Updated: Jan 7, 2020
Host your annual board meeting
Organizations are only required to host an annual board meeting, but it is a good practice to host more than one board meeting per year for churches. This is a good time to review your policies and procedures, nominate new board members, review compensation and performance and approve organizational budgets.
Prepare a budget
If you wait until the new year to prepare a budget, you’ll miss the opportunity to start the year with a clear financial vision in mind. Create a real budget, not just a general list of expenses. Review giving histories, access your current membership giving patterns and make informed decisions about spending limits and priorities for the new year.
Without a vision, the people cast off all restraint. Show good stewardship through planning and preparation for a successful financial future in ministry.
Update bank signatories
Check with your bank to ensure your account signatories are current. There are many changes in board authorizations throughout the year. Members come and go. Ensure that you remove any signatories that you no longer want to have authorization on the account and add those who are entrusted with this responsibility for the upcoming year.
Review Insurance Coverage
End of year is a great time to adjust, if needed, your current insurance coverage. Many churches provide life insurance for their pastor as part of the overall compensation package.
However, be sure to purchase a separate insurance policy where the church is the designated beneficiary. Plan for future support of the vision through endowment donations.
Ensure that all 2019 revenue and expenses are included in your budget by December 31st.
This includes donations, unrelated business income, purchases, payroll, housing allowance, etc. This also includes your electronic giving platforms if balances are retained in the account (i.e. Paypal).
Knowing your starting point for the new year helps the organization to assess their true liquidity before new expenses and revenues are accounted for.
Review filing requirements
Check your state’s requirements for filing to determine whether you are required to file. Some states exempt churches and other nonprofits from the payment of sales & use taxes either by eliminating the tax at the time of purchase or by requiring the organization to file for reimbursement of taxes paid. This is a good time of the year to file for reimbursement.
Annual Ministry Reports
I absolutely love ministry annual reports because they provide a clear picture of how the ministry has fulfilled ministry for the past year.
Annual reports are more than a financial accounting of the ministry’s assets. They can include salvations, baptisms, classes, membership status, outreach and missions for the year. Include small group progress or anything that gives a clear picture of what has been accomplished and where growth opportunities lie for the next year.
Next year's vision
Use end of year to begin crafting the message and focus for ministry next year.
Finalize your calendar, decide on priorities, create goals and define your strategy for fulfilling the vision. Then plan to host a vision casting in January where you share this inspiring vision with your congregation for the year. It’s a great way to ensure you remain focused on your mission.
Not all churches provide a “salary” for pastors or other stafg, however many do provide a financial stipend or compensation. Musicians often fall into this category of independent contractors. Be sure to provide a 1099 to all independent contractors or vendors to whom you have paid $600 or more for the year.
Guest Ministers are required to report income received from your ministry on their personal taxes, however the church is not required to send them a 1099 form. The church should retain a W-9 form at the time of their ministry and keep it on file for documentation purposes.
Verify current contact information to reduce the likelihood of mailing errors when forms are due. Per IRS guidelines, 1099s must be sent no later than January 31st of the new year.
Donations received on or by December 31st to be included in the church’s 2019 written acknowledgement of their contributions. If the donation is backdated it to a date in 2019, it will not be included in your 2019 giving statement. If you host a New Year’s service and electronic giving occurs after the new year begins, those donations are not included in your 2019 giving statement. Only donations received via mail, postmarked before January 1st can be included 2019 totals.
Send donors a 'thank you' letter
A donor who gives $250 or more in a single or cumulative donation is entitled to deduct these donations from their federal income taxes as a charitable deduction.
However, donors must be able to substantiate those donations by keeping a "contemporaneous written acknowledgment" from the church or nonprofit. This acknowledgement must be provided before the taxpayer files taxes.
Here’s what you should include in that statement:
Your church’s name
Your church’s EIN/tax ID number (recommended but not required)
The amount and date of each monetary gift
Some version of the following statement:
“No goods or services were provided by our organization in return for the contribution apart from intangible religious benefits.”