A Guide to the Month-End Close for Nonprofits

Americans donated an estimated $617.2 billion to charitable organizations in 2025, according to a recent report by Giving USA. The increase reflects continued support for the nonprofit sector, but many organizations are still managing rising operating costs, greater demand for services, and ongoing funding uncertainty. In that environment, timely financial information is critical to the mission. Leadership needs to know how the organization is performing while there is still time to respond, not weeks after the month has ended. That starts with an effective month-end close. To help clients, prospects, and others, Wilson Lewis has summarized the key details below.

Why Does the Month-End Close Matter to Nonprofits?

The month-end close verifies that the nonprofit has kept complete and accurate financial records throughout the month. It also helps leadership answer a few important questions. Does the organization have enough cash to meet upcoming obligations? Are programs operating within budget? Are grants being spent and tracked appropriately? Are there any unexpected cash flow issues?

For example, a nonprofit may realize that a main source of funding has been delayed while payroll and other operating costs continue as planned. Identifying that trend early gives leadership the opportunity to resolve the issue before it becomes a problem. They may decide to postpone discretionary spending or find another funding source before there is negative cash flow.

The month-end close also makes grant reporting and the annual audit more manageable. Reviewing accounts regularly allows any open question marks to be resolved throughout the year. Then there’s less work to untangle later.

Additionally, the month-end close is the first step to producing key financial reports for the organization. Reports, like the balance sheet, are often reviewed by nonprofit leaders and board members on a monthly basis. More detailed reports may be reviewed on a quarterly or annual basis, depending on the size of the organization. 

What Should Be Included in a Nonprofit Month-End Close?

Although every organization has its own procedures, the month-end close generally includes many of the same activities.

The first priority is making sure all financial activity has been recorded. Donations, grants, program revenue, payroll, vendor invoices, and employee expense reimbursements all need to be entered before reports are prepared. Missing or incomplete transactions can distort the organization’s financial picture.

From there, accounting records are compared with outside sources such as bank and credit card statements, along with investment reports. These reconciliations help identify issues that might otherwise go unnoticed, including duplicate transactions, deposits recorded incorrectly, or outstanding items that require follow-up.

The accounting team also records routine adjusting entries so revenue and expenses are reported in the correct accounting period under generally accepted accounting principles (GAAP).

Nonprofits often review donor restrictions and grant requirements at month-end as well. For example, a contribution designated for a building project cannot be treated the same as unrestricted operating revenue. Grant-funded expenses may also need to be reviewed before reimbursement requests are submitted, and shared costs may need to be allocated among multiple programs.

Once those steps are complete, leadership reviews the financial statements. Budget variances and other unusual changes are evaluated before reports are shared with management or the board.

This level of detail is an expected part of the accounting function; however, funders and charity rating organizations are also interested in this information. They review spending for direct mission-related work versus indirect administrative costs. A misallocation or improper documentation can skew the numbers and influence how an organization is viewed by outside stakeholders.

How Can Nonprofits Improve the Process?

One of the simplest improvements is documenting the process. A written checklist helps ensure important steps are completed consistently and makes it easier to train new employees or keep work flowing through the finance team even when someone is unavailable due to vacation time or health reasons.

Clear expectations across departments are equally important. Finance staff often depend on information from payroll, development, program managers, and others before the close can move forward. Internal deadlines can help keep everyone on the same timeline.

Another best practice is completing work throughout the month whenever possible. Accounts can be reconciled at several points during the month rather than waiting. Supporting documents can be added at any point as well. 

Finally, it helps to evaluate the close after each reporting cycle. If the same delays continue to happen, it usually means the process needs to be improved. Small changes to responsibilities or procedures can often make the next close more efficient. Many nonprofit organizations also use industry-specific accounting software to automate routine tasks or bring in an outsourced accounting team to help streamline the process.

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The month-end close is a critical component of running a successful nonprofit operation. It produces financial statements that will likely be reviewed or audited and helps organizations see if there are sufficient funds for programming. But more than that, it produces the financial information leaders rely on to make strategic decisions going forward. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.