A nonprofit’s checklist for end of the fiscal year

The end of the fiscal year marks an important time of the year for organisations, businesses and nonprofits across the globe as they record and report financial activities. It ensures compliance and helps organisations create a financial plan for sustainability.

In the United States, the fiscal year starts on October 1 and ends on September 30 while in the United Kingdom, it runs from April 1 to March 31. In Australia, it runs from July 1 to June 30, making this month an important time in the financial calendar.

The end of the fiscal year requires important steps to keep a nonprofit organisation in good financial order. Here are some tasks to keep in mind.

1. Review your finances

A crucial activity on the nonprofit’s year-end accounting checklist is to conduct a financial review. This helps charitable organisations gauge their financial health and ensure their capacity to effectively execute their mission.

A comprehensive financial review begins with assembling all financial documents to assess the organisation’s sources of income, assets, liabilities, cash flow as well as previous and actual budgets. It also involves analysing key financial metrics to categorise expenditure and ensure liquidity.

During this process, it’s important to adhere to financial policies and present the financial reports to the board of directors.

2. Run an operational audit

Nonprofits should evaluate their internal systems, practices and processes to ensure efficiency and alignment with the organisation’s mission. Such a holistic assessment can help them identify areas for improvement, mitigate potential risks and demonstrate their commitment to accountability and transparency.

To tick this box on the fiscal year-end checklist, it can be helpful to define the areas and objectives of the audit. Assess the organisation’s internal control systems for checks and balances to prevent abuse and malpractice. Evaluate the financial management procedures to ensure that funds are used according to instructions.

Consider gauging the effectiveness and impact of existing charitable programs. Staff performance reviews can also give insight into the efficiency of your team.

3. Comply with regulations

Complying with applicable regulations at the end of the fiscal year can help nonprofits maintain their legal status and ensure stakeholder trust. To maintain their good standing, it’s important for nonprofits to:

• Make financial records available for an independent audit
• Complete and file the necessary tax forms such as the IRS Form 990 in the US, the Annual Return and Charity Commission Accounts in the UK or the ACNC Annual Information Statement in Australia
• Ensure that all operational licenses are renewed as needed
• File documents such as annual reports and board member changes

4. Report on grant applications

Funding organisations typically expect nonprofits to detail how any grant funds were used and the results achieved. Grant reporting at the end of the fiscal year can help charitable organisations demonstrate accountability and compliance with funder requirements.

To ace this item on the end-of-the-fiscal-year checklist, it’s important to review each grant agreement to understand the grantor’s guidelines and requirements. Track all expenses associated with the grant and collect both quantitative and qualitative data on the impacts of the funded programs using determined metrics.

Prepare and submit the report—consider incorporating plans on how the program can be continued.

5. Engage donors and raise funds

The end of the fiscal year can provide a valuable opportunity for nonprofits to build donor relations and raise funds. To build lasting relationships with funders, it can be helpful to send personalised appreciation messages to acknowledge their donations. Also, consider recognising them through shoutouts on social media, your website or newsletters.

To raise funds, connect with previous and potential donors via multiple channels. Leverage the power of storytelling to craft a compelling message that emphasises the importance of donations. Create engaging fundraising events in person or online to add some excitement to the fiscal year-end campaign.

6. Strategically plan for the next fiscal year

At the end of the fiscal year, nonprofits should plan for the next. This planning process involves reviewing the current year, setting realistic goals for the next year, setting a budget with the goals in mind and building an action plan.

Consider holding a board meeting and involving the board members in the planning process for their insight and approval. Also, gather input from staff and other stakeholders to position your organisation for a more effective operation.

As busy as the end of the fiscal year can be, this checklist can help you finish strong and position you for another successful fiscal year.