Best Accounting Alternative Selectioin for NonProfits

This is a humane overview of business-like approaches to non-profit accounting software and charity bookkeeping solutions.

There are unique accounting requirements for nonprofit organizations as opposed to for profit companies. No matter if you’re a small community group or mid-sized charity, an accounting alternative that supports fund accounting, donation tracking, compliance and transparency reporting is crucial. This guide discusses what to prioritize in features, evaluation steps and a working implementation checklist so your team can make an educated decision and keep their finances sane: 1.

Why specialized nonprofit accounting matters

Nonprofit accounting is based on restrictions and grants and donor directed funding as opposed to business who success or fail due to profit-loss. That leads to accounting needs like maintaining knowledge of fund balances, the status of restricted funds versus unrestricted funds as approval holds or reliant on donor agreements and producing receipting (for donors) and reporting (internal or external) ready materials. A common accounting framework can sweep these differences under the rug and complicate audits and grant reporting. A nonprofit-tailored accounting alternative would streamline compliance and offer stakeholders transparency.

Key features to look for

1. Fund accounting and classes: Make sure you can track income and expenditures by fund, program or grant. That makes it simple to display how restricted gifts are used and for you to publish reports by program.
2. Donor and grant tracking: The software must be able to log the details of donors, donation designations, pledge schedules and grant awards. And they’ll appreciate getting receipt generation and downloadable donor lists out of the box to save time and be better stewards.
3. Budgeting and forecasting: Program-based budget tools allow leaders to compare actuals to planned usage and adjust forecasts for grant cycles or seasonal giving.
4. Reporting and compliance: Find customizable reports for board meetings, grantors, and auditors. Basic financial statements should present the statement of position, statement of activities and cash flow by fund.
5. Multi-user access and permissions: Charities often need their staff or volunteers to have different roles. Granular permissions lock down devices against unauthorized editing and facilitate required collaboration.
6. Audit trail and data integrity: The ability to track historical changes, reconciliations, and attachments for supporting documents is important during an audit and creates confidence with stakeholders.
7. Integration and import/export of data: Effortless importing of bank statements, export for payroll systems, fundraising systems, and spreadsheets to prevent duplication of work and errors.
8. Affordable and supportive: Nonprofits tend to be chronically cash-strapped. Look for budget-friendly pricing and responsive support, including help with setup and training your staff and volunteers.

How to assess options: a step-by-step checklist

1) Determine your must-haves: Start with a shortlist of nonnegotiable needs — fund accounting, donor receipts and grant reporting. Rank further nice-to-haves, like managing recurring gifts or access on mobile.

2) Map the flows: Document how donations come in, how grants are tracked, who approves expenses and how financial reports are constructed. Knowing workflows also allows you to test how well an option will fit into the daily routine.

3) Test with actual data: Load a quarter of transactions, fund balances, and a few donor records to check ease of setup and accuracy in report generation.

4) Evaluate user experience: Conduct a small pilot with employees who will be using the system daily. Consider how fast jobs can be executed and the if the interface is matching with your teamwork technical comfort.

5) Take into account total cost: Subscription fees, onboarding or migration costs, ongoing support and possible training time. Lower monthly fees can be offset by expensive set up or slow workflow.

6) Review reporting and export capabilities: Verify your ability to export data in standard formats for auditors or to transition systems later. Running reports that can be tailored may cut down on manual spreadsheet hours as well.

Migration and implementation tips

Migrating from a legacy solution or spreadsheets to a new accounting solution is not something can be taken lightly, in terms of proper planning that prevents data loss and avoids business disruption.

1) Clean and reconcile prior to migration: We want to get all the bank accounts reconciled and clear up disparity. De-duplicate your donor list and incomplete transactions to make migration less of a headache.

2) Put critical data first: Not all of history has to come along. Focus on the current funds balance, open grants, active pledges and recent transaction history.

3) Outline a phased timeline: List bookkeeping, reporting, then donor management and so on. A phased rollout minimizes risk and lets staff acclimate.

4) Train and train often: Offer role-based training classes and quick reference guides. Make sure there is a channel of support for questions over the first 60 to 90 days.

5) Verify and validate — Validate trial balances, fund balances, transaction samples and other key data points post-migration to check if these far the new country-specific systems fare. If necessary, change mapping or settings.

Reporting best practices for charities

The board, as well as donors, is more confident when there are transparent and timely reports on hand. Provide monthly information from the fund statement and quarterly program performance reports. Use visual summaries for board meetings and grant specific expense breakdowns to fulfill funder requirements. Keep the same chart of accounts and report templates so you can easily compare across periods.

Security, privacy, and compliance

Secure donor records as well as financial systems with role-based access, strong passwords and data backups. Check with regulations, however, for local requirements on donor privacy and financial disclosures. With an accounting alternative that has audit logs and secure storage built in, risk can be minimized along with the complexity of compliance.

Getting buy-in from stakeholders

Change can be hard. Engage board members, finance staff, and program leaders early in review. Show time savings, better reporting and better donor stewardship to get buy-in. Provide test introductions and get feedback for tuning in before full-scale deployment.

Final checklist before you decide

Will the choice neatly divide funds and programs?

Does it manage donor and grant tracking, include receipting?

Can reports be tailored to the specific needs of boards / funders?

Safe and efficient multi-user access?

What is the overall cost of ownership including migration and training?

Can it work with your bank, payroll and fundraising systems?

The right accounting alternative for your nonprofit is an investment in transparency, compliance, and the long term financial health of your organization. By focusing on key fund accounting capabilities, donor tracking and transparent reporting - as well as having a thought-out migration process and implementation plan in place before starting the move - your organization can transition to an effective bookkeeping system that advances cause-driven efforts and gains trust from donors and constituents.