The Board’s Role in Choosing a Financial Provider
As a nonprofit board member, financial oversight is part of your fiduciary duty. Part of that is evaluating service providers.
Unfortunately, in order to save costs, whether it’s investment advisors, auditors, or bookkeepers, many boards will default to the lowest bidder. After all, you’re trying to maximize every dollar for mission impact. That can come back to haunt your organization in costly ways.
The Temptation: Stretching Every Dollar
It’s natural. Your organization runs on tight margins. You want to demonstrate fiscal stewardship. You assume all financial providers do roughly the same thing — so why not pick the one with the lowest quote?
A hard lesson many learn is that not all providers are equal. And a low-cost engagement can lead to:
Missed compliance issues
Poor communication and slow responsiveness
Turnover that disrupts continuity
Findings you should’ve known about, but didn’t until the last minute
Reputational damage when something goes wrong
What Low-Cost Providers Often Don’t Tell You
Quantity over quality
Inexpensive providers often make up for their low cost with volume. Instead of getting individual attention, you often get lumped in with multiple other clients, making communications difficult - if not impossible.
Missing credentials or lack of expertise
Credentials are expensive, but they also matter. The work put in for each letter behind someone’s name will pay off. It shows the time and dedication they put in to learning that service, and have demonstrated their expertise. This is especially important when looking into investment services or an auditor.
They may leave you open to unexpected risks
A low-quality audit or bookkeeping engagement can expose your organization to compliance failures, misstated financials, and even loss of funding. Similarly, an underqualified investment advisor may ignore your investment policy or take risks beyond your board’s comfort level, and exposing critical assets at stake.
The Board’s Role: Ask the Right Questions
As a board, you have a duty to perform due diligence. Here’s what to consider going into the process and when performing the evaluation.
What’s your scope? Do you need an audit, or would a review be sufficient? Do you need a bookkeeper or a full-service outsourced controller?
Make sure you’re properly evaluating your needs and that you’ve included all potential options. When talking with the firms, request they verify their understanding of the scope and how they plan to fulfill your needs.
Are there any conflicts of interest either at the organization level or board level?
If you have a board member offering a bid, make sure your conflict of interest procedures are properly followed, and that proper independence protocol are in place.
How many quotes are needed? Is there an evaluation process in place?
Determine if you have documented requirements on the number of providers to evaluate (typically at least 2-3). If you have a documented evaluation process in place, ensure you’re following it to the letter.
Do they have the proper prerequisites in place?
Ensure the service providers all meet specific criteria - insurance, proper credentials and licensing (ex. CPA if an audit is needed), etc.
Do they have references you could check?
There may be some confidentiality issues here, but you may check to see if there are any references you could contact - specifically in the nonprofit sector.
For audit specifically, are they licensed in your state? Do they have proper experience? Do they have any completed peer reviews? Are they independent?
When looking at auditors specifically, there are some additional considerations. You’ll want to make sure that they’re licensed in your state, make sure that they have the proper experience (e.g. if you need a single audit, do they have experience performing these? Ask that they disclose any findings from prior audits. Another spot to look is on the CPA verify portal with NASBA. This will help you make sure they’re properly licensed and have an active CPA license.
What to Look For in a True Financial Partner
The best audit and accounting providers for nonprofits do more than check boxes — they:
Understand nonprofit funding streams and compliance
Flag risks and help mitigate them proactively
Provide education for staff and boards
Deliver timely, accurate reporting
Help strengthen internal controls, not just critique them
Final Thought: Cheap Now Can Cost More Later
Board members carry legal and ethical responsibilities. Choosing an accounting or audit provider based solely on price is a short-term decision that can create long-term consequences — especially if it jeopardizes your funder relationships, audit outcomes, or public trust.
When evaluating financial providers, don’t just ask “How much?”
Ask “How well? How experienced? How committed?”
In nonprofit governance, due diligence isn’t optional — it’s your duty.