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By Omar Visram, Co-Founder and CEO at Enkel

As non-profits in BC approach their fiscal year-ends, certain financial tasks can slip through the cracks. Leaving these tasks unaddressed can result in compliance issues, inaccurate financial reporting, and potentially strained relationships with partners, team members, and other collaborators.

We partnered with Enkel, who has helped hundreds of Canadian non-profits, to create a guide to help you deal with the most overlooked or mishandled year-end financial tasks, so you can avoid financial errors, maintain transparency, and position your non-profit for future success.

1. Reconcile Restricted and Unrestricted Funds

Non-profits often receive restricted funds—donations or grants earmarked for specific purposes. These need to be tracked and reconciled separately from unrestricted funds to avoid compliance issues and ensure transparency with funders.

Why reconciling restricted and unrestricted funds matters

Proper reconciliation ensures compliance with grant terms, maintains transparency, and builds donor trust. Financial clarity can help ensure strong relationships and secure future funding with trusted partners. 

What happens if you don't do this task?

Mismanaging restricted funds can lead to spending errors, audit issues, and even legal penalties.  

How to handle it:

1. Set up separate accounts or classifications for restricted and unrestricted funds using accounting software.
2. Perform quarterly reviews to ensure all funds are being used as intended.
3. Have your books reviewed by a senior finance professional on a monthly or quarterly basis once your bookkeeper has wrapped up the books.

2. Review Deferred Revenue

Deferred revenue refers to money received but not yet earned, such as grants or multi-year donations. It’s easy to overlook, but misreporting deferred revenue can result in overstating your income. 

Why reviewing deferred revenue matters

Accurate deferred revenue reporting helps with cash flow management and keeps your financials in order. Accurate deferred revenue tracking by funders helps organizations budget more effectively by recognizing when certain revenues will be available and when they will need to deliver on programmatic commitments to “earn” that revenue. Nnon-profits often receive grants or large donations tied to specific programs, events, or timelines. Deferred revenue helps track these commitments and ensures that the organization meets its obligations. 

What happens if you don't do this task?

Overstating revenue could lead to financial mismanagement, causing strain on future periods when these funds have already been spent. It can also lead to audit issues and a loss of credibility with funders or other key partners. 

How to handle it

1. Use a separate deferred revenue account in your accounting software to track each stream of unearned funds. 
2. Ensure that the account is reviewed regularly with revenue recognized in accordance with your accounting policies. 
3. Given that revenue recognition often follows expenditures, it’s also important to track expenses by funding source.

3. Year-End Adjusting Journal Entries

Year-end adjusting journal entries (AJE) are entries made in the accounting records at the end of an accounting period to adjust the accounts to reflect accurate financial conditions. 

Year-end adjusting journal entries are important to get your bookkeeping records to a point where they are compliant with the accounting standards under which your financial statements will be audited or reviewed. 

Many of these entries are not necessarily important on a day-to-day basis, so they often get ignored throughout the year. 

Why posting year-end adjustments matters

• Accurate financial reporting: These entries provide a clear, accurate snapshot of a business’s financial position at the end of the year. 
• Tax preparation: AJEs ensure all income and expenses are recorded in the right period is critical for preparing accurate tax returns. 

What happens if you don’t do this task?

You run the risk of your accountant doing the work, which may increase the cost of your year-end audit. It can also paint a picture that your books require a lot of clean-up at year end. 

How to handle it

1. Have your financial team review your adjusting journal entries from your accountants from last year to identify what you proactively address to avoid adjusting journal entries this year. 
2. Common places to look include:  
   1. Prepaid expenses 
   2. Fixed assets 
   3. Vacation balance accruals. 
3. Make sure to maintain documentation for the adjustments that you can share with your auditor to support the opening balances, closing balances, and adjusting entries you have made. 

4. Perform a Fundraising Efficiency Review

Non-profits often focus on how much they raise without evaluating the true cost of their fundraising efforts. A fundraising efficiency review helps you understand the actual return on investment for your campaigns.

Why performing a fundraising efficiency review matters

This review ensures you maximize the effectiveness of your fundraising activities. Knowing your cost per dollar raised helps you decide whether to continue or discontinue certain campaigns based on their performance.

What happens if you don't do this task

If you’re spending more to raise funds than you’re bringing in, your resources will be drained, which could negatively affect program delivery.

How to handle it

Gather data on staff time, marketing costs, and event expenses. Calculate your cost per dollar raised for each campaign to determine which are worth continuing. 

5. Internal Control Review and Updates

Internal controls are essential for safeguarding your non-profit’s financial resources. However, these controls are often not reviewed regularly, which increases the risk of fraud or mismanagement. 

