Nonprofit Year-End Spending: Smart Ways to Use Every Dollar Wisely

Year-end is a critical time for your nonprofit to review budgets, ensure compliance, and make innovative spending decisions for your organization’s future. Surpluses can offer immediate opportunities to improve your operations or expand your team’s current tools. Discrepancies between your initial budget and actual spending can reveal better ways for your team to allocate your nonprofit budget.

That said, your nonprofit year-end will leave you with a lot of information to juggle, including expense reports, receipts, and grant compliance information. The right tools, such as Casebook, can save you time, raise accuracy, and build trust with your most important stakeholders. 

Discover everything you need to know for your nonprofit year-end checklist, including practical ways to stay compliant, prepare for the next fiscal year, and strategically use your remaining funds. 

Why the Nonprofit Year-End Matters for Financial Health

Nonprofit year-end reviews and reports are crucial for organizations’ transparency, compliance, and financial health. First and foremost, a comprehensive year-end review ensures that your financial reporting has been accurate throughout the year, which builds trust with stakeholders and gives you a chance to amend mistakes. 

Year-end compliance also helps your nonprofit meet regulatory requirements, avoid penalties, and improve grant funder communication and reporting. Maintain accountability and trust with your donors by proving that funds are going where they need to.

Additionally, your nonprofit’s year-end report can guide your financial management strategy moving into future fiscal years. Reviewing funds, cash flow patterns, and project reports can help you assess your current financial model and revise how you allocate money. 

A Step-by-Step Guide to Navigating Your Nonprofit Year-End

Even with professional nonprofit tools, such as Casebook, you won’t be able to assess your year-end with a single button click. Reviewing your nonprofit’s year-end is a multifaceted process that requires you to consider multiple aspects of your organization, including your financial and fundraising readiness. 

Follow this simple nonprofit year-end checklist to make sure your report covers everything it needs to. 

1. Assess Where Your Nonprofit Stands Financially

First and foremost, review all relevant financial reports and key accounts to compare your annual budgets, including program costs, functional expenses, administrative costs, and general operating budgets. These insights let you identify surpluses, deficits, and errors, along with the areas where your money had the most significant impacts. 

Casebook and other nonprofit accounting software solutions simplify this process by compiling all key information in a single, comprehensive database. From here, you can quickly access any numbers you need and automate financial reporting for fast and accurate results. 

2. Manage Nonprofit Expenses Responsibly

Comparing your nonprofit’s year-end budget with your actual spending may highlight surpluses. These surpluses offer potential opportunities for your nonprofit to spend a little bit more, whether that’s on future financial planning or something specific your organization needs. 

However, you can’t simply blow your surpluses on anything you want. For example, you likely can’t use the extra money to inflate a specific department’s budget next year. Review where the excess funds originated to make sure you use the surplus responsibly and stay compliant with any donor, grant, or legal regulations. 

Examples of legitimate end-of-year nonprofit expenses include:

• Equipment and supplies: Consider any supplies you’d need in the office or for caseworkers to complete their jobs, such as furniture, electronics, paper, or cleaning equipment. These funds can also support repairs or maintenance, as needed. 
• Utilities and rent: You may be able to use your surplus to cover internet costs, phone bills, and other utilities, along with rent or insurance premiums for your nonprofit’s physical address. 
• Software and tools: Consider using your surplus to cover subscriptions for websites, case management software, or other tools that your nonprofit may need. For instance, you could cover next year’s subscription costs upfront or use this as an excuse to invest in something new. 
• Professional assistance: Invest excess funds for consultations with accountants, lawyers, tax professionals, and other experts who can support your nonprofit’s future. 

3. Plan Ahead for the Next Fiscal Year

The changing fiscal year-end for nonprofits offers an opportunity to revise your financial management strategy. Compare the annual budget you planned at the beginning of the year with your actual operating expenses to consider how you can better allocate resources next year. 

Additionally, consider the most significant changes in the social services and nonprofit industry to forecast future changes. For example, limited community resources may require you to spend more next year, which may demand additional funding sources. Assessing the full picture based on this previous year’s data and next year’s forecast will help you align your revenue streams with your nonprofit’s long-term goals. 

