The Year-End Financial Checklist Every Non-Profit CFO Wishes They Had Earlier

Last December, Maria, the Executive Director of a mid-sized youth education non-profit in Chicago, found herself in a nightmare scenario. It was December 28th, and her board treasurer had just called asking for year-end financials for an emergency board meeting. Her bookkeeper had quit three weeks earlier. Grant reports were overdue. And somewhere in her QuickBooks file, $47,000 in restricted funds had been miscoded as general operating revenue.

She spent New Year's Eve untangling the mess instead of celebrating with her family.

This story repeats itself at hundreds of non-profits every December. But it doesn't have to be yours.

Whether your fiscal year ends December 31st or you're simply preparing for the calendar year close, this checklist will help you avoid Maria's fate—and maybe even enjoy the holidays.

The 15-Point Year-End Financial Checklist

Week 1: Reconciliation & Cleanup (December 1-7)

1. Reconcile All Bank Accounts

Every single one. Operating accounts, money market funds, PayPal, that old checking account you forgot about. Match every transaction to your books. If something doesn't reconcile, now is the time to investigate—not in March when your auditor asks.

Pro tip: Set a calendar reminder for the 5th of every month. Monthly reconciliation prevents year-end panic.

2. Reconcile Credit Cards and Loans

Pull statements for every credit card and line of credit. Ensure all transactions are recorded and properly categorized. Check that interest expenses are correctly allocated.

3. Review Outstanding Receivables

Who owes you money? Follow up on pledges, grants, and any other receivables. Determine if any need to be written off as uncollectible—better to face reality now than carry bad receivables into the new year.

Week 2: Revenue & Restricted Funds (December 8-14)

4. Verify Restricted Fund Coding

This is where Maria's nightmare began. Pull a report of all restricted funds and verify:

• Are donor restrictions properly documented?
• Have you released restrictions appropriately as expenses occurred?
• Does your restricted fund balance make sense?

A single miscoded transaction can cascade into Form 990 errors, failed audits, and awkward conversations with funders.

5. Record All Pledges and Conditional Grants

Multi-year pledges should be recorded at present value. Conditional grants (those with barriers or right of return) should only be recognized when conditions are met. Get this wrong, and you're overstating—or understating—your financial position.

6. Reconcile Donor Database to Accounting System

Your development team's records and your accounting records should match. If they don't, someone's data is wrong. Find out whose before you send out tax acknowledgment letters.

Week 3: Expenses & Compliance (December 15-21)

7. Review Vendor 1099 Information

Starting January, you'll need to issue 1099s to vendors paid $600 or more. Now is the time to:

• Collect missing W-9 forms
• Verify taxpayer identification numbers
• Ensure vendor addresses are current

The IRS penalty for incorrect 1099s can reach $290 per form. With 50 vendors, that's $14,500 in potential penalties.

8. Accrue Outstanding Expenses

Did you receive services in December that you haven't been billed for yet? Accrue them. This includes:

• Professional fees (legal, accounting, consulting)
• Utilities and rent
• Employee benefits
• Any goods received but not yet invoiced

9. Review Payroll Records

Ensure all payroll is processed and recorded. Verify that payroll tax deposits are current. Confirm employee benefits are properly recorded. Check that any year-end bonuses are properly accrued.

Week 4: Reporting & Preparation (December 22-31)

10. Prepare Draft Financial Statements

Even if your audit isn't until spring, prepare draft statements now while the year is fresh. This helps identify any issues while you still have time to address them.

11. Calculate Functional Expense Allocations

Form 990 requires expenses allocated across program, management, and fundraising. Ensure your allocation methodology is documented, reasonable, and consistently applied.

12. Document Any Unusual Transactions

Did anything out of the ordinary happen this year? Large one-time donations? Property sales? Related party transactions? Document them now—you'll thank yourself during audit prep.

13. Back Up Everything

Financial data, supporting documents, grant agreements, board minutes. Store copies in multiple secure locations. Cloud storage isn't optional anymore—it's essential.

14. Schedule Your Form 990 Preparation

The May 15th deadline will arrive faster than you think. If you're working with an external CPA, book your slot now. The best firms fill up quickly.

15. Brief Your Board

Prepare a year-end financial summary for your board. They'll appreciate the proactive communication, and it sets the tone for strong governance in 2026.

The Cost of Skipping This Checklist

Non-profits that rush through year-end—or skip these steps entirely—face real consequences:

• Audit adjustments that delay your 990 filing
• Funder concerns when grant reports don't match audited financials
• IRS scrutiny from Form 990 errors
• Board embarrassment when financial statements need restatement
• Staff burnout from crisis-mode cleanup

A Better Path Forward

Maria's story has a happy ending. After that difficult December, she reached out for help. We worked together to clean up her books, implement monthly reconciliation processes, and create a year-end checklist tailored to her organization.

This December, she sent us a photo of her family's holiday gathering—with a note that said, "First peaceful December in five years."

Year-end doesn't have to be stressful. With the right processes—and the right support—it can simply be a milestone you pass smoothly on the way to greater impact in 2026.

Need help closing out 2025? Our team of US-licensed CPAs specializes in non-profit accounting. Schedule a free consultation to discuss how we can help you start the new year with clean books and clear minds.

This checklist provides general guidance. Your organization's specific needs may vary based on size, complexity, and state requirements. Consult with a qualified CPA for advice tailored to your situation.