Do Nonprofits Need Audited Financials to Receive Grants?
Do Nonprofits Need Audited Financials to Receive Grants?
One of the most common questions we hear from nonprofit leaders is:
“Do we need audited financial statements to apply for grants?”
The short answer is: No, most nonprofits do not need audited financials to receive grants.
In fact, many small to mid-sized nonprofit organizations successfully secure grant funding every year without audits in place. What funders are really looking for is financial transparency, organization, and credibility, not perfection.
What Are Audited Financial Statements?
Audited financials are formal financial statements reviewed and verified by an independent CPA. They are typically required for:
- Larger nonprofits with significant annual revenue
• Organizations receiving certain government funding
• Nonprofits with specific regulatory requirements
While audits are valuable, they are not a requirement for most grant opportunities, especially at the local, regional, and corporate level.
Do You Need Audited Financials for Grants?
For most nonprofit organizations, the answer is:
No, audited financials are not required to apply for grants.
Many funders, including:
• Community foundations
• Corporate giving programs
• Family foundations
• Local and regional grants
will accept alternative financial documentation.
What Funders Actually Want to See
Instead of audited statements, funders are typically looking for:
- A clear and realistic operating budget
• Program budgets tied to your request
• Recent financial statements (income and expenses)
• Your most recent IRS Form 990
• Evidence of responsible financial management
Funders want to understand:
How you manage money and how their funding will be used.
What to Do If You Don’t Have Audited Financials
If your organization does not have audited financial statements, there are simple ways to strengthen your financial credibility.
1. File a Detailed Form 990
Whenever possible, file a long-form IRS Form 990 instead of a shorter version. This provides more detail and demonstrates transparency to funders.
2. Prepare Professional Internal Financial Statements
Even if you are using internal reports, presentation matters.
Instead of submitting a basic spreadsheet:
• Create a clean, formatted financial statement
• Include a simple cover page with your organization’s name and fiscal year
• Clearly label income, expenses, and totals
This small step significantly increases perceived professionalism.
3. Add a Signature for Credibility
For added trust, include a signed statement from:
• Your Executive Director
or
• Your Board Chair
This signals accountability and oversight, which funders value highly.
4. Align Your Budget With Your Narrative
Your financials should clearly support your grant request.
Make sure:
• Numbers match your proposal
• Program costs are clearly outlined
• Your request fits within your overall budget
Consistency builds confidence.
When Audited Financials May Be Required
There are situations where audited financials may be expected, such as:
- Large federal or state grants
• Major foundation requests ($100,000+)
• Organizations with annual revenue above certain thresholds
• Capital campaigns or large-scale funding requests
Even in these cases, lack of an audit does not always disqualify you. It may simply mean you need to provide additional documentation or explanation.
“In my experience, as a nonprofit begins to approach $1 million in annual revenue, the board should start exploring the investment in audited financial statements. At this level, within the fundraising landscape, grant funders and donors increasingly expect the added accountability and assurance that comes from having every dollar professionally reviewed and accounted for.” – Sarah Clarke, Professional Grant Writer
Grant Readiness Matters More Than Audits
At the end of the day, grant success is not determined by whether you have audited financials. It is determined by whether your organization is prepared, organized, and able to clearly communicate its impact and financial stewardship.
Nonprofits that consistently secure funding typically have:
- Strong budgets
• Clear programs
• Organized financial documents
• Consistent grant applications
• A long-term funding strategy
This is why we emphasize grant management, not just grant writing.
Final Thought
If you have been holding off on applying for grants because you do not have audited financials, this is your sign to move forward.
You likely have everything you need to begin. And if a specific grant requires an audit, you can plan for that as your organization grows.
Grant funding is not reserved for large, fully resourced organizations. It is available to nonprofits that are clear, credible, and committed to their mission.
Frequently Asked Questions
Do you need audited financials to apply for grants?
No. Most grants, especially local and corporate grants, do not require audited financial statements.
What financial documents do nonprofits need for grant applications?
Typically an operating budget, program budget, financial statements, and your most recent Form 990.
Can a small nonprofit get grants without an audit?
Yes. Many small nonprofits successfully receive grants without audited financials by providing clear and professional internal documents.
What can I use instead of audited financials?
You can use internal financial statements, a detailed Form 990, and signed documentation from leadership to demonstrate credibility.
Should we invest in an audit in the future?
Yes, as your organization grows and pursues larger funding opportunities, an audit can strengthen your financial position, but it is not required to get started.
Need Help Preparing for Grants?
Working with an experienced grant writer can help ensure your financial documents, budgets, and proposals are aligned and ready for submission. Strong grant writing for nonprofit organizations goes beyond the application itself. It’s about building systems that support long-term funding success.
If you’re ready to strengthen your grant readiness and approach funding with confidence, we would love to support you.
