A July Fiscal Year Start?

A July Fiscal Year start? That’s what Auxilio recommends to our church clients. If you’re currently using a calendar year as your fiscal year, read on to see if a change might be right for you.

Some Basics

You can set your fiscal year to whatever 12-month schedule works best for your organization. For example, the federal government has an Oct 1 fiscal year start to allow newly elected incumbents to participate in the budget process. Many businesses use the calendar year, as it lines up with the tax schedule. But churches and nonprofits, as charitable organizations, are exempt from federal and state income and property taxes so it makes more sense to set your fiscal year to meet the needs and rhythm of your organization.

The Rhythm of Church Life 

Church rhythms tend to mimic the academic year. Programming is usually a little quieter in the summer, with Fall kick-offs to new ministries that run through the school year. Many churches find it best to have the entire academic year within their fiscal year. Let’s walk through the benefits of this approach. 

Benefits of a June 30 End/July 1 Start to Your Fiscal Year 

1. Whole programs are captured in one budget 

   If you’re running ministries for the academic year, a June 30 end/July 1 start to your fiscal year allows you to capture the entirety of those plans in one budget rather than straddling two and shifting to a new budget in January.

2. The budget process made easier

   For those using a calendar year, budget planning begins in the Fall - likely the busiest part of your ministry year just when you’re starting up new programs and re-starting existing ones. A calendar fiscal year also means your approval process is during the holidays when it can be extremely difficult to gather key decision-makers or get timely responses from them.

   In contrast, a June 30 end/July 1 start means your budget planning is happening in the Spring, and approvals are finalized before the summer holidays when people tend to travel as kids are out of school.

3. Put December, your highest giving month, in the middle of your year, rather than the end

   For churches and nonprofits, December is usually your best giving month by far. If you’re taking that into account when setting your budget, if you’re using a calendar fiscal year, then you’re likely running a deficit all year until December. This makes planning and year-end spending fraught with uncertainty. By moving to a June 30 end, year-end generosity is then positioned in the middle of your fiscal year giving you time to pivot as needed before the end of the fiscal year. 

4. A natural opportunity to talk about money with your congregation and donors

   Lastly, a June 30 fiscal year end gives you another time to talk about the budget and giving to your church members and donors. December has become a traditional time of generosity as we celebrate Christmas, God’s generosity to us. Donors often make year-end gifts by Dec 31 to maximize tax benefits. With a June 30 fiscal year end, June becomes another natural time for people to give and for leaders to talk about generosity and the practical needs of the church. Auxilio has found for churches using a June 30 fiscal year-end, December remains the month of highest giving, but June becomes the second-highest month as donors rise to meet budget needs.

There’s no right or wrong answer when choosing your fiscal year. It comes down to what works best for your church or nonprofit. Auxilio sees a lot of benefits to a June 30 end and we’d be glad to talk with you in more detail about it. You may also enjoy this article, Should Your Church Change Its Fiscal Year?, by our friends at CapinCrouse. Spoiler Alert - they use our same logic! But their article gives more detail and raises other considerations.

Talk to your Auxilio Partner Strategist to learn more or contact us at hello@auxilio.partners.