Year-End Giving: How to Create a Financially Sound Strategy

Thursday, November 14, 2024

It’s no secret that the end of the year is a busy time for nonprofits. Giving tends to spike during this season, so your fundraising and development teams have a lot to do to plan effective campaigns and engage your supporters one last time this year. At the same time, your leaders and finance team have to close the books on this fiscal year, analyze and report data, and make sure your financial plans are ready to go for the new year.

While you might treat fundraising and financial management as separate tasks, they need to work together for the best possible results. In this guide, we’ll explore how to create a balanced strategy for your nonprofit’s year-end giving season by covering the following topics:

• Why is year-end giving important for nonprofits?
• What does year-end financial management entail?
• Tips to Coordinate Year-End Fundraising & Financial Management

By pairing your fundraising and financial strategies for year-end giving, you’ll set your nonprofit up for alignment in these areas into the new year and beyond. Let’s dive in!

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Why is year-end giving important for nonprofits?

The spirit of generosity that comes with the holiday season combined with the prospect of claiming one last tax benefit makes donors highly motivated to give at the end of the year. And the nonprofit-sector data provides clear evidence:

• 30% of annual charitable giving occurs in December.
• 10% of nonprofit donation revenue comes in during the last three days of the year.
• 49% of one-time online contributions happen in November and December combined.
• 97% of donors cite their gift’s impact as a major reason for contributing at the end of the year, although tax deduction is still a significant motivator (56%).

External factors will naturally affect these statistics—for example, the exact distribution of online gifts made in November vs. December depends on when GivingTuesday occurs, and more donations tend to come in on December 31 if it falls on a weekday rather than a weekend. However, the exact effects of year-end giving on your organization also depend on how well you plan, promote, and execute your fundraising efforts.

What does year-end financial management entail?

With a few exceptions, most nonprofits’ fiscal year follows the calendar year. So, while your team is managing its year-end fundraising, you’ll also need to wrap up your financial activities for the year and prepare for next year by completing the following tasks:

• Record all remaining transactions so you have complete data on the revenue you brought in and expenses you incurred during the year.
• Review all financial data from the year to ensure you’re practicing good data hygiene and reduce the risk of reporting incorrect information.
• Perform a final bank reconciliation to confirm that your internal records match the information the bank has on file.
• Pay any outstanding bills or invoices you can, and review your accounts receivable and payable to confirm which financial obligations will carry over to the next year.
• Check on your nonprofit’s investments and other assets to confirm they’re properly categorized and managed.
• Compile the four core nonprofit financial statements—income statement, balance sheet, cash flow statement, and functional expense report—to summarize your financial data in actionable ways.
• Create the financial section of your annual report summarizing the year’s highlights in spending and fundraising, then attach your financial statements as appendices in case supporters want to dig deeper.
• Finalize next year’s operating budget and submit it to your organization’s board for approval.

Having your nonprofit’s financial data in order at the end of the year will also allow you to file tax forms more efficiently. Your organization has to submit its Form 990 by the 15th day of the fifth month after its fiscal year ends—May 15 for nonprofits on the calendar fiscal year—which can take time to complete and requires detailed, accurate records.

Additionally, your employees and contractors need to receive their W-2s and 1099s respectively by January 31, regardless of when your fiscal year ends. Double-check all compensation information in December—even if you complete the rest of the above tasks at another time—to ensure you can fill out these forms before their deadline.

Use our financial reporting policy template to standardize your nonprofit’s processes.

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Tips to Coordinate Year-End Fundraising & Financial Management

Now that you understand the importance of year-end giving and fiscal year wrap-up tasks for nonprofits, let’s look at some actions you can take to conduct your final fundraising push of the year in a financially responsible manner.

Set Clear Goals for Year-End Giving

Whether you’re organizing fundraisers or navigating financial planning, goals are essential to keep your team’s efforts on the right track. While your main objective for your year-end giving campaign will likely concern the amount of revenue you hope to raise, you might also set goals that relate to engaging supporters and spreading awareness of your mission.

