Don’t Skip These 5 Steps When Closing Your Nonprofit’s Books Before Year-End

Attention Executive Directors:

Most nonprofit leaders think of year-end close as a mountain of compliance tasks. It’s stressful, time-consuming, and often feels like it pulls you away from your mission.

But closing your books doesn’t have to be chaos. In fact, with the right process, year-end close can give you clarity, confidence, and a stronger story to share with your board, donors, and funders.

Here’s my step-by-step guide to making it manageable – especially for nonprofits with unique needs like restricted funds and grant reporting.

Step 1: Spot Check Supporting Documentation Schema

Don’t wait until the last minute. Make sure your accounting team has maintained organized and secure records to support preparation and audit activities:

• Bank statements and reconciliations
• Payroll records
• Accounts payable/receivable reports
• Grant agreements and funding schedules
• Supporting schedules and source documents for all other balance sheet items

Think of it as ensuring the “source library” for your financial story.

Step 2: Verify Month-End Close Checklist

Take a quick look at last month’s Month End Close Checklist. Did your team quickly point you to the last completed checklist? Was it actually completed? Are there any open or unexplained items?

Step 3: Review Revenue & Expenses to Budget

Go line by line. Ask yourself:

• Did we operate within budget? If not, do I have a clear and compelling explanation for the Board? Do I have/need a plan to remediate or leverage our financial performance?
• Does any aspect of our accounting/finance operations expose us or our mission to undue risk?
• Are we leveraging technology and policy to build efficiency, continuity, and resilience in our mission-oriented and back-office operations?
• Have we delivered on our initiatives for the year? Have we remained focused on our mission? What is the relationship of these answers to the financial statements?

Hopefully steps 1 & 2 were painless – and this step is where forward-looking clarity emerges.

Step 4: Confirm Fund Alignment & Financial Accuracy

For nonprofits, this is where things often get tricky.

• Make sure your grants and restricted funds are aligned and your reports tell a consistent story to funders and your board.
• Then, confirm your financial picture is accurate – not just convenient. Accrual-based adjustments ensure you’re seeing the full reality of your organization’s position.

You don’t need to know every detail, but you should understand the story behind the numbers.

Step 5: Translate Financials Into Strategy

Before anything goes to your board or auditors, review internal summaries that show key insights like budget vs. actuals, program efficiency ratios, and cash reserves.

These reports help you make confident, forward-looking decisions. If you’re unsure how to interpret the data or what story it’s telling, a fractional team with expertise in nonprofit accounting can help you turn your financials into actionable strategy.

You Don’t Have to Do It Alone

If your head is spinning, you’re not failing. You just need better support. A nonprofit fractional accounting team can guide you through these steps, keep your records clean, and free you up to focus on what’s most important: your mission.

Make Year-End a Launchpad

Closing your books isn’t the finish line for nonprofits – it’s the launchpad for furthering your mission next year. When your numbers are clean, your reports are clear, and your board has confidence, you’re set up for growth.

Ready to see how prepared your nonprofit really is? Book a free 2026 Board-Ready Financial Review with our nonprofit accounting experts – it’s a quick way to spot gaps before year-end close sneaks up and make sure your mission is protected through next year (and beyond).