Fiscal year-end (FYE) data is more than a record for your auditors or board. Read closely; your year-end numbers show where your nonprofit is financially strong, where it is exposed, and where to focus next year. Four areas carry the most insight: revenue and donors, expenses and program impact, cash flow and reserves, and audit and compliance.
Revenue and Donors: Stable, Shrinking, or Shifting?
What to look for: Compare revenue year over year by category, such as grants, donations, events, and earned income. Then review donor retention, especially among first-time and recurring donors, and note who has lapsed.
What the data tells you: Heavy reliance on one funding type leaves your organization exposed to a single change, much like an investment portfolio concentrated in one stock. Falling retention may signal that your impact messaging is not reaching donors.
What to do:
Identify the programs that drew the most funding last year. They show where donor and grantor interest is strongest, so lead with them in appeals and proposals.
Launch new revenue efforts one at a time. Track each closely, and be ready to adjust or stop an effort that is not working.
Make giving easy. One organization we work with saw a significant increase in contributions after adding a popular payment app to its donation options. Before adding apps such as Venmo or Zelle, talk with your auditor. These platforms can introduce internal control risks and, without proper oversight, may lead to a management letter comment (a written recommendation from your auditor to strengthen a process).
Reconnect with lapsed donors through a personal note or a reminder of the impact they helped create. For current donors, automated thank-you notes and impact updates keep stewardship going when your team is stretched.
Identify the programs that drew the most funding last year. They show where donor and grantor interest is strongest, so lead with them in appeals and proposals.
Launch new revenue efforts one at a time. Track each closely, and be ready to adjust or stop an effort that is not working.
Make giving easy. One organization we work with saw a significant increase in contributions after adding a popular payment app to its donation options. Before adding apps such as Venmo or Zelle, talk with your auditor. These platforms can introduce internal control risks and, without proper oversight, may lead to a management letter comment (a written recommendation from your auditor to strengthen a process).
Reconnect with lapsed donors through a personal note or a reminder of the impact they helped create. For current donors, automated thank-you notes and impact updates keep stewardship going when your team is stretched.
Expenses and Program Impact: Aligned With Your Mission?
What to look for: Review your functional expense breakdown, which shows spending on programs compared with administrative and fundraising costs. Note any significant gaps between budgeted and actual expenses. For each program, calculate the cost per outcome or cost per participant.
What the data tells you: Donors and grantors often look at the share of spending that goes to programs. Cost per outcome goes a step further, showing whether a program is making a measurable difference or whether those dollars would do more elsewhere.
What to do:
- If program spending falls below roughly 65% to 75% of total expenses, find out why before shifting resources toward mission-critical work.
- Review budget-to-actual reports monthly. A sports team that reviews its performance only after the season ends cannot change the result.
- Reassess vendor contracts, insurance carriers, staffing, and technology. Modern systems can automate routine tasks and return staff time to programs.
- Restructure or sunset programs that are not delivering results. Watch for the sunk-cost fallacy, the tendency to keep funding a program because of what you have already invested.
- Use outcome data to show funders the impact of the programs that are working.
Cash Flow and Reserves: Can You Weather a Disruption?
What to look for: Calculate how many months of unrestricted operating cash you have on hand.
What the data tells you: Months of cash on hand shows whether your organization has a financial cushion, much like a household emergency fund. A cushion also helps you manage cost-reimbursement grants, which require you to spend funds up front and wait weeks or months for reimbursement.
What to do:
- Set a clear reserve goal. A common benchmark is three to six months of average expenses. If monthly expenses average $20,000, the target would be $60,000 to $120,000.
- Budget for a modest surplus each year. Nonprofits can run a surplus, and it is the most reliable way to build reserves over time.
- Run regular cash flow projections. If projections show cash will be tight in June, you have time to postpone expenses, adjust plans, or draw a line of credit.
Audit and Compliance: Are You in Good Standing?
What to look for: Review your most recent audit report for adjustments, findings, or concerns about internal controls. Check whether any required filings, such as IRS Form 990 or state compliance documents, were late.
What the data tells you: Audit findings point to places where internal processes need strengthening. Late filings can affect your reputation and your standing with regulators. Together, these flags show whether your financial systems are keeping pace with your organization’s growth.
What to do:
- Address audit findings promptly with documented remediation steps.
- Use technology with built-in safeguards, such as bill pay systems that require multi-level approvals.
- Update policies, procedures, and staff training to reflect process changes, and give your team time to adjust.
- Weigh in-house staffing against outsourced accounting. A firm that specializes in nonprofit accounting can add the segregation of duties a small staff cannot, and may cost less than hiring internally.
- Address audit findings promptly with documented remediation steps.
- Use technology with built-in safeguards, such as bill pay systems that require multi-level approvals.
- Update policies, procedures, and staff training to reflect process changes, and give your team time to adjust.
- Weigh in-house staffing against outsourced accounting. A firm that specializes in nonprofit accounting can add the segregation of duties a small staff cannot, and may cost less than hiring internally.
Your FYE Data Is a Mirror and a Map
Year-end data reflects where your organization has been and points to where it can go. Rather than filing the reports away, use them to set priorities, allocate resources, and strengthen your impact in the year ahead. The numbers speak. Make sure you’re listening.
Free Guide: Year-End Financial Checklist for Nonprofits
Reading your FYE data is easier when the close behind it is complete. Our free checklist walks you through each step, from reconciling accounts and assessing revenue to preparing financial statements, conducting an internal audit, archiving digital financial documents, and updating donor records.
About the Author
Chazin is a women-owned accounting and finance firm exclusively serving nonprofit organizations nationwide. The team supports nonprofit leaders with outsourced accounting, CFO services, technology, and training, built specifically around the needs of the sector.
Chazin partners with nonprofit organizations to build financial systems and processes that hold up under scrutiny, so leadership and boards can make decisions with confidence.
Looking for support with your organization’s finances? Chazin is here to help. Learn more at