Once you have a general idea of what you want to accomplish, make your year-end giving goals actionable using the SMART method, meaning they’re:

• Specific about what success looks like.
• Measurable, including a specific number or percentage you want to hit.
• Attainable based on past year-end fundraising data and your nonprofit’s current capacity.
• Relevant to your mission and upcoming initiatives.
• Time-bound with a clear deadline (usually the end of the day on December 31).

Keeping these parameters in mind, an example of a SMART year-end giving goal might be “to raise $50,000 ($3,000 more than we did last December as we’re in a better financial position now) to support next year’s community programming needs between GivingTuesday and the end of the day on December 31.”

As you set these goals, align them with the operating budget you have in progress for next year, since you’ll likely wait until next year to spend the revenue you bring in at year-end. Take a look at your nonprofit’s ongoing or upcoming strategic plan so your goals fit into it as well.

Offer Multiple Ways to Give at Year-End

Especially if donors make their biggest (or only!) charitable contribution of the year in December, they’ll be more likely to choose your organization if you let them give how they want to. Plus, diversifying your year-end fundraising strategy makes you more likely to reach your goal since you’ll have a stronger safety net in case of unexpected circumstances.

We’ve broken down the best options for year-end giving based on the five major categories of nonprofit revenue to make budgeting and reporting easier for your team.

Individual Donations

Individual donations will likely make up the bulk of your organization’s year-end contributions. Allow donors to choose from a variety of donation methods, such as:

• Responding to a direct mail solicitation by sending a check in a prepaid return envelope or by scanning a QR code to your online donation page.
• Texting a special year-end keyword to your nonprofit’s text-to-give number for easy mobile giving.
• Donating to a crowdfunding campaign or similar social media fundraiser.
• Campaigning for a peer-to-peer fundraiser or giving through a friend’s page.
• Contributing physical goods to an in-kind donation drive.
• Attending a fundraising event (possibly with a holiday theme to capture the spirit of the season).
• Joining your recurring giving program so their contributions continue into the new year.

Corporate Philanthropy

Your donors’ employers may also be eager to get involved in your year-end campaign, and you can leverage their support to maximize the value of individual donations. Research the companies your supporters work for to see what their corporate social responsibility initiatives look like, particularly if they offer any of these programs:

• Matching gifts to multiply their employees’ monetary year-end donations.
• Volunteer grants to turn the time volunteers spend helping with your campaigns into money.
• Sponsorships to offset the upfront costs of fundraising events.
• Employee giving campaigns like team fundraising challenges or payroll deductions.

Earned Income

If your nonprofit has a membership program, December is a great time to promote it so you can get both first-time sign-ups and renewals going into the new year. Some other ways your organization can generate its own income at the end of the year include:

• Selling branded merchandise like clothing, drinkware, and magnets.
• Launching product fundraisers, especially those featuring holiday-related items like wrapping paper and cookie dough.
• Leveraging supporters’ holiday shopping through gift card fundraisers or rounding-up programs at popular retailers.
• Running promotions on fees for mission-related services—for instance, an animal shelter might discount pet adoption costs in December, or a museum could rent out its event spaces at a reduced rate to other nonprofits for their year-end galas and auctions.

Investments and Grants

Since these revenue streams have a long-term focus, they likely won’t play a major role in your year-end fundraising efforts. However, you should take some time to ensure everything is in order for next year by:

• Reviewing your existing investments to see if you want to make any adjustments.
• Making a schedule of when you’ll apply for new grants and manage ongoing ones.
• Using marketing grants to promote year-end giving opportunities.

Focus on Donor Retention

According to Fundraising Report Card, the average year-over-year donor retention rate in the nonprofit sector is just under 35%. So, if 100 donors gave to your organization last year, probably only 35 would donate again this year.

The end of the year is a critical time for donor retention for a few reasons:

• Cost-effectiveness. On average, nonprofits spend $1.50 per dollar raised to acquire a new donor, but just $0.20 per dollar raised to retain an existing one. Retaining donors allows you to reduce upfront costs for your year-end giving campaigns and put more of your hard-earned resources toward your mission.
• Annual giving habits. While some supporters stay involved with your nonprofit between their year-end donations, other donors give just once a year—in December. So, it’s essential to remind them about their year-end gift to re-engage them and keep the door open for additional future support.
• Reliable support. By retaining year-end donors, you’ll build a stable support base for your organization that will carry you into the next year and beyond. This is especially true if you get supporters to sign up for your monthly giving program or membership program.