Examples of internal financial controls include:

1. Segregation of Duties: Ensuring that no single person is responsible for handling all aspects of a financial transaction. For example, the person authorizing a payment should be different from the one processing it or reconciling the bank accounts. 
2. Authorization and Approval Processes: Requiring approvals for certain financial transactions, such as large payments or expenses. For instance, expenses over a set limit may need board approval or executive director sign-off. 
3. Physical and Digital Access Controls: Limiting access to financial records, accounting systems, and sensitive data. Only authorized personnel should have access to cash, checks, or financial software. 
4. Regular Reconciliations: Performing frequent reconciliations of accounts, such as bank accounts or credit card statements, to detect and correct any discrepancies. 
5. Budget Monitoring and Reporting: Establishing a process for regularly reviewing actual spending versus budgeted amounts. This ensures that financial resources are used effectively and within approved limits. 

Why reviewing internal controls matters

Strong internal controls ensure that your non-profit’s financial processes are protected from fraud, mismanagement, or errors. They also help ensure compliance with funders and auditors. 

What happens if you don't do this task

Weak internal controls can lead to financial mismanagement or even fraud. Without regular reviews, mistakes or inappropriate transactions can go unnoticed, causing long-term harm. 

How to handle it

1. Conduct an internal audit to assess the effectiveness of your current internal controls. 
2. Ensure segregation of duties and approvals for all major financial transactions. 

Ready to Strengthen Your Non-profit’s Financial Health This Year? 

Year-end financial tasks are critical for ensuring transparency, compliance, and the long-term sustainability of your non-profit. If you’re feeling overwhelmed or unsure about tackling any of these tasks, start by reaching out to your internal team. 

Your Finance Manager, Bookkeeper, or Accountant should be able to guide you through essential processes like reconciling funds, reviewing deferred revenue, and ensuring strong internal controls. 

If your team doesn’t have the capacity or expertise to manage these mission-critical tasks, working with external financial support can make all the difference!  

We wish you success as you work towards building more sustainable organizations and develop your capacity for financial management! 

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ABOUT THE AUTHOR 

Omar Visram is the Co-Founder and Head of Growth at Enkel, a financial services firm specializing in supporting Canadian non-profits and small to medium-sized businesses with their financial operations. Enkel gives Canadian non-profits the financial operations support they need to stay compliant and thrive. Book a free consultation to learn how our bookkeeping, payroll, and fractional controllership services can help your non-profit in the year ahead.

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Ensure your organization is overseeing its finances effectively with our Board Fundamentals: Financial Governance workshop. Find out more about the course and when it's next offered here.

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By Zahra Esmail, CEO of Vantage Point, and Kishone Roy, Executive Director of the Federation of Community Social Services

Non-Profit North, an event co-hosted by Vantage Point and the Federation of Community Social Services of BC (FCSSBC), was a significant milestone for the community social services sector in Northern British Columbia.

This gathering marked a much-needed return to in-person events post-COVID-19, aimed at fostering connections, sharing knowledge, and addressing the unique challenges and opportunities faced by non-profit organizations in this region.

A shared vision for community engagement

At the heart of Non-Profit North was a shared vision between Vantage Point and The Federation: to engage deeply with non-profits in Northern BC, listen to their experiences, and facilitate meaningful connections among leaders and changemakers.

This event was a testament to the strong sense of community and shared purpose that exists among organizations in Northern BC, as we all navigate a landscape filled with distinct challenges. By coming together, we sought to harness collective efforts and knowledge sharing to better serve the sector and the communities it supports.

Highlights of the event

One of the most memorable moments was Dr. Dustin Louie's keynote address. As a First Nations scholar from Nee Tahi Buhn and Nadleh Whut'en, Dr. Louie brought unique insights into transformative reconciliation, enriching the discourse with perspectives deeply rooted in local knowledge and experience.

Additionally, the session co-led by Prairie Chiu, Vantage Point's Director of Engagement and Advocacy, and Zahra Esmail, provided a comprehensive overview of the 2024 State of BC’s Non-Profit Sector Survey and ongoing initiatives to convene a BC Non-Profit Network. This session sparked essential discussions about regional equity and advocacy opportunities, which are crucial for advancing the sector's collective goals.

Chiu and Esmail also facilitated a session on Board Diversity & Inclusion, addressing critical issues that impact the effectiveness and representativeness of non-profit boards. The engagement and enthusiasm of participants highlighted the sector's commitment to these values.

The importance of in-person gatherings

The palpable enthusiasm and active participation from attendees at Non-Profit North were truly inspiring.

We are deeply grateful for the opportunity to meet leaders from across Northern BC, to build stronger relationships, and to gain a deeper understanding of the regional nuances affecting local non-profits.

Their presence and engagement are invaluable as we continue to build trust and reciprocity with the sector in Northern BC.

Personal reflections from Zahra Esmail

On a personal note, Non-Profit North was a profoundly enriching experience for me.

The opportunity to reconnect with the vibrant communities in Northern BC was both professionally rewarding and personally fulfilling. I was particularly moved by the openness and resilience of the non-profit leaders I met. Their stories of perseverance in the face of unique regional challenges reinforced my belief in the power of collaboration and shared learning...and the strength of our mighty sector!

Looking ahead: Sustaining momentum

As we reflect on the success of Non-Profit North, we are inspired by the impact it has had on the non-profit sector in Northern BC. The momentum generated by this event has sparked new collaborations, deepened relationships, and developed a sense of shared purpose. Our commitment to being curious learners and building relationships of trust will guide our efforts as we move forward. We are excited about the journey ahead, confident that together, we can work towards a more connected, cohesive, and thriving non-profit sector.

Personal reflections from Kishone Roy

For me, the highlight was the opportunity to connect with the diverse community of Prince George and the surrounding areas. The transformation of the region's diversity over my lifetime has been remarkable, and it was heartening to see the vibrant mix of people and cultures. The moments of connection and reflection underscored the importance of in-person engagement, which had been sorely missed during the pandemic years.

Building an annual tradition

Looking ahead, we aim to establish Non-Profit North as an annual gathering in Prince George. This will involve discussions with partners, boards, and members, but the enthusiasm and success of this year's event will give us confidence in the future. We eagerly anticipate the next steps and the ongoing journey of collaboration and growth within the non-profit sector in Northern BC.

In conclusion, Non-Profit North was more than just an event; it was a testament to the power of coming together, sharing knowledge, and building a stronger community. As we continue to reflect on the insights gained and the connections made, we are inspired and motivated to keep working towards a vibrant and thriving non-profit sector in Northern BC.

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By Cree Henderson, Purposely

It’s National Volunteer Week, and a great opportunity to consider the ways that volunteerism can impact your organization!

At Purposely, our mission is to “bring employee volunteer solutions to small and medium sized businesses in an effort to get companies volunteering and giving back to the community.” Purposely matches passionate employees with inspiring non-profits. Our goal is to empower non-profits by co-creating projects, managing volunteers, and tackling impactful initiatives. It's fun, rewarding, and delivers real results.

We work with hundreds of non-profits around the world, and time and time again we hear the same thing: there is significant, increased demand for non-profit services, especially over the past few years.

This begs an important question for us; how can we, at Purposely, support non-profits with this increased need for their services?

One way to combat this is to support organizations to recruit more volunteers to help take on a variety of tasks.

But that’s easier said than done.

Non-profits are experiencing a great need for their services in a time when volunteer rates are plummeting. The good news is that utilizing corporate groups can be a great way to complete projects and tasks in a short amount of time. Let’s dig into what this looks like!

Why Utilize Corporate Volunteers?

Corporate volunteers are motivated to help.

During COVID-19, many companies went partially or fully remote and were looking for ways to bring their employees together. As it turns out, volunteering is a great way for employees to meet and connect with their coworkers in person, all while giving back in an impactful way. It’s “feeding two birds with one scone” as we like to say! Secondly, corporate volunteers often bring a diverse set of skills and expertise from their professional backgrounds and life experience. If needed, for example, they can offer specialized knowledge in areas such as marketing, finance, and technology, which can be valuable for non-profits seeking to improve operations or achieve other goals more effectively or efficiently.

Not only this, but it’s cost-effective. Instead of hiring consultants or contractors, non-profits can leverage the skills and time of corporate volunteers to address specific needs and challenges. This can also lead to greater capacity for existing staff who might take it upon themselves to carry out these tasks.

There are also financial factors to consider. Collaborating with corporate volunteers can foster partnerships between organizations and the companies volunteering, leading to recurring volunteers and donations as the relationship grows.

How Families Matter Utilized Corporate Volunteers

Families Matter, a non-profit located in Calgary, works to strengthen families by creating learning opportunities that build confidence, competence, and connection through life’s transitions. They offer free programs for families of all kinds. The Families Matter team has grown significantly in the last few years, which has led to a need for more space for their staff to meet, as well as for all the families they service through their programming. They also needed their new office and classroom space painted with a fresh coat so that the space could be used for staff meetings and programs. 

While Families Matter had not previously worked with a corporate group, with our help they were able to work with a local company to paint two accent walls in the office, the wall of the classroom, and the adjoining hallway. All of this took place in just a few hours. The bright colours on the newly painted walls reflect the kind of space Families Matter wants to provide for their clients. The job was so well done that clients began complimenting the staff on how bright and open the space felt upon entering. 

Families Matter let us know it’s common for this kind of operational task to be completed by a few individual staff, or as a last resort, hired professionals. This is the first time Families Matter has utilized corporate volunteers and mentioned the task was completed more quickly than if it had been completed by staff, given their busy schedules. Now, staff use the office space and have made it their own, and many programs are running out of the classroom to support families in Calgary. This saved them valuable resources and time! 

How could a team of volunteers help your organization?

Every non-profit’s needs are unique. It’s up to you to decide how best to utilize volunteers to serve your mission. Whether it’s painting, gardening, setting up mentoring events, organizational tasks, or event preparation, there are plenty of options. Engaging corporate volunteers is invaluable, and many are ready to help! 

Purposely is an organization that brings employee volunteer solutions to small and medium sized businesses in an effort to get companies volunteering and giving back to the community. Reach out to Cree at cree@purposely.co if you’re interested to learn more about how Purposely can help your non-profit leverage corporate volunteers.