Winter is Coming… Five Tips to Prep for Upcoming Nonprofits' Fiscal Year-End
Springtime is about to finish its course and make way for summer to take off. And if you own or work for a nonprofit organization, then you know that both springtime and summer are significant seasons of your nonprofit fiscal year.
That’s because most nonprofits end their fiscal year on June 30th - around the end of spring. So summer announces the start of a new Fiscal Year.
In times like this - during an upcoming nonprofit Fiscal Year-End - there's the temptation for Nonprofits to be anxious about the end of the Fiscal Year. And they have reasons to be.
The truth is, different people have distinct reasons why they chose to work with a nonprofit. It could be:
The desire to make a difference;
The need to stay connected to work environments;
The opportunity to get more out of a career;
The opportunity to gain a wide range of experience while achieving the nonprofit’s mission;
Wanting to flex creative muscles, among others.
But in all of these, not many people expect to face tedious paperwork, challenging calculations, and daunting compliance regulations. And although this paperwork, bookkeeping, and other tasks may seem difficult, they are necessary to run an effective nonprofit organization.
One of such tedious tasks is the nonprofit accounting at the end of the Fiscal Year.
What does Preparing for Nonprofits' Fiscal Year-End Entail?
As the end of your nonprofit fiscal year approaches, you may get discouraged when you think of all you have to do. Tasks like writing an annual report, membership renewals, fundraisers, tax forms, and audits can make the Fiscal Year-End a stressful time.
However, although it may seem daunting, your nonprofit Fiscal Year-End does not have to be such a difficult time. With a great plan in place, it can even be a stimulating activity to engage in. And instead of viewing it as a tedious season, you'll end up seeing it as a time to promote your organization and celebrate your successes.
And you won't have to worry about botching your nonprofit Fiscal Year-End. We're here to lend a helping hand.
To enable you to get started, we’ve outlined some tips that will give you a solid plan. This will provide you with the help you need to do your Nonprofit Budget, Grant Reporting, and Nonprofit Audit.
5 Tips to Get Ready for the Next Fiscal Year
#1. Analyze the previous fiscal year's budget
You may need to analyze the budget for the previous fiscal year and use it as a basis to create a budget for the next Fiscal Year. To do this successfully, you must use the budget of the prior year as a baseline to set a new budget.
While perusing the old budget, you may need to get clarity about certain details. And to do that, you may need to do the following:
Connect with the program heads of the nonprofit's system and ask them about the money spent during the Fiscal Year. You will also need to confirm the things that they need to execute programs successfully.
If less money was needed the year before than for the current year, you might have to consider reallocating funds between programs.
Break up the nonprofit budget. Sort them by grant, program, and organization.
#2. Get all your grant reports done
You will have to write your grant reports for the fiscal year. Your grant report will be easier to compose if you already have a record of all grants that came into your nonprofit. All you then have to do is to outline and reproduce what you already have. Most grant reports are due shortly after the fiscal year is complete.
#3. Get your financial books in order
You need to get your books in order and ready for your audit. Break down your grant revenue and program expenses. This will make your audit report/form 99% more accurate and easy to complete.
#4. Conduct a Board Review
You may need to make adjustments to the board of the nonprofit. This is something that's needed if some members are no longer a good fit for the organization.
No hard feelings, but you need people that will actively support the organization and its effort to accomplish its mission. Board members who are not as passionate about the mission of a nonprofit may only bring about counter-productiveness. They will end up being more of a hindrance than a help.
#5. Make an Annual Report:
You may need to create a plan for your nonprofit Annual Report. This report is something you'll keep doing every year. So it's best that you get the hang of it and do a good job of it every year.
You should try to plan ahead, especially if you have to write it at the same time every year.
Here is a plan to follow if you want to write a great annual report:
Make a detailed list of your program and accomplishments. You will do this by outlining all the wonderful things that your nonprofit achieved during the year. Include the stories of beneficiaries who benefited from your organization's programs. Also, add lots of images to your report.
Have a list of all your key donors. You need this if you plan to send a copy of your annual report to your donors, especially the mid and high-value donors. You can add it to the end-of-year receipt and send it via email. Think of it as an activity to retain your donors.
Create an outline for your report. This is an important step. Because annual reports all share a common outline, it would be wise to take a look at the annual reports of similar organizations. Note what they include in theirs. Do your research and put in what information you need to include.
The outline of your annual report should be consistent from year to year. So all you have to do the next year is to reuse the format which you’ve put in place. Having a consistent outline also has another advantage. As long as everyone understands what information they need to provide, they too can prepare the annual report in advance.
You need to prepare a financial report about your annual income, expenditure, and funding sources. Show a graph of how you spent your nonprofit funds. Donors usually want to know where the money was channeled into and what was achieved. Transparency about funding, financial, and program information, as well as the outcomes of those programs, will build trust. It will show prospective donors and partners that you can effectively manage your funds.
It may be the duty of other teams or staff members to provide information about financials, programs, or beneficiaries. In such cases, you must tell them what your requirements are. You should let them know this in advance so that there will be enough time to collate that information.
It can also help to ensure that they compile the info throughout the year. That way, at the end of the year, reporting is easier and effective.
Report any tax exemptions or returns. For a list of all tax forms that your charitable or tax-exempt organization needs to have completed, check out the Charities and Nonprofits page on the IRS website.
Make a nonprofit budget for the next fiscal year. Use the tips shared above.
Best Practices for Your Nonprofit Fiscal Year-End.
Now that you know the tips for starting a new fiscal year let's look at the best practices for your nonprofit fiscal year-end.
As you plan for your fiscal year-end, make sure you address different aspects of the work to be done in your report. Have your staff know who is responsible for gathering the corresponding information.
Once you have your plan, you then have to decide on things like the layout and format, the number of pages, and the design of your annual report.
Your annual report should be a personal affair. Recognize your donors who have made contributions to your annual report. Write about their achievements and say how they have helped to create a change.
Also, use your annual report as a chance to thank all your corporate partners, staff, and volunteers for their contributions and commitment.
Let's Help your Nonprofit Comply with Best Practices.
Whatever your plans for your nonprofit fiscal year-end or new fiscal year, Precise Grants is here to help you make the process a smooth one.
Whether you're looking to do simple nonprofit grant reporting or you want to manage your grant reports and monitor program budgets, we've got you covered. With a few simple clicks, we will provide you with all that you need to make the end of your nonprofit fiscal year and start of the new fiscal year seamless.
Does your nonprofit need help complying with funders and government agencies? We offer services to help you build better budgets, stay compliant, and prepare for nonprofit audits. Contact us now to learn more about our services. We're just a click away.