Going Concern Checklist for Non-Profit
Tailored going concern assessment for non-profit organisations. Covers industry-specific indicators including donor dependency, grant pipeline, fundraising trends, and restricted fund obligations.
Going Concern
Checklist.
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Going concern assessment: Non-Profit
Non-profit entities face unique going concern dynamics because they do not generate commercial revenue — their sustainability depends on the continued willingness of donors, grant-makers, and funding bodies to provide resources. A loss of a major donor, the expiry of a multi-year grant without renewal, or a reputational event that undermines public trust can all precipitate a funding crisis. Unlike commercial entities, non-profits often cannot simply cut costs to survive because their costs are their mission.
Key risk factors: Non-Profit
Key non-profit going concern indicators include: dependency on a single donor or grant representing more than 25–30% of total income, expiry of multi-year grants without confirmed renewal, declining fundraising income over consecutive periods, restricted fund obligations that consume unrestricted cash (where restricted funds require co-funding), governance failures or reputational events that undermine donor confidence, and volunteer workforce decline affecting the entity's ability to deliver programmes.
Donor concentration — assess the top 5 income sources by value and what percentage of total income they represent. Loss of any single source representing more than 20% warrants going concern analysis.
Grant pipeline — for grant-dependent entities, map the expiry dates of all current grants and the status of renewal applications. A grant cliff (multiple grants expiring simultaneously) creates acute risk.
Unrestricted reserves — many non-profits report positive total funds but have minimal unrestricted reserves because the majority of funds are restricted. Assess free reserves as a percentage of annual operating costs.
Fundraising trends — declining donation income over 2–3 years may indicate donor fatigue, increased competition for funding, or reputational issues. Assess the trend and the entity's response.
Restricted fund obligations — entities with restricted funds may be required to spend those funds on specific programmes, even if the co-funding from unrestricted sources is not available. This creates a cash flow squeeze.
Governance and reputation — for non-profits, public trust is the foundation of income. Assess whether any governance issues, scandal, or adverse media coverage could affect future donations and grants.