The Importance of Nonprofit SEFA Reporting

For nonprofits receiving federal funding, the Schedule of Expenditures of Federal Awards (SEFA) is more than just a required report. It’s a vital tool for building credibility, preparing for audits, and positioning your organization for future opportunities.

(For a refresher on what the SEFA is and when it’s required, see our overview blog).

In this article, we’ll take a closer look at why the SEFA matters, how to approach SEFA reporting with excellence, and what strong SEFA practices mean for the bigger picture of your nonprofit’s success.

Why the SEFA Matters

The SEFA is a reflection of how your organization manages and reports on federal dollars. A strong SEFA matters because it:

• Demonstrates accountability

  • Clear reporting shows that federal funds were managed responsibly and in alignment with award requirements.

• Builds funder and donor confidence

  • Transparent financial practices reassure federal agencies, private grantmakers, and donors alike.

• Supports future funding

  • A well-prepared SEFA positions your nonprofit as a competitive, trustworthy partner for new federal awards.

• Serves as the foundation of the Single Audit

  • Auditors rely on the SEFA to determine which federal programs to test for compliance. Errors or omissions in the SEFA can lead to findings and additional scrutiny.

When done well, the SEFA is more than compliance; it’s a tool for demonstrating integrity and readiness for growth.

Tips for SEFA Excellence

Strong SEFA reporting doesn’t happen by accident. It requires intentional processes and attention to detail. Here are key practices that can help:

• Use integrated tracking systems:

  • A centralized system makes it easier to monitor federal expenditures across departments.

• Train your staff:

  • Program and finance teams should understand Uniform Guidance and SEFA requirements, not just the finance office.

• Reconcile regularly:

  • Compare grant records with the general ledger throughout the year, not just at year-end.

• Leverage external expertise:

  • External advisors and auditors can provide valuable guidance and oversight.

• Focus on accuracy and timeliness:

  • Clean, timely reporting not only reduces audit findings but also strengthens your reputation with funders

The Bigger Picture

Nonprofits with strong SEFA processes benefit from fewer audit findings, lower risk, and reduced costs. Clean reporting also strengthens your credibility with federal agencies and establishes a foundation for multi-year federal partnerships.

Most importantly, the SEFA reinforces your role as a reliable steward of public resources. That credibility can open doors to future opportunities and give your organization the stability it needs to focus on its mission

When your SEFA is accurate, timely, and transparent, it strengthens trust with funders, reduces audit risks, and supports your long-term sustainability. If your nonprofit is preparing for a Single Audit or looking to enhance its SEFA process, our Single Audit Advisory Services can help. We work with leaders to simplify compliance, strengthen internal practices, and build the confidence needed to secure future funding.