10 Best Accounting Software for Nonprofits in 2022
If you work for or run a nonprofit organization, then you are probably aware that its bookkeeping needs can’t be solved by regular accounting. For starters, your organization has to meet the strict guidelines of the Financial Accounting Standards Board, so it’s a given that you need special features to run your operations.
It’s 2021 and most businesses or organizations need accounting tools that can automate most of their financial tasks. Nonprofits however need software that can perform specific functions that suit how they operate. These include but are not limited to, creating budgets and specific financial reports, tracking contributions and grants, managing donor profiles, and recording volunteer time.
The best accounting software for nonprofits not only offer the required functions, they are also equipped with the features most nonprofits want in accounting e.g, the ability to integrate with specific software that the organization uses, the user-friendliness to make user onboarding easier, and a cloud-based model to make employees access the tool from anywhere.
Depending on the size and approach of your organization, the software you need might differ. In consideration, we’ve taken the time to research tools that would suit different types and sizes of nonprofits.
We’ve considered their prices, features, and usability and laid these out so you can compare and discover the best accounting software for your nonprofit.
Best Accounting Software for Nonprofits
Best Accounting Software For Small to Large Nonprofits.
QuickBooks immediately stands out as the best accounting software for nonprofits because it’s an incredibly robust platform with programs that are suitable for nonprofits of all sizes.
Smaller organizations that are watching out for price and ease of use can use simpler and cheaper versions like QuickBooks Online. Thanks to its user-friendly interface and convenient onboarding