Considerations for choosing your nonprofit’s fiscal year end

By Nikki Kubly, director, BKD

Throughout the years, I’ve received questions from not-for-profit organizations (NFP) regarding the costs and benefits of changing to a fiscal year-end. I’ve seen organizations transition from Dec. 31 to fiscal year-end for many reasons, but the overarching motive is the budget challenge. Many organizations with individual-driven contributions receive a majority of revenues in the fourth quarter of the calendar year. With a calendar year-end, many NFP organizations are waiting for generous donors to contribute last-minute for personal tax reasons.

This article touches on some of the benefits and costs of changing to a fiscal year-end.

The IRS states a fiscal year should coincide with the organization’s natural operating cycle. These are some example questions:

  • What is your organization’s most significant quarter for revenue generation?
  • Do you rely mostly on individual giving, traditionally taking place near the December 31 year-end?
  • Are you an educational institution where a significant portion of tuition is generated in the fall?
  • Are revenues mostly generated in the summer months,g., zoos?
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