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Meeting the Special Accounting Needs of Non-Profits

Nonprofit organizations, perhaps more than any other business structure, must keep a close rein on their finances, including revenue streams, such as donations or annual appeal funds.


Nonprofit organizations, perhaps more than any other business structure, must keep a close rein on their finances, including revenue streams, such as donations or annual appeal funds. In the case of nonprofits, profit margins are frequently low and funds limited, making it imperative that the funds received are managed properly.

While the above scenario is not the case for all nonprofits, in the current economy, many nonprofits have found themselves struggling to keep the doors open. Financial tools that help nonprofits manage their money more efficiently play an important part in the financial viability of nonprofits.

A software product that manages and tracks separate funds is also important, as nonprofits are required to track all grant or program funds separately. Finally, good donor or fundraising management and tracking is paramount for an organization that relies on donations in order to exist.

Fundraising in today’s economic climate is a tough job for even the most experienced fundraising professional. Having a central database where donor details can be mined for future cultivation is imperative. Other common nonprofit software features such as grant tracking and campaign/appeal management are important pieces of the nonprofit software puzzle as well.

Luckily, in today’s software market, nonprofit organizations have more software choices than ever before. Some of those choices are strong in accounting and financial management but not quite as strong in the fundraising area.

Some have outstanding donor management functionality with basic accounting features. There are also a select few that have all of those things. This variance is okay; because not all organizations need all of those features.

Many software companies are now providing users with easy access via the Internet, making anywhere access easier than ever. But like most features, if you’re a small nonprofit with a single location, this matters much less to you than it would if your organization had multiple locations and hundreds of employees.

When advising your clients on software purchases, it’s important to note their current needs as well as what they may need a few years from now. Scalability is important, particularly if an organization experiences unexpected growth.

The nonprofit software reviewed in this issue range from a start-up level product designed for the small nonprofit that needs to be up and running today, to a state of the art software product that offers more features than most organizations will ever need. However, most products fall somewhere between these two extremes.

I hesitate to put a star rating beside some of these products for a variety of reasons; mostly because even though they do not perform at the same level as a high-end product may, nor do they contain the same amount of features, they are performing the job that they are designed to perform.

A $500.00 product will likely not contain the same features as a $10,000 product, and most organizations know where they fall in that realm, so it’s important to note that a 5 star rating does not mean that it is not a good product.

As in previous years, we reviewed Basic System Function, which looks at system navigation, available modules, and product scalability. We also looked at Core NFP/Fund Accounting Capabilities, which is one of the most important areas, reviewing account structure, budget capabilities, grant and donor tracking and management, and available e-features.

Management Features includes the availability of dashboards, spending control functions, collections and fundraising. Financial Statements & Reporting looks at customization capabilities, financial statements, FASB/GASB reporting, and grant reporting.

Integration/Import/Export looks at data transfer capability, product integration, and accessibility to accountants. Help and Support looks at available support features, system updates, training options, and live phone support options.

Nonprofit organizations have special needs that other types of business structures do not and it pays to keep that in mind when searching for a suitable software product for your client. With the plethora of options and excellent products available, there’s bound to be one to suit your client’s needs.

See inside November 2012

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