“Accounting does not make corporate earnings or balance sheets more volatile. Accounting just increases the transparency of volatility in earnings.” -Diane Garnick
Nonprofit organizations, operating under challenging circumstances, perform admirable work that heavily relies on the support of others to sustain their operations. Nonprofit accounting software serves as a valuable tool in saving time and money for these organizations, enabling them to focus on their core missions.
Selecting suitable accounting software for nonprofit organizations can be a complex task, considering the diverse needs of each organization. An important aspect to consider is the software’s ability to provide industry-specific solutions tailored to the unique requirements of nonprofits.
Effective nonprofit accounting software streamlines financial management processes, including accounting, bookkeeping, and reporting, making them simpler and more efficient to handle.
Apart from industry-specific functionality, flexibility is a key feature to seek in nonprofit accounting software. The software should be adaptable to organizations of various sizes, ensuring scalability as the organization grows. Additionally, choosing a software provider that offers staff training can empower the team to effectively utilize the software’s features and optimize its value to the organization.
It’s also worth noting that some nonprofit financial software providers offer discounted rates to nonprofit organizations.
Key Factors To Consider When Choosing Accounting Software For Nonprofits:
We’ve had a quick look at some of the features to look for in accounting software for NFPs, but here are some factors that will influence your decision.
Cost And Budget Considerations
NFPs have tight budgets, they can’t afford to buy software that has features that they won’t use. That’s why you need a software provider that caters specifically to nonprofits. You save money by only paying for the services you need.
Determine your exact needs. You might need features that tend more to bookkeeping and payroll management rather than grant accounting and project management.
Of course, you first need to know how much you can spend before you go shopping. Often you get what you pay for. That’s not to say that cheaper software products are automatically inferior, but it’s generally best to aim for the best software you can afford.
Ease Of Use And Learning Curve
One of the primary requirements for nonprofit organization accounting software is that it be easy to use for you and the person in charge of your NFPs finances. This is why training is important.
- Find out if training is available
- Is training included in the package?
- Does training cost extra?
Many software providers include a brief training session when they install the software. Some nonprofit accounting software providers are prepared to offer free training to their customers. It’s always worth asking.
You should also find out about their customer support.
- Do they have experienced staff on the other end of the line?
- Is it easy to get customer support
For example, is there a live chat or a 24/7 phone line for immediate support?
If you have a pressing question or emergency, you don’t want to have to wait a day or even a few hours to have the matter resolved.
Compatibility With Existing Software And Systems
You might already have accounting software in place, but need a package with additional features. Any product you buy must be compatible with the existing payroll or data collection systems.
Find out if the person installing the software is also the person who integrates it with your current service. The person should have experience incorporating new software with existing programs.
Ensure the nonprofit accounting software comes with a guarantee of some kind. If the provider isn’t willing to stand by its product or its services, you should probably look elsewhere.
Reporting And Analytics Capabilities
NFPs generally have to provide regular reports to trustees, the board, and donors, and be able to prove their financial situation to the taxman. Look for software that:
- Generates reports needed
- Format reports to comply with regulations.
It’s handy to have an accounting system that also includes an analytics feature. This way you can determine where the majority of your revenue comes from (legacies or donors) and whether certain fundraising activities are more successful than others (the fete or the charity shop).
By pinpointing your revenue streams you know what you can optimize, what you need to adjust, and what you should abandon.
Integration With Fundraising And Donor Management Systems
We’ve already looked at the importance of system integration and reporting, but here’s a quick look at how they apply specifically to fundraising and donor management.
- A separate function tracks income generated by fundraising activities and donations to identify opportunities.
For example, it identifies the most generous donors, whom you can then thank at a formal event.
- It identifies donors who perhaps aren’t giving quite as much as you know they can.
Perhaps a formal fundraising dinner will give you the chance to corner them and discuss the type of hero needed to save a particular initiative.
One of the primary benefits of donor management software is its ability to forecast the income generated by fundraisers and donors over the following year. This can be weighed against the organization’s expenses so you can come up with ideas to address any shortfall.
Compliance With Nonprofit Accounting Standards And Regulations
Nonprofits’ financial reports must comply with specific accounting standards and regulations. The accounting software you purchase must have features that ensure all records and reports meet regulatory and legal requirements.
Aside from the advantage of being able to generate accurate reports on demand and on time, NFP accounting software also ensures that you’re never penalized or fined for late or inaccurate reports.
A solid financial record with no blemishes will go a long way towards securing essential grants.
Security And Data Protection
All financial records are vulnerable to a degree. The thing is to shore up your defenses so that your system is never breached, or, if it is breached, the damage is limited.
NFP accounting software should come with built-in security features, like two-step verification, to protect your data.
If you’re not sure how to gauge a specific vendor’s vulnerability, CVE Details is a great resource to thoroughly research very many vendors’ vulnerabilities.
Customer Support And Training Resources
We’ve already had a brief look at customer support and training, but here they’re so important that we’ve included a bit of a recap.
They might claim they have good customer support, but you needn’t take their word for it.
- Check online reviews that aren’t on their website or Facebook page.
You’ll get more honesty that way.
- Put their customer support to the test personally.
- Contact them and see how long it takes for someone to help you.
- Ask them questions and see if they are confident in the way they respond.
- Test the response to see if it works.
Don’t be afraid to ask about the qualification requirements for customer support staff. They should at least fully understand the product they’re selling.
Conclusion And Final Recommendations
Nonprofit organizations have two options when it comes to managing their finances; they can battle with generic accounting software or outsource their accounting to save money in the long-run.
Financial software for NFPs is tailored to suit the industry’s needs, for example, it keeps tabs on donations and fundraising and generates accurate reports for the board to analyze. It’s easy to keep an eye on cash flow and expenses, so you can plan ahead. It’s designed to make NFP accounting simpler, so choose wisely.
You can find out more about the different financial software products for nonprofits on Software Advice.
Sage Intacct is an ERP software that offers customizable modules suitable for various industries, including nonprofit and charitable organizations. With AI-powered solutions, it provides essential financial services tailored to the needs of nonprofits without unnecessary add-ons. Sage Intacct is an affordable solution for revenue and inventory management, as well as simplifying project-based accounting to monitor the financial well-being of an organization’s programs.
Make an informed decision for your nonprofit organization by following our expert guidelines or choose LWI as your trusted partner in selecting the perfect accounting software solution.