Although your nonprofit should acquire some new donors during its year-end campaign to fuel growth, prioritize retention to manage your resources effectively. If you haven’t reached the 35% year-over-year benchmark yet, work toward that goal first and improve from there.

Communicate Year-End Giving Impact

Given that the overwhelming majority of donors say they give at year-end to make a difference for a cause they care about, communicating impact is essential for both retention and acquisition. Whether you’re designing campaign marketing materials, creating your annual report, or writing donor thank-you notes, emphasize the key role your year-end donors play in helping your nonprofit further its mission.

To accomplish this in your donor communications, consider incorporating:

• Images. Charts, tables, and graphs go a long way in showing progress and making complex concepts easy to understand. Also, photos of your beneficiaries receiving services or your volunteers hard at work put a face to your mission and allow supporters to visualize their gifts’ impact. (Just remember to obtain consent before publicly sharing anyone’s pictures or names!)
• Storytelling. Real-life impact stories help donors connect emotionally with the work their gifts have accomplished. Make sure to tell your nonprofit’s stories as they actually happened and include firsthand perspectives from your staff, supporters, or beneficiaries as they’re relevant to build trust with your audience.
• Data. Statistics make your organization’s impact more concrete, and they ground images and stories in reality. Don’t manipulate the facts here either—be transparent with supporters no matter the results. If you achieved your goals, genuinely thank them and follow through on your promises for how you’ll use their resources to further your mission. If not, explain why not, outline your plans to improve your results, and encourage supporters to help you accomplish more in the future.

Think of year-end financial reporting as another element of communicating impact. Although you have to comply with specific requirements and your audience includes government agencies and other stakeholders, you’re still demonstrating your organization’s commitment to using its resources wisely to fulfill its mission. Plus, some year-end campaign donors will at least look at your most recent annual report’s financial charts and graphs—if not your financial statements and past Form 990s—to decide if they want to contribute.

Leverage Outsourced Services

To effectively manage all of your nonprofit’s year-end activities, you may need some additional help beyond your existing team’s bandwidth. But unless you know you’ll have enough work for another staff member to take on year-round, consider saving money and time by outsourcing some end-of-year tasks to external professionals instead of hiring new employees.

Commonly outsourced services in the nonprofit sector include:

• Fundraising consulting to assist with campaign strategy and strategic planning.
• Marketing and design to update your website and create other promotional materials for year-end giving.
• Information technology to set up and maintain various types of software, from your donor database to your event planning tools.
• Human resources to ensure your employee compensation information and plans are in order for the new year.
• Financial management—including bookkeeping, accounting, and fractional CFO services—to work through all necessary fiscal year-end tasks accurately and strategically.

If you’re looking for any or all three types of outsourced nonprofit financial management services, look no further than Jitasa! We provide affordable, tailored bookkeeping and accounting services for a flat monthly rate, as well as fractional CFO services through the Jitasa Strategic Advisory Team. Plus, we only work with nonprofits, so our experienced team understands your organization’s unique needs and will work with you to ensure effective financial management all year long.

But don’t just take our word for it—see what our clients have to say!

Year-end fundraising and financial management can be stressful for your nonprofit, but by developing an integrated strategy for them, you’ll set your organization up for success. Use the tips above to get started, and don’t hesitate to reach out to experts with any questions or issues—including our team at Jitasa for financial activities.

For more information on end-of-year financial management, check out these resources:

• Nonprofit Revenue Recognition: What It Is & Why It Matters. Discover best practices for recording and categorizing the revenue you bring in during year-end fundraising.
• GivingTuesday Best Practices to Align Fundraising & Finances. Dive deeper into how to balance financial management and fundraising on the day that kicks off the year-end giving season.
• Form W-9 for Nonprofits: What It Is & How to Fill It Out. To complete 1099s for your nonprofit’s contractors each year, you first need to request W-9s from them—learn more in this guide.

Let Jitasa’s expert accountants handle your year-end financial management so you can focus on your mission.

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