For many churches, the end of the calendar year also marks the end of the fiscal year. As many churches and ministries consider fiscal year responsibilities, I thought it timely to give a few suggestions.
- Ensure each month’s financial books have been closed properly. This includes bank reconciliations, investment reconciliations, donor reconciliations, tracking of revenues, expenses, and restricted (specifically temporary) net assets. This is important on a monthly basis that leads into closing out the fiscal year. If you do not have monthly checklists to follow, establish those and stick to them going forward in the new fiscal year.
- Prepare donor giving records. These are required each year and need to be done timely and professionally for each giver. Ensuring that records are up to date each month makes it easier to provide annual giving statements with minimal administrative burden.
- Compare year-end numbers with the budget and discuss the accuracy of your forecast. This is important for learning purposes, but it can also lead to revised budget considerations for the new fiscal year and decisions that may follow those revisions.
- Review all contractual and debt obligations. This is a great time to look over your organization’s contracts and debt agreements to ensure compliance and to develop action items or set reminders for follow-up.
- Utilize professionals to assist. Oftentimes churches utilize in-house assistance for accounting purposes. This can save the church money; however, I would strongly suggest using an outside accountant who is familiar with working with nonprofits, specifically one who is familiar with working with churches. Many will say they can handle a church’s finances when in reality they don’t have direct experience with churches. Expertise in church matters can be prove valuable.
Now is a great time to think through how to spread the workload throughout the year, making year-end a much smoother process. It is also a good time to review, learn, and implement changes.