For example, reviewing your fiscal year’s funding sources and fundraising expenses could highlight the need for nonprofit funding diversification. This way, you can maintain a dependable revenue stream without relying too heavily on specific sources or donors, such as by applying for grants for nonprofits during low-funding periods. 

4. Avoid Common Mistakes Nonprofits Make at Year-End

Rushed spending, missing documentation, and other errors can make your financial reporting inaccurate and cause you to overlook key aspects of your nonprofit budgeting strategy. The most common mistakes of nonprofit year-end reporting include:

• Quick fixes: Temporary fixes made for minor financial reporting issues throughout the year can contribute to other problems, such as errors, delays, and non-compliance. Even if it takes extra time, be sure to address any potential setbacks or mistakes before they snowball into non-compliance issues. 
• Rushed spending: Spending all of your additional funds as soon as you identify the surplus can lead to wasteful expenditures and potential compliance issues. Instead, take time to consult with board members and other stakeholders to identify the best places to divert funds, such as fundraising expenses or administrative costs. 
• Missing documentation: Verify that you’ve included all relevant reports, receipts, and documents from the previous fiscal year. Accounting software can significantly help with this process by keeping all relevant documents within the same, easily accessible database. This way, you can come back and access everything whenever you need it. 
• Using manual processes: Manually entering expenses and other data can contribute to errors and wasted time. Casebook and other accounting tools can automate this process for maximum accuracy while letting your team focus on other responsibilities. 

9 Smart Ways To Spend Remaining Nonprofit Funds Before Year-End

Your financial reports may highlight opportunities for nonprofit year-end spending, such as on supplies, utilities, or professional support. Of course, you can’t just spend the money on anything that may be useful. Consider actionable, mission-aligned ideas for your extra year-end funds, including:

1. Enhancing program quality
2. Expanding program outreach
3. Paying down debts
4. Building reserves to strengthen stability
5. Supporting team well-being through small incentives and resources
6. Increasing fundraising expenses for specific campaigns
7. Refreshing marketing and fundraising tools to prepare for the new year
8. Adopting new accounting and case management software, such as Casebook
9. Improving data tracking and analytics for more transparent reporting

Year-End Compliance for Nonprofits: What To Double-Check

Year-end compliance for nonprofits is essential for your organization’s reputation and stability, especially when operating in social services. This emphasizes the importance of thoroughly reviewing your program costs, not just to minimize but to fully eliminate all potential errors. While artificial intelligence (AI) tools for human services nonprofits can help with this process, you can’t always rely on AI for accuracy, either. So, you will need to adopt multiple tools and practices to maximize accuracy and compliance. 

Key compliance tasks include:

• Filings: Perform an internal audit of all financial records, including income, expenses, and taxes, to verify that everything adds up accurately. Additionally, compare this data with any relevant grant or donor restrictions.
• Documentation: Bank statements, donation receipts, functional expenses, and other financial documents will paint a bigger picture of your nonprofit’s fiscal year budget. Using this data can further boost accuracy and raise trust with board members and other key stakeholders. 
• Donations: Review all donations and additional revenue streams your nonprofit used over the course of the fiscal year. Verify that each donation was accurately recorded and that restricted funds were used appropriately. Additionally, use this time to consider new nonprofit fundraising ideas for next year.
• Approvals: Take extra time to make sure your nonprofit year-end report aligns with federal, state, local, and grant regulations, ensuring no funds were misused or overlooked. 
• Tax forms: Prepare all relevant tax forms, including contractors’ 1099s, to verify accuracy and prepare your organization for the next fiscal year. 

Is Your Nonprofit Year-End Ready? Here’s How To Turn Data Into Action

Nonprofit year-end reporting requires you to consider various aspects of your organization’s finances and operations, which may be too much to handle manually. Casebook helps nonprofits organize their financial data, track expenses, and generate compliant reports with fast and accurate reporting. 

The case management tool centralizes data and automates reporting to give you maximum insight into your nonprofit’s financial health. This way, you can accurately document all expenses and receipts throughout the year and refer back to them whenever needed. This empowers mission-driven decisions with clear insights into your nonprofit’s spending and real-world impacts. 

Get a head start on your year-end readiness by trying Casebook today.