990 compliance and optimize filings to maintain funding eligibility
• Reduce accounting and bookkeeping costs by up to 35%
• Keep financials audit-ready and in full compliance with funder expectations
• Provide board and grant agency financial packages to strengthen funding applications