Making the most of year-end giving: A practical guide for mission-driven nonprofits

For many nonprofits, such as faith based organizations, healthcare entities, human services providers, and cultural institutions, the final weeks of the calendar year bring a welcome influx of generosity. Donors are motivated by mission, impact, and often the tax benefits of making a gift before December 31. But once the rush subsides, January and February can feel like dry months, leaving leadership teams asking how to best steward the resources entrusted to them.

The start of a new year is an ideal moment to convert year end momentum into strategic, mission aligned planning. Below are key considerations and accounting informed tips to help nonprofits use year end gifts wisely, strengthen internal controls, and build donor confidence.

1. Honor Donor Intentions from Day One

Year end gifts often include a mix of unrestricted dollars, restricted contributions, and one time gifts specified for particular programs or purposes. Treating each gift according to the donor’s intent is both a legal obligation and a trust building opportunity.

What to focus on:

• Confirm whether each gift is restricted or unrestricted.
• Attach all donor letters, emails, and acknowledgments to the donation record in your donor system or ledger.
• Track restrictions clearly in your accounting and donor management systems.
• Apply proper valuation and documentation procedures for noncash gifts such as securities, equipment, or real estate.
• Categorize pledges as conditional or unconditional and monitor them appropriately.
• Maintain segregation of duties around receiving, recording, and depositing gifts.

Accounting Tip:

Create a summary for each restricted gift and link it directly to the general ledger. Clear documentation simplifies audits, prevents confusion months later, and supports accurate releases from restriction.

2. Steward Donors With Thoughtful, Timely Follow Up

Year end donors should feel thanked, acknowledged, and informed—not just during the holiday push, but throughout the year.

What to focus on:

• Personalize thank you communications.
• Use newsletters or updates to show how year end contributions are being put to work.
• Send a mid year impact update to demonstrate progress and build loyalty.
• Segment year end donors for tailored stewardship plans (new, recurring, major, or first time donors).
• Clearly explain how restricted gifts were used, using plain language rather than technical accounting terms.

Accounting Tip:

Automate acknowledgment letters directly from your donor system and reconcile them against the accounting records to confirm completeness and accuracy for auditors.

3. Align Year End Giving with Mission Driven Plans and Budgets

Early in the year is the best time to turn holiday season generosity into a mission aligned operating plan for the months ahead.

Key questions to guide planning:

• Which programs can scale now based on available funding?
• Do one time gifts require a spend down plan to avoid structural deficits later?
• How do year end gifts support board approved priorities?
• Should new or expanded reserves be designated for stability?
• Which program expansions are “shovel ready,” and what KPIs indicate early success?
• How will you manage revenue concentration risk (e.g., reliance on a single donor)?

Accounting Tip:

Model cash flow using weekly or monthly scenarios so program spending, vendor commitments, and hiring align with when cash is expected—not just when pledges are received.

4. Strengthen Accountability and Transparency with Funders

Clear, consistent reporting reassures donors that their contributions are producing results and shines a light on the organization’s governance, compliance, and fiscal discipline.

What to focus on:

• Establish quarterly dashboards or annual impact letters.
• Highlight accomplishments and governance strengths in your Form 990 narrative.
• Document time  or event based restrictions at the moment of receipt so releases are easy to track and explain.
• Monitor grant reporting requirements, matching obligations, and spending thresholds.
• Maintain an audit ready “paper trail” for both cash and noncash gifts, including valuation files and donor correspondence.

Accounting Tip:

Prepare key items from the auditor’s “Prepared By Client” (PBC) list throughout the year. Strong, consistent month end routines prevent last minute audit scrambling. For more insights, see our related article: 6 Steps to a Clean Nonprofit Year-End

5. Carry Year End Momentum into Sustainable Giving Models

The surge of December generosity can and should fuel a longer term funding strategy.

What to focus on:

• Convert holiday donors into recurring donors through monthly giving programs.
• Collaborate closely with your development team to forecast expected recurring versus one time gifts.
• Build budget scenarios for conservative, expected, and optimistic giving patterns.

Accounting Tip:

Separate recurring gifts from one time contributions in both the donor system and the chart of accounts to improve forecasting accuracy and transparency.

We Can Help

Holiday generosity is a gift, but stewardship is a responsibility. With strong controls, thoughtful planning, and transparent reporting, nonprofits can translate December giving into twelve months of mission driven impact.

If you’d like help strengthening your nonprofit’s year end close, improving donor to accounting reconciliations, or building a mission aligned financial plan, the Elliott Davis Not-For-Profit team is here to support you.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.