Non‑Profit Accounting Software: Identify the Right Program for Your Organization

Your non-profit organization faces challenges different than those faced by standard commercial companies. Non-profit accounting software programs provide a suite of software applications designed to help you specifically meet these unique needs. Leveraging software targeted toward non-profit usage can help you more efficiently manage financial data, attract new funding sources, and further the organizational mission.

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Non-profit accounting software: A key tool for successful financial stewardship

Non-profit accounting software packages provide the tools to manage typical business processes such as writing checks, paying employees, and budgeting, while also addressing the fund-centric nature of non-profit accounting. Fund accounting functionalities let you to track records by a particular funding source, department, grant, or program. For typical non-profits such as health and human services organizations, schools, religious entities, community developer groups, foundations, associations, and special interest groups, the profit motive does not drive fiscal responsibility in the same way it does for commercial enterprises. For the non-profit, stewardship of funds and social impact are the key organizational goals. Non-profit software is adapted to this shift in focus from increasing shareholder value to promoting optimal financial stewardship.

Readable reports for funding sources

One of the unique requirements for non-profits is the need for reports designed for an audience beyond just accounting staff. Funding sources and boards need to be able to easily understand key financial information. The ability to communicate information about the impact of fund allocations is critical for non-profits looking to further their impact by securing funds for important projects and programs. Non-profit accounting software can provide reports documenting both past fund stewardship and its outcomes, as well as plans for future initiatives.

Predicting cash-flow

Another challenge for your non-profit organization is the unpredictable nature of funding. Funding in the form of endowments and grants is inherently less predictable than operating off of sales revenues, which is typically much easier to predict. Consequently, the importance of cash management is paramount for non-profits. Non-profit software provides you with the ability to easily see upcoming expenses, available resources, and encumbrances.

Ease of use and flexibility

Non-profit organizations often have a different model for financial responsibility than for-profit companies. The primary financial decision makers may even rotate on an elected or term basis. Further, many non-profits are staffed primarily by volunteers who may be able to work only intermittently as their schedule allows. The educational or professional backgrounds of non-profit accounting users frequently don’t include specific accounting training. With frequently changing user groups and users who may be unfamiliar with accounting software technologies, ease-of-use is a critical requirement for non-profit software.

Integrated software versus add-on modules

Many non-profits often consider adding non-profit functionality to an existing for profit packages. There are advantages and disadvantages to this approach. One the one hand, the immediate price tag may be considerably lower for just buying an additional module. On the other hand, the total cost of ownership may be much less over time for an integrated system. Adding a standalone, non-profit module to an existing for profit program typically requires customization and consulting services. Once the integration is set up, program updates may require additional work down the road. Also, sharing key data may be much more time-intensive if multiple databases need to be accessed. Rekeying data or taking the time to manually input data across systems can quickly incur labor costs that eat up the initial savings. Generally, an integrated system designed for non-profit accounting will provide the lowest total cost of ownership and best ease of use, but there are situations where it may be advisable to extend functionality through an add-on module. Most of the software providers who offer stand-alone modules also offer integrated options and can be of significant assistance in helping you determine what the best course is for your organizations.

Adam Bluemner is a Managing Editor at Software Connect. He and his colleagues have been helping organizations like yours find top non-profit software options since 1996.

Popular Non‑Profit Software Products

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