subject: Selecting Accounting Software For Nonprofits [print this page] Believe it or not, there are actually two main kinds of accounting software programs. The first is commercial or for profit software and the other is fund or nonprofit accounting software. A lot of people would normally assume that there is no difference between the two. Its true that they share a lot of things in common, but they have significant differences in reporting requirements, accounting procedures, and management objectives.
First off, a nonprofit organization should be able to dig out its financial resources based upon certain regulations. Every organization should be treated as a separate entity with its own ledger and its own balance sheet, revenue, expense, and income. If you manage such an organization then its crucial to match your accounting needs with accounting software. Accounting software designed for commercial businesses arent suitable for nonprofit organizations. Ideal accounting software should be designed with nonprofit organizations in mind.
Consider if the software is a batch system or a real time system. In checking an organizations budget, processing in real time is needed. This makes the work faster and helps the organization save money but simplifying the processing steps.
Find out if the nonprofit accounting software can handle cash and accrual basis funds at the same time. For instance, special sales may be based on an accrual basis and general fund may be considered as a cash basis. Also try to find out if the software can handle large amounts of cash, like numbers up to a billion. Good software shouldnt restrict the number of funds and should have the ability of paying invoices from multiple funds with a single check.
Accounting nonprofits software should also be able to offer grant and project tracking. This will enable reports for different grants and projects to be produced in accordance with the specific needs and reporting periods of various donors. For nonprofit organizations that work under the government, its essential to have software thats able to process mortgages in real time.
In addition, organizations need to have an expense and revenue reporting besides the normal reporting used by businesses, which shows the actual expenses and revenues compared to the budget. More importantly, good nonprofit accounting software should provide security. Access should be controlled by the user and program.
