For the non-profit or public sector organization, success isn’t defined by generating profits. Accordingly, nonprofits and government entities use different accounting methods than for-profit businesses.
A fund accounting software offers visibility into your financials to better understand exactly how each dollar is spent. With improved financial clarity, you’ll be better equipped to lower operational costs and maximize the impact of every dollar.
We’ve compiled a list of popular fund accounting systems to help you find the best solution for you:
Aplos is a true fund accounting software which allows you to easily apply contributions and gifts to specific funds or projects. Keep track of how close you are to reaching your goals, and provide better financial stewardship for your organization.
Unlike other accounting software solutions, Aplos is specifically created for the complexities of nonprofits and churches—not for for-profit businesses.
Blackbaud Financial Edge NXT is a complete cloud accounting solution designed to meet the unique needs of nonprofits and government entities. Built on Blackbaud’s expertise and experience of over three decades, Blackbaud Financial Edge NXT delivers all the tools your NPO needs to manage financial reporting, monitor and track program success, support fundraising efforts, and ensure overall integrity.
Intuitive, reliable, and secure, Blackbaud Financial Edge NXT can help streamline financial processes at your organization, so you can spend more time and resources to drive your mission forward. And it comes to you on one cloud platform that’s fast, secure, and always current.
MIP Fund Accounting exclusively serves the financial management and fund accounting needs for thousands of nonprofits and government agencies. MIP has received the Campbell Award for several years in a row. This software is focused strictly on custom designs for your system to enable you to manage effectively, get timely information, streamline processes and provide strong controls.
MIP is a fully integrated system with comprehensive functionality including fund accounting, procurement, budgeting, payroll, human resources, timekeeping, fixed asset management, grant management, dashboards, and more. This flexible structure enables you to manage and report on multiple cost centers at the general ledger level including multiple organizations, funds, projects, grants, programs, departments, locations, etc.
Sage Intacct is a web-based, SaaS accounting and financial management software system designed for use by small and mid-size organizations. Sage Intacct was built by finance professionals, for finance professionals, providing powerful automation of complex processes and multi-dimensional data analysis even for government and nonprofit entities.
FastFund Nonprofit Software is a fully integrated fund accounting system designed by Certified Public Accountants. Affordable modules include General Ledger, Accounts Payable, Accounts Receivable, Cost Allocations, Payroll and Fundraising.
Handles the complex reporting requirements of multi-funded organizations. Designed to maintain separate financial records for each program. User definable chart of accounts to define funds, cost center and accounts. Powerful reporting capabilities produce custom reports to meet all your fiscal requirements including multi-year reports, budgets and reports that comply with FASB 116 and 117.
Fund accounting software is designed to enable improved allocation management of resources which have been designated for specific uses. A common application found within nonprofit accounting software, funds are a special type of accounting entity which provides a self-balancing set of accounts allowing the reservation of cash and non-cash assets for specific purposes or activities.
Fund accounting is most commonly used by nonprofits and government entities because these organizations need to track expenditures and balances across multiple funds and have them appropriated at certain times.
A few of the most common benefits companies experience when utilizing fund accounting software include:
To start, a fund is a unit of financial organization with a self-balancing set of accounts designed to record cash and other assets together with related balances and liabilities. Fund accounting software provides the automated ability to create financial statements and balance sheets for each fund.
Organizations providing funds often require clear reports detailing how the money has been spent. Fund accounting software can create detailed reports designed for this purpose. By improving your ability to document the impact of previous expenditures, you can help promote your ability to receive future funding.
Just as there are accounting packages designed with manufacturers or retailers in mind, software developers have created fund accounting software to meet the specific accounting requirements of nonprofit and government organizations. Using software geared for commercial for-profit operations can lead to a number of issues for nonprofits and government entities.
While the profit motive may not be behind it in the case of nonprofits and government entities, every organization is looking to maximize their efficiency. Fund accounting software provides an accounting approach designed to eliminate time-intensive workarounds necessary to make standard commercial packages work.
Fund accounting software modules provide a number of inherent benefits. Donations, grants, and endowments are frequently provided to the non-profit organization with specific instructions on the usage of the funding. Tracking these financial assets in funds allows the non-profit organization to easily see how each dollar was spent. The results of failing to meet specific spending restrictions can have negative consequences, including discontinued funding.
The first step of meeting spending restrictions is knowing where every penny is allocated. For any government entity, GASB standards actually require that accounts are kept on a fund basis. Fund accounting software allows governments to track a variety of different funds including general/operations, special revenues, capital projects, debt services, permanent, fiduciary, and proprietary funds.
Which type of fund accounting does your organization need? You may just need a solution that can handle the management of funds/grants, or you may need a complete accounting system that includes other back-end accounting functionalities like accounts payable and a general ledger.
However, most end-users of entry-level fund accounting solutions will be start-up nonprofits, churches, and very small municipalities or local government organizations who are just trying to track a particular grant or comply with strict reporting guidelines for auditing.
For very small organizations, a complete accounting software may cover all the fund accounting functionality necessary, though a separate software may be best suited to fit the specific needs of a growing nonprofit organization.
Current users of fund accounting solutions may start looking to expand upon existing functionality as they grow. As you deal with more and more funds, you’ll need strong IT support and security, which may not be offered with a basic package. These are all great reasons to take a deeper look into your software solution and see if it’s meeting not just today’s needs, but also tomorrows.
Finally, larger organizations may have a handful of legal entities they are recording within their systems, or perhaps have dozens of programs, projects, locations, etc. all with their own funds for various causes that need to be managed. Simply put, organizations with a lot of funds likely will have even more as they continue to operate and will need a scalable solution to handle them.
QuickBooks is one of the most popular solutions for organizations with tight budgets, which rings true for many nonprofits and government organizations. QuickBooks does have nonprofit versions of their Desktop Enterprise solution, automating of fund and program accounting, and customization to create lists of members/donors and track budget by programs or funds.
Yet in a recent study conducted by our company, we found companies looking to replace QuickBooks and find a new nonprofit accounting solution were more likely to review the options listed above than any other nonprofit accounting solution.
The reason? QuickBooks falls short when it comes to “true” fund accounting, as what QuickBooks consists of is: