Making Sense of Nonprofit Accounting Software: Tips for Choosing the Right Solution
When it’s time for new accounting software for your nonprofit, the choice isn’t always easy. There are multiple solutions on the market.
Finding the right software requires your IT and finance organizations, as well as others at your organization, to analyze:
- How the new accounting software will integrate with your existing technology
- What functionality is offered by the software you’re considering and how it addresses the fund accounting needs of nonprofits
- How each accounting software option aligns with your nonprofit’s organizational structure and requirements around budget, ease of use, customer support, and more
Let’s look at five key things to consider when you’re selecting accounting software for your nonprofit:
1. How will it integrate with your other software systems?
Your accounting software must pull in data from your fundraising and other systems. If your nonprofit’s technology stack is built primarily around a platform such as Salesforce or Microsoft, then for ease of integration with your other systems, you might want to consider only accounting solutions built on the platform you use.
If you want to explore other options, look for any pre-built integrations they have with your primary systems. If they don’t easily integrate with your systems, then you’ll likely need to build a custom integration, which can add to implementation time and costs.
And keep in mind that if you don’t have the internal resources available to implement the software, you will likely need to use one of the software provider’s implementation partners. If this is the case, be sure to look at the list of implementation partners to ensure you have a wide range of firms to choose from.
TIP: Find out how donations are mapped into accounts in the accounting software. Look for features such as batch donation processing that can simplify deposits with multiple transactions, and how donations with designations are mapped to the GL chart of accounts.
2. Does it support nonprofit fund accounting out of the box?
Most accounting software offers standard capabilities for commercial accounting needs, such as general ledger (GL) chart of accounts, employee expenses, budgeting, and accounts payable and receivable. Look for accounting solution vendors offering options specifically for nonprofits that address common accounting needs plus the unique fund accounting needs of nonprofits, such as donation tracking, gift designations, fund restrictions, and grant requirements.
TIP: Because fund accounting software is often part of an enterprise resource planning (ERP) solution that also includes human resources (HR) functionality, you’ll often find features that overlap between accounting and staff management, such as payroll.
3. How is your organization structured?
The structure of your organization impacts how you track and manage finances. For example, you might have a central finance team, yet revenue must be tracked separately for chapters or affiliates. Make sure the software you’re considering allows you to generate income statements, balance sheets, and other reports based on your nonprofit’s organizational structure.
TIP: Make sure the accounting software you select allows you to easily manage funding in compliance with AASB, FASB, and IASB standards.
4. What are your organization’s other unique needs?
Organizations’ needs vary. Think about your organization’s budget, training needs, and customer support requirements for your new accounting software. Ask the software vendors you’re considering about their software licensing model, training options, and support offerings to ensure they meet your needs.
TIP: Look at how easy the software is for both finance staff and non-finance staff to use. Ease of use can save your organization valuable time and reduce the need for extensive training and support.
5. What changes do you want to make?
Moving to new finance software can be a great opportunity to modify your processes and even rework your chart of accounts. These types of changes can impact what data you choose to migrate and how you configure processes in your new system. Consider any changes you want to make, and finalize those decisions as soon as possible, as they might influence your choice of software as well as extend the time and cost of implementation.
Find the right software for your nonprofit
When you’re ready to make a software change, Heller Consulting is ready to be your trusted technology planning and implementation partner. Our team is ready to help you evaluate and implement new technology so you can find the best software fit for your organization and implement it in a way that supports your goals. Contact us today to get started.
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