For nonprofit leaders, fiscal year-end can feel like a race to the finish line. Financial reporting deadlines, compliance reviews, HR requirements, audit preparation, and donor accountability all converge at once — often while teams are already stretched thin.
But this season doesn’t have to be reactive. When approached strategically, it becomes a powerful opportunity to strengthen internal controls, reduce risk, and create clarity that supports better decision-making all year long.
Here’s how leaders can turn year-end from a stress point into a strategic advantage.
Start Earlier Than You Think You Need To
One of the most common mistakes nonprofits make is waiting too long to start preparing. When end-of-year responsibilities are compressed into a short window, small issues quickly become big problems — reconciliations fall behind, documentation gets rushed, and important compliance steps are overlooked.
“The organizations that experience the least stress at year-end are the ones that start 60 to 90 days early. That runway gives you time to clean up records, review compliance, coordinate across departments, and map who owns each task — it changes the whole process from reactive to intentional,” says Grace McKoy, lead advisor for not-for-profit organizations at Pinion.
Starting earlier creates space for thoughtful review, reducing the likelihood of errors and last-minute stress.
Use Accounting Updates as an Opportunity, Not a Burden
Accounting standards continue to evolve, and organizations must stay current to avoid audit findings and compliance risk. Recent updates around current expected credit losses (CECL), internal-use software, Uniform Guidance, and lease accounting can all materially affect financial reporting.
McKoy emphasizes, “Accounting updates don’t have to feel like a burden. When you address them proactively, they often reveal opportunities to simplify reporting, strengthen documentation, and reduce audit friction down the road.”
The close period is the ideal time to revisit assumptions, policies, and documentation to ensure they align with current guidance. Engaging advisors early allows organizations to move beyond simply “checking the box” and instead focus on what matters most: properly interpreting guidance, applying it consistently, and documenting decisions in a way that stands up to scrutiny long after the reporting cycle has ended.
Tackle Common Pitfalls Before They Turn Into Findings
Certain issues appear again and again in nonprofit audits: misclassified contributions, improperly recorded leases, weak internal controls, unreconciled accounts, and inaccurate functional expense allocations.
These challenges rarely stem from negligence. More often, they result from outdated processes, unclear responsibilities, or competing priorities. The close season is the perfect time to step back and evaluate where breakdowns are happening.
A pre-close review — looking at lease agreements, donor restrictions, revenue recognition policies, and reconciliation procedures — can surface problems while there’s still time to fix them. The goal isn’t perfection. It’s reducing surprises and avoiding findings that could have been prevented with earlier attention.
Don’t Let HR Compliance Become a Blind Spot
The annual close is also a critical checkpoint for HR and payroll compliance, especially as regulatory scrutiny continues to increase. Wage and hour laws, employee classification, payroll reporting, documentation, and record retention all carry significant risk if mishandled.
Shannon Mahoney, TalentPro advisor, warns, “Wage and hour issues don’t just carry penalties per incident. They can also result in retroactive back wages, which add up quickly and create financial exposure.”
She adds, “Compliance isn’t just about knowing the rules exist. It’s about interpreting them correctly, applying them consistently, and documenting decisions in a way that stands up over time.”
This is also the time to conduct an HR health check: reviewing employee classifications, auditing time and labor tracking, confirming payroll accuracy, and ensuring handbooks and policies reflect how the organization actually operates today. Many nonprofits also find that evaluating payroll and HR systems at year-end helps reduce errors, strengthen documentation, and improve efficiency.
Address Financial Risk Before It Becomes a Crisis
This is also the right moment to assess financial sustainability. Heavy reliance on a single funding source, declining grant revenue, cash flow volatility, or recurring operating losses can all raise red flags around long-term viability.
Conducting a realistic financial review — stress-testing budgets, evaluating liquidity, and modeling funding scenarios — allows leadership to address risks proactively rather than reactively. This forward-looking planning supports stronger board conversations, smarter budgeting, and better alignment between mission goals and financial realities.
Turn Year-End Into a Strategic Reset
The most effective leaders don’t view the annual close as simply closing the books. They treat it as a strategic reset — a chance to reflect on the past year, identify improvements, and set priorities for the year ahead.
Mahoney points out, “When finance and HR teams work together at year-end, organizations gain more than compliance — they gain clarity. That clarity supports stronger decision-making and reduces risk across the organization.”
This is the moment to ask bigger questions: Are your systems still working for you? Do your policies reflect current operations? When is your organization exposed to unnecessary risk? Addressing these issues now positions organizations for a stronger, more confident year ahead.
Close Strong, Start Smarter
Fiscal year-end will always demand focus. But with early planning, disciplined processes, and strategic insight, nonprofits can transform this busy season into a moment of clarity and momentum.
Stay Ahead of What’s Next
Pinion’s Not-for-Profit Education Webinar Series offers ongoing guidance on evolving accounting standards, HR compliance, financial sustainability, and operational best practices.
View upcoming webinars here:
https://www.pinionglobal.com/not-for-profit-education-webinar-series/
If your organization could benefit from guidance on accounting updates, HR compliance, audit readiness, or financial strategy, Pinion’s not-for-profit advisors are here to alleviate your back-office and operational challenges.
