How to Prepare for the End of the Nonprofit Fiscal Year

June 30th. It's the middle of the calendar year and the beginning of summer. It's home to Michael Phelps' birthday, the ratification of the 26th Amendment to the Constitution, and for thousands of nonprofit organizations, a particularly stressful milestone — the end of the fiscal year.

While the nonprofit fiscal year can end at any virtually any date, most nonprofit organizations close out the year on 6/30.

So, how can nonprofits prepare for the end of the fiscal year?

Review Your Goals

To start, it's important to step back and reflect on the past 365 days. This is not merely a financial exercise, but a full review of your end-to-end goals. This includes goals related to hiring, fundraising, membership, communications, employee development, process improvement, tech and software updates, and of course, how effective the team was at achieving its mission.

Once this review is completed, your organization, and in particular the leadership team, will be in a much better position to strategize and create solutions for the year to come.

Review Your Budget

Reviewing the budget means asking the hard questions. Which programs had the biggest positive impact? Which were the most cost effective? How did employees spend their time? Is your organization overstaffed? Understaffed? What were the most successful fundraising efforts? Can they be replicated? Are there ways to provide employees with health and retirement benefits at a lower cost to the organization? The list goes on and on ...

Reviewing the budget is critical, especially in times of rapidly changing funding environments. Do you recall when you first started mobile fundraising? What about social fundraising? In hindsight, did you start using new technologies later than you should have? What technology, tools, or people should you invest in now to ensure a successful future?

Whether you are paying down debt, running a surplus, or struggling to break even, building a shared consensus around budgetary goals will help prepare your organization for the new year.

Thank Your Employees

Almost without fail, your organization will thank your donors or your members for their continued support of the work you do. But, it's all too easy to forget to thank your employees, without whom, nothing would be accomplished. As you work to close out the year, take a moment to write a personal note of thanks to your employees. Buy your team lunch. Let the people with whom you spend nearly 2,000 hours a year know that you appreciate their contributions.

Review Employee Performance

Different organizations have different requirements and processes for evaluating employee performance. That being said, year end is an ideal time to take a step back and see how your team is doing. There are myriad quantitative and qualitative metrics that can be used to assess employee performance, but what matters most is that your organization reviews employees in a manner that is:

  • objective
  • fair
  • consistent
  • aligned with organizational and team goals

Along with the assessments of employee performance, you'll want to offer coaching, mentorship, and training. If you can make your employees better at what they do, you — and your donors — will benefit from the results in the years to come.

Review Employee Overtime Costs

Some employees may be subject to overtime compensation. This can be challenging for nonprofits, as overtime pay is not only costly, but also difficult to track. (For example, California overtime has a number of requirements that incorporate both consecutive overtime days and additional compensation after 12 hours a day.)

Are there times when it makes sense for employees to work overtime hours? Of course there are. But that doesn't mean it's not a good idea to review aggregate overtime costs. You'll want to ensure you have the right number of full-time, part-time, and contract employees to best serve your organization when the new year kicks off on July 1st.

employee overtime report