Another year’s end is finally in sight. But what’s that—it’s only June, you say? Well, for nonprofit organizations Christmas really does come in July. That’s because June 30 marks the end of a fiscal year for many nonprofit organizations. So while businesses are in a comfortable mid-year groove, nonprofits should focus on finishing up year-end responsibilities.
Not quite sure what that entails? No problem. We’ve got your year-end checklist to make sure you don’t miss any important end-of-the-year details.
Get Your Finances in Check
Just because you have 501(c)(3) status doesn’t mean you’re exempt from keeping financial records. You may be tax exempt, but you’ll still need to file paperwork for the fiscal year. Here are the most important financial forms you should take care of.
- Form 990
Most importantly for paperwork, you may be required to file a Form 990 with the IRS. Guidestar offers a list of frequently asked questions that will be helpful when you’re filing yours, or determining if you need to file. The deadline for all nonprofits following the fiscal year is November 15. Although November is off in the distance, focus on getting your finances in order now. Remember how holiday fundraising always sneaks up on you? Allow us to give you a gentle reminder. Don’t get caught filing your tax forms when you should be concentrated on holiday fundraising or you’ll be stressed out near Thanksgiving. And we know that having the in-laws over is stress enough.
- Grant Forms
Remember that most government grants require a report by July 30, or one month after the fiscal year end. Check with your funders to see what their conditions are in terms of the report date and what they want you to include in the report. This one varies depending on the grant.
While it can be scary looking back on the previous year’s finances, it is important to analyze last year’s budget so that you can figure out how to improve starting in July. If you analyze the budget now, it will make it easier for you when it comes time to write your annual report. Start by finding out where you spent the most money last year and then determine ways that you can cut out on those costs. Remember that the more money you save, the more money you get to donate toward your mission.
Once you’ve analyzed last year’s budget, it’s time to make a new one. Get department heads together to ask them about the money they have spent in the previous year. If one department clearly has a surplus and another is lacking, it’s time to refigure. You know the drill.
Should They Stay or Should They Go?
An organization is only as good as the leaders who head the mission. That means that it’s time to evaluate the board of directors from the previous year. Nobody wants to be the bad guy, but if you are unhappy with the performance of any of your board members then now is the time to voice your concerns. Keep in mind during evaluations that you must act in the best interest of your nonprofit and its mission. Also, if anybody is retiring or resigning, you should be in the process of looking for the right candidate for the position.
When interviewing potential candidates, make sure you’re asking the right questions. Consider their current involvement with the organization, but also the amount of time they will have in the future. You may know the most qualified person for the job, but if they will be spread too thinly the next year then you should look for somebody who has enough time to devote to your mission. Hopefully, you should be able to gauge how involved the individual has been because they have been associated with your nonprofit previously.
Once you’ve got the right people, it’s time to make the transition of board members as smooth as possible. Make sure that you have clear descriptions of what each board member is responsible for. Also make a list of special skills or criteria you would like the new board members to meet. If you know what you’re looking for it will make the transition process more effective.
There are a variety of other questions to ask to see if you’re ready for a board transition.
Make an Annual Report
If you haven’t been thinking about an annual report, the time is now. It is necessary for your nonprofit to put together a report, and it will ultimately help you in the long run. Network for Good suggests that the most important part of your annual report is the description of your accomplishments. If you didn’t keep a detailed list this year, you’ll know better next time.
Keep in mind that it’s much easier to reflect on accomplishments if you’ve been keeping track all year. You’ll also need to include a list of all your donors, and a section on where your revenue has come from and been spent on. Graphs are always a nice way to make your report look more organized and to break down the information for readers. Who doesn’t love to look at pictures?
If you’re a procrastinator, the process of compiling an annual report will be difficult. As you can see, the amount of information necessary for a report is substantial. If you haven’t put thought into your annual report, have no fear. You still have time to start yours. But why would you want to spend hours on a report when your time is limited already? Remember that the report could reflect future donors and help with the success of your mission. For examples of how your annual report should look, visit Nonprofit Marketing Guide.
How have you been preparing for the end of the nonprofit fiscal year?