What to Look for in Non Profit Accounting Software
Non-profit organizations, such as churches, charities, and volunteer associations, have certain accounting needs that differ substantially from for-profit businesses.
Non-profits need to keep careful records of contributions and expenses, especially since the Financial Accounting Standards Board (FASB) requires all non-profits to abide by strict accounting standards, such as are outlined in FAS 116 and 117. Both donors and federal tax officials expect a non-profit organization to be able to account for how many has been received and how it is being spent. As such, finding suitable nonprofit accounting software is vital for these organizations. Below are some of the items to look for from an ideal non profit accounting software program.
Customization and Categorization
A non-profit organization is required to keep separate records of all sources of contributions, such as donations, grants, pledges, and fundraising efforts. The ability to customize transaction and balance sheets in order to keep track of these unique contribution sources is, therefore, vital for any non-profit. Nonprofit accounting software should include features that allow for such customization and categorization. Not only is being able to keep track of different sources of contributions necessary for tax purposes, but it is also helpful for mapping out future financial strategies. By knowing how money is being raised, organizations can better strategize for upcoming fundraising efforts.
While there are some non-profit organizations that are large and with plenty of resources, the truth is that most non-profits are small organizations that need to manage their expenses closely. Furthermore, since many organizations are performing some sort of service to their community, donors will want to see that the organization is not spending its limited resources on costly accounting software. Therefore, when choosing a not for profit accounting software program, it’s important for such organizations to choose a program that is cost effective. An accounting program that offers all of the features that a not for profit business needs, while still charging a competitive subscription rate, will go a long way towards keeping expenses down so that contributions can be put to good use.
As mentioned above, most non-profits tend to be small businesses without much in the way of resources. While a large organization can depend on the services of large in-house accounting teams, many non-profits will have to take care of their accounting needs with minimal help from certified accountants. Therefore, any accounting program should be intuitive enough for every non-accountant to use. Tutorial videos and educational materials should be standard with such software and it should offer some form of online support to help resolve any issues quickly and efficiently. Additionally, software should include the ability for users to share balance sheets and records quickly and easily with an accountant in order to cut down on wasted time and maximize efficiency.
Today, many organizations rely on online contributions from donors who may be spread out over a wide area. Such contributors expect to be able to donate to a cause through the payment method of their choice, and an organization that fails to keep up with these demands risks losing valuable funds as a result. The ability of an organization to process these contributions, through methods such as credit card or PayPal payments, is important for future growth. Accounting software should include options to accept these sorts of payments and to automatically download them to into the program, thus saving valuable time and ensuring that financial records are kept constantly up-to-date.
Finding the best not for profit accounting software depends on knowing what makes non-profits different from for-profit businesses. A non-profit that fails to keep accurate financial records risks not only being audited by federal authorities, but also losing the trust of donors and contributors. By selecting a software program that caters to the unique accounting needs of a non-profit organization, such organizations can worry less about the management of financial records and instead focus more on important future goals and endeavors.