Today's Technology for Tomorrow's Firm.
Issue link: https://cpapracticeadvisor.epubxp.com/i/511071
NONPROFIT ACCOUNTING SOFTWARE Reviews Nonprofts Need Strong Accounting Software for Effective Management By Mary Girsch-Bock I n 2012, public charities – the largest group of nonprofts regis- tered with the IRS – accounted for nearly three quarters of the estimated $1.65 trillion dollars in nonproft revenues received. In 2013, the nonproft sector was the third largest workforce in the U.S., making up fve percent of the Gross Domestic Product; contributing $805 billion dollars to the U.S. economy. Like any business, nonprofts need to monitor expenses, create a viable income stream, pay bills, and invoice and collect on past due monies. But unlike a regular business, a nonprofit also needs to manage multiple programs, track and maintain membership dues, manage grant funds from multiple sources, and track and manage donors. There are several things to look at when determining the best sofware for a nonproft organization. What is the source of its funding? Does it receive the majority of funding from government grants? If so, its needs would vary greatly from the nonprofit that receives the majority of its funding from private donors. While there are several programs that can help manage all of these things, most nonprofts will need only a fraction of the features that many sofware products ofer. If the main revenue source is from grants, it's imperative to get a system that can manage grants properly, accounting for all expenditures. If a nonprofit is program-driven, a sofware product that can help to manage those programs would be beneficial. That's why it's always beneficial to look at module- structured systems, where individual modules can be purchased, with others added at a later date. Te size of the nonproft also mat- ters. A small nonprofit with limited revenues w ill have minimal needs compared to the nonproft that manages multiple programs and grants. Likewise, a nonproft that has a large membership base will require a different software product than the nonproft that provides other organizations with grant funding. Te products reviewed in this issue vary as much as the nonprofit sector itself. While several are designed spe- cifcally for the smaller nonproft, others ofer an array of modules and features that can suit the needs of the largest nonprofit organization. We've even included a brief article on a grant man- agement sofware product that is highly specialized and suited to nonprofts that handle multiple grants and grant budgets on a daily basis. Scalability is another consideration. While a nonproft may be small today, what happens when that nonproft experiences a growth spurt? Will the organization need to look for another product, or will they be able to scale up their current sofware? Pricing is another consideration. W hile many larger nonprof its are fnancially viable, smaller ones may have limited resources to spend on anything that is not program related. To this end, the review also offers many software products that are affordable, even for fnancially-challenged nonprofts. It's up to you and your client to determine which of these categories best suits them. Tis review focuses on the following areas: • Basic System Functions – Here, we look at produc t i nst a l lat ion a nd delivery methods. Is it available only as a traditional desktop system, or is a cloud-based version available? We also look at navigation: Is the product user friendly or confusing? • C o r e N F P/ F u n d A c c o u n t i n g Capabi l it ies – T he hea r t of t he review, here we look at the vital non- proft functionality of each system including account structure, ability to track and maintain multiple bud- gets, donor management tools, fund balancing, and grant tracking capa- bility. Are multiple year-end closings available for various funds, and does the system have an audit trail. Finally, we look at electronic capabilities, including emailing of invoices and statements, remote access, epayment and ebanking features. • M a n a g e m e n t Fe a t u r e s – T h i s includes the availability of manage- ment tools like dashboards, security, collections and fundraising tools. We also look at features such as budget analysis and what-if scenarios. • F i n a n c i a l S t a t e m e n t s a n d Reporting – Reporting is critical for nonprofts, so we look at the number of reports available, customization capabi lities of those repor ts, and whether the product can product nonprof it specif ic reports such as FASB 117 or IRS 990. • Integration/Import/Export – Can data be easily imported or exported using this product? Does ii integrate with other modules and with third party applications? Can users export reports and other data to Excel or other spreadsheet programs? • Help/Support – Tis area remains one of the most important, particu- larly to new users. Does the product of fer good help tools? A re there resou rces such as webi na rs a nd v ideos available for new users to rev iew? Does the company of fer training options and an afordable support plan? Many of these sofware vendors ofer downloadable demos for users to try out for themselves – a great way to determine whether the system ofers necessary func- tions and to see if the user is comfortable navigating the system. While your clients' needs may vary tremendously, there's bound to be a product here that is worth exploring further. ● REVIEW SECTIONS BASIC SYSTEM FUNCTIONS • Installation • General Navigation/Ease-of-Use • Modules • Scalability CORE NFP/FUND ACCOUNTING CAPABILITIES • Account Structure/Types • Multiple Transaction Types • Budget Management/Tracking • Multiple Budget Types • Donor Management/Tracking • Grant Tracking • Automatic Fund Balancing • Multiple Year-End Closings • Audit Trail • E-Features MANAGEMENT FEATURES • Dashboards (snapshots) • What-If Analysis & Budgeting Scenarios • Security Features/User Roles • Spending Control Functions • Collections • Fundraising • Document Management Capabilities FINANCIAL STATEMENTS & REPORTING • Customization Capabilities • Financial Statements • FASB/GASB Reporting • Endowment/Grant Reporting • Reporting Export Options INTEGRATION/IMPORT/EXPORT • Data Transfer/Import • Integration w/Vendor's Other Products • External Program Integration • Remote Accountant Access or Online Accountant Data Transfer Tool HELP/SUPPORT • Built-in Support Features • System Updates • Support Website/Documentation • Training Options • Live Support Mary Girsch-Bock Mary Girsch-Bock has been an accountant n the property management and healthcare industries. She now specializes in business and technology issues and is an author of one book, several HR handbooks, training manuals, and other publications. She can be reached at mary. girschbock@cpapracticeadvisor.com .