Organizations define a 12-month period on which they will consistently report financial statements and tax and other information returns to various federal and state regulatory agencies including the IRS and Department of Revenue.
A calendar year is January 1 through December 31. A fiscal year is some other 12-month period. Any combination will do as long as it’s a full 12 months. Examples of fiscal years including July 1 through June 30, October 1 through September 30. Calendar years are helpful because it coincides with payroll and most individual and business tax years. This cuts down on timing issues and some confusion. On the other hand, calendar year can be a problem if many of your donors wait till year end to contribution and/or your major fundraising event is at the end of the year causing the organization to run in the red almost all year.
Sometimes major funders/grantors require reports on a fiscal year and so it makes sense to also run on the same year rather than creating special reports. Also, it may make sense to adopt a fiscal year that does not interfere with the organization’s busy period (whenever that might be) and to better encompass its seasonal nature of revenue and expenses.
Presumably there was a valid reason for the year end your organization currently follows. If that reason is no longer present or evident, then it’s possible to change this. It would require discussion, approval, and a resolution by the board, change of internal policy and procedure, and filing of a form with the IRS for their approval on the form 990.