Have you considered what will happen as your Nonprofit organization grows in size and complexity while maintaining manual accounting processes? Accounting errors and a loss in staff productivity are the first concerns that are raised as a Nonprofit grows due to the increase in accounting and operational demands. To address this, Nonprofits look to modern accounting software that leverages the latest technology advancements as a viable long-term solution.
When sitting down and reviewing all the available accounting software it is easy to see the wide range of benefits that are tailored specifically to the accounting needs of Nonprofits. They can automate and streamline financial management functions, which allows for improved decision-making by managers with real-time data, increase operational efficiency, and some software even offer a user-defined multi-currency viewing for global organizations.
Two important baseline features of using the right software are that it ensures data security and cost savings by eliminating the need for additional staff. Integrating the best Nonprofit accounting software can transform financial management for Nonprofits, let us explore this topic in detail.
Key Advantages of Using Nonprofit Accounting Software
Nonprofit accounting software offers a plethora of advantages. It has improved decision-making and efficiency as all stakeholders have access to real-time financial information.
It can simplify the dreaded complicated grant compliance requirements and this data can be quickly accessed in any desired format. The software ensures cost savings by eliminating the need for additional staff and automating mundane daily financial tasks that are prone to human error.
With the different software options available they will all offer various specialized features for accounting, budgeting, grant management, reporting, and data security as Nonprofit accounting software is tailored to meet the needs of any Nonprofit.
Key Features in Nonprofit Accounting Software
Nonprofit accounting software offers several essential features, including budgeting, grant management, reporting, and an audit trail.
- The budgeting feature facilitates the easy creation of budgets, forecasts, and reporting.
- Grant management capabilities help efficiently track and manage grant activities throughout their life cycle.
- Reliable financial reporting, which is critical for compliance, transparency, and donor auditing.
- The audit trail feature tracks all financial transactions, providing valuable insights into the organization’s financial health.
With these key features as a baseline for any Nonprofit organization, Nonprofit accounting software ensures accurate financial management and transparent reporting for donors and board members.
Nonprofit Accounting Software Checklist
When choosing Nonprofit accounting software, several factors should be considered to ensure the chosen solution aligns with the organization’s needs. For ease of reference, we have created a step-by-step checklist for Nonprofits to follow when working out how to decide on the best software solution.
1. Budget
The best place to start is to consider your company’s budget, as Nonprofits typically have limited resources, making it important to find a solution that aligns with its financial constraints. While the cheapest option might seem the best choice for a quick fix, it is important to check the features as they probably do not offer all the required features. When considering the expensive options, you might find that they offer advanced features that are not needed for your organization. Taking the time to strike the right balance between cost and functionality is key to making the best choice.
2. Features
The next decision is to assess the offered features by different software providers and identify the ones that are required for your business needs. Key features to consider include:
- Accounting and Financial Reporting: This covers basic accounting functions like accounts payable and receivable, financial reporting, and general ledger management.
- Grant Management: If your organization applies for and receives grants, seek software that includes a grant management suite of features for tracking grant applications and reporting on grant funds.
- Donor Management: This is an important feature for Nonprofits as they are reliant on donations. When considering software, review the available donor management capabilities and review how easily they track donations, generate donation receipts, and how they display donor analytics. You want software that takes complex data streams and makes them easy to understand.
- Fund Accounting: Considered the most important feature of any accounting software for Nonprofits. Check to see how easy it is to use the dashboard to track and report on funds/financials, and if these reports meet the compliance standards for any applicable regulatory needs.
3. Identify your requirements
What are your accounting requirements? Make a list of what you need and what you want, as they are very different. Your needs are must-haves and wants are nice to have but not essential. Then check that your desired financial software will seamlessly integrate data from your current systems. The data to be considered is donor management, payroll, and client management. By defining the functional requirements, you can ensure that the new system can seamlessly support your organization’s accounts and reporting needs.
4. Technical requirements
You will now need to consider the delivery method for your new system, will it be on-premise, hosted, or cloud-based?
On-premise installation: This will require the Nonprofit to have a dedicated IT person or team that can handle the responsibility of installing, maintaining, and upgrading the IT systems. They will also have the secondary function of data backup, which will require additional expenses for hardware and software.
Hosted solution: This will connect your systems to external servers that house traditional Windows-based applications. These servers often lack access to new data-sharing capabilities through APIs, which is limiting if the Nonprofit needs to make IT infrastructure changes to meet operational needs.
Cloud-based solution: Cloud is the way of the future as it eliminates the need for software installation on your in-house computers, meaning that the vendor is responsible for all updates, upgrades, and backups. The most attractive feature of using the cloud is that it allows you to access your programs and data from anywhere in the world and on any device with an internet connection.
5. Ease of use
An important question to ask yourself when trialing software is how easy is it for you and your staff to use. Is it user-friendly with easy navigation, or will it require in-depth or ongoing training?
6. Integration
Integration capabilities need to be carefully considered. You must evaluate whether the chosen software can seamlessly integrate with other tools and systems your organization currently uses or is planning to use in the future, and ascertain if it streamlines processes and will enhance overall efficiency.
7. Security
In today’s modern age, cyber threats are an ongoing concern for businesses as they are constantly changing to try to keep up with advancements in cyberattacks. Ransomware and Malware are on the rise so when considering software look for features that include data encryption, password protection, regular software updates, and vendor policies around data breaches and insurance plus assurances that your company is protected and what will happen in the event of a data breach and if the Nonprofit is sued.
8. Scalability
When you think about your business, think about the future and if you see growth or slow periods. Understanding how you’re expecting your business to scale is an important factor to consider when choosing software that your Nonprofit wants to procure, as it must be agile and scalable with your needs and finances.
9. Support
There is nothing worse than experiencing a software issue when you are trying to get a task done. Researching a software provider’s customer support by reading reviews and understanding the process of what they will do when things go wrong is an important step, as you want to choose a company that will meet and exceed your expectations when things get tough and need quick fixes.
To learn more about Sage Intacct as a nonprofit accounting software solution download this free ebook.
Accounting is the secret sauce to a successful Nonprofit organization. When your Nonprofit shows that it is financially savvy, it creates a level of trust that can motivate donations from individuals, foundations, and government agencies. This makes picking the perfect accounting software for your Nonprofit an important decision, akin to hiring your organization’s financial sidekick.
Take the time to consider all the factors: Budget, features, ease of use, integration, support, and scalability. If you choose wisely, you’ll have a long-lasting, prosperous relationship that’ll make your Nonprofit shine in a competitive landscape.
Does all the above seem like a daunting task, and you would prefer the assistance of professionals in the know? Lescault and Walderman specialize in outsourced Nonprofit accounting services and software solutions.
With our team of dedicated professionals, LWI brings you top-notch expertise with 30+ accountants across 18 states, specializing in Nonprofit Bookkeeping, Controllership, and CFO services. Discover the ultimate tailored solution: Outsource to the experts.
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