July is a natural checkpoint for nonprofits to step back and evaluate their financial position with intention.
At the halfway point in the year, programs are fully underway, grants are being executed, and budgets are starting to reveal real trends. While year-end may still feel distant, the challenges that create pressure later on often take shape much earlier.
A mid-year financial review gives your organization the opportunity to address issues before they escalate. It allows your team to clean up records, validate key balances, and make thoughtful adjustments while there is still flexibility to respond.
The goal is not simply to assess where you stand today. It is to ensure your financial structure, reporting, and processes are positioned to support a more controlled and informed second half of the year.
Review Budget vs. Actuals in Detail
Start with budget vs. actual performance. By mid-year, trends should be clear enough to highlight meaningful variances.
Review results across the organization, then drill down by program, grant, department, and funding source. Are expenses running ahead of budget? Is revenue delayed? Are certain areas consistently under- or over-performing?
This level of review often reveals issues that are not visible at a high level. A program may appear on track overall but be over budget in a key category. A grant may be underutilized due to delayed activity. A department may be underspending due to staffing gaps.
Mid-year is also a good time to revisit projections. If funding, costs, or program activity have shifted, updated forecasts can help leadership make more informed decisions for the remainder of the year.
Confirm Restricted Funds Are Accurate
Net assets with donor restrictions should be reviewed carefully at mid-year. Confirm that revenue has been recorded properly, and that related expenses are consistently applied.
If restrictions have been satisfied and amounts have been released, ensure the supporting documentation demonstrates that donor requirements were met. This step is critical for both compliance and internal clarity.
It is also important to evaluate how restricted and unrestricted resources are being presented. A nonprofit may have cash on hand, but not all of it is available for general use. Without clear visibility, leadership may misinterpret the organization’s financial flexibility.
Consistent tracking supports stronger decision-making and reinforces trust with donors and funders.
Review Grant Activity and Timing
Grant accounting is another key focus area. Review each active grant and compare spending to the approved budget.
Look for grants that are overspent, underspent, or showing inconsistent activity. Allocations should be based on a reasonable methodology that is applied consistently.
For reimbursement-based grants, review the timing of reimbursement requests and outstanding receivables. Delays in submitting requests can create unnecessary cash flow pressure.
Also confirm upcoming reporting deadlines. Preparing in advance reduces the risk of rushed reporting and avoidable errors later in the year.
Strengthen Core Accounting Records
Accurate reporting depends on strong underlying records.
Confirm that bank reconciliations are complete and up to date. Review accounts receivable for aging balances or delayed collections. Evaluate accounts payable to ensure expenses are recorded in the correct period. Review prepaid expenses, accrued expenses, deferred revenue, and other significant balance sheet accounts.
These areas may feel routine, but they are essential. If foundational records are not accurate, every report built on top of them becomes less reliable.
In addition to reviewing transaction activity, take time to evaluate key balance sheet accounts, including cash, receivables, payables, prepaid expenses, deferred revenue, and other significant balances. Identifying unusual balances or items requiring adjustment before year-end can help prevent last-minute corrections during closing.
Evaluate Internal Controls Before Audit Season
Mid-year is one of the best times to review internal controls, before audit preparation begins.
Assess approval workflows, documentation practices, and separation of duties where possible. Look for processes that rely too heavily on one individual or lack consistent oversight.
Strong documentation is especially important. Ensure that transactions are supported, approvals are retained, and journal entries are clearly explained.
Addressing control gaps now is far easier than trying to resolve them during audit season. If your team is currently reviewing its operational policies, utilizing an established nonprofit internal controls checklist is an excellent way to pinpoint hidden vulnerabilities.
Refine Board Reporting
Board members depend on clear, timely financial information. Mid-year is a good opportunity to evaluate whether your reporting package is meeting that need.
Reports should provide meaningful insight into budget performance, cash position, and available resources, including amounts subject to donor restrictions.
If reports are difficult to interpret, delayed, or overly dependent on manual work, it may be time to refine both the format and the process.
Clear reporting supports better conversations and stronger oversight.
Assess Whether Your System Is Keeping Up
As nonprofits grow, their financial complexity increases. Mid-year is a practical time to evaluate whether your accounting system is still supporting your needs.
Can your system track grants, donor restrictions, and program activity effectively? Can you generate reports without heavy spreadsheet manipulation? Does leadership have timely visibility into financial performance?
If your team is spending significant time working around system limitations, the issue may be structural rather than operational. Upgrading to an advanced ecosystem like Sage Intacct for nonprofits automates dimensional fund tracking, completely removing manual spreadsheet manipulation from your mid-year close.
Get Ahead of Year-End Pressure
A mid-year review is not just a checkpoint. It is a chance to reduce the pressure that often builds at year-end.
By addressing budget variances, confirming fund balances, reviewing grant activity, and strengthening internal processes now, your organization can move into the second half of the year with greater confidence.
At JFW Accounting Services, we often find that mid-year is when underlying reporting challenges become most visible. If your team is seeing recurring issues, delays, or inconsistencies, it can be helpful to step back and evaluate whether your current processes and structure are truly supporting your goals.
A focused mid-year review can provide that clarity and help position your organization for a smoother, more controlled year-end.
Contact us today to learn how JFW Accounting Services can deliver the specialized nonprofit accounting services, year-round audit support services, and strategic CFO oversight your organization needs to thrive.
Jo-Anne Williams Barnes, is a Certified Public Accountant (CPA) and Chartered Global Management Accountant (CGMA) holding a Master’s of Science in Accounting (MSA) and a Master’s in Business Administration (MBA). Additionally, she holds a Bachelor of Science (BS) in Accounting from the University of Baltimore and is a seasoned accounting professional with several years of experience in the field of managing financial records for non-profits, small, medium, and large businesses. Jo-Anne is a certified Sage Intacct Accounting and Implementation Specialist, a certified QuickBooks ProAdvisor, an AICPA Not-for-Profit Certificate II holder, and Standard for Excellence Licensed Consultant. Additionally, Jo-Anne is a member of American Institute of Certified Public Accountant (AICPA), Maryland Association of Certified Public Accountants (MACPA), and Greater Washington Society of Certified Public Accountants (GWSCPA) where she continues to keep abreast on the latest industry trends and changes.