Last week's Rich Tips dealt with writing the year- end appeal letter to donors and potential donors. This week we will focus on other year- end materials that need to be pulled together to plan your objectives and programs for next year.

Many nonprofits spend the months of November and December mailing year-end donor letters and performing housecleaning activities in preparation for the development of next year's operational plan. The end of the year is also an important time to evaluate and assess the organization's programs, mission statement (Does it need to be refined or changed?), environment (like Hurricane Katrina or the passage of certain ballot initiatives), and internal leadership issues.

There are a host of other issues that need your attention at the end of the year. Here are what we consider to be the most important:

1. Scheduling the financial audit. This is a good time to schedule an audit for the first quarter of the new year. Make sure the auditor you choose to use includes the cost of drafting the IRS 990 form in their fee - and also make sure a board member (preferably the president) signs the contract with the auditor.
2. Develop and finalize the budget for the next year. This is not an easy task because the budget needs to relate to the program goals and objectives, and also incorporate all of the infrastructure requirements. It's imperative to NOT ONLY look at what you did last year, but to anticipate the future and all of its possible pitfalls. The board of directors needs to approve this budget.
3. Prepare the required reporting measurements for your funding sources and internal evaluations. It's important to conduct an assessment in terms of number of clients served, number of trainings held, number of people impacted, etc. Don't look at the numbers as mere measurements, rather look at them as the amount of impact your organization is having on its community and constituency.
4. Begin developing the 12-month operational plan of next year's goals and objectives. This plan should illustrate to the board and staff how each objective and program will be executed.
5. Grant reports should be completed according to the grantor's requirements for the current fiscal year. These reports should be reviewed and updated as necessary.
6. Update policies. Update all of your policies (including personnel policies), and review your by-laws, financial statements and other legal documents so they comply with changing legal and regulatory requirements. To be safe, you may want to schedule time with your accountant and attorney to be sure you have all your legal and regulatory ducks in a row going into the new year.
7. Conduct a budget analysis to make sure the actual vs. projected budget costs are in line. Also review the administrative and fundraising costs (in relation to the program costs) to confirm that your overhead costs are less than 25 percent of your total costs. This figure will appear on the IRS 990 form.
8. Payroll tax reporting should be completed in January.
9. Begin preparing the annual report. You should begin to prepare the table of contents, the theme and the outline for the annual report, which is essentially a summary of your organization's financials. A legally required document, the annual report needs to be attractive and easy to read so that it can be used as a marketing and selling tool.
10. Volunteer thank-you. This is a great time of the year to acknowledge and thank all of your volunteers and supporters. Perhaps have a holiday party at the office or at a board member's home where you reward and thank the staff, volunteers, and leaders of the organization.