With the end of the year only a few weeks away, many nonprofits have already started focusing on closing out their books and preparing their year-end reports. Unfortunately, the holiday season makes it hard to focus on what needs to be done and many nonprofits could use a little help in preparing for the year-end. The following is a checklist that will help you prepare for the year-end and ensure that your new year starts out on the right foot.
Strategic Planning
The current economic uncertainty has brought about many challenges for nonprofit organizations. In fact, many are having to cut back on services and programs in order to stay afloat. The end of the year is a natural time to start re-evaluating your financial processes, procedures and goals. Focus your efforts on maximizing your impact in the next year while minimizing your expenses.
Analyze and Develop a New Budget
While nobody enjoys budgeting, it is a necessary part of running a nonprofit. Take a look at this year’s budget and make note of any trends. Was your organization able to stick to the budget? What were the challenges? What could area use some improvement? Learn from this year’s mistakes and create an effective budget for the year to come.
Evaluate Your Financial Records
What is the current state of your financial records? Good, bad… or in need of some improvement? Hopefully your financial records are in good shape, but if they are not, you will need to do some work on them before the year ends. If necessary, hire a professional. While it is important to straighten out your financial records due to legalities, it is also important for properly managing your organization. Inaccurate financial records often results in poor decision making and missed opportunities, not to mention trouble from the government and other funders. Ensure that you have the documents you need by asking yourself the following questions:
- Are last year’s operating documents (such as board meeting minutes, resolutions, loan agreements, etc.) easily accessible? If not, make sure that all of your documents are organized by the end of the year. You will need to access this information at a moment’s notice and cannot afford to waste time digging around looking for a document.
- Are you prepared to file your organization’s IRS annual reporting requirement (Form 990)? While it may not be due until May 15th, now is a good time to make sure your financial records are in good shape. You don’t want to be scrambling right before the deadline!
Update Donor Records
Donors are extremely important to nonprofit organizations, as they make your mission possible. Make sure that your donor records are in order by the year-end, for donors will be expecting their annual contribution statements at the beginning of the year.
Payroll
If your organization has staff, you probably have some work to do in this area. Tax deadlines are on the horizon (think W2s and tax deposits), and you need to be prepared. Make sure everything is in order to ensure your employees receive their W2s in a timely manner.
Prepare for Your Annual Board Meeting
While many organizations only have board meetings once a year, nonprofits would benefit from having a year-end meeting to discuss the challenges of the past year and focus on the necessary improvements for the year to come. Prepare for your end-of-year meeting by creating the necessary financial reports.
As you can see, nonprofits need to be prepared for year-end. Many organizations also like to focus their efforts on last-minute fundraising. For more information about year-end financial reporting, click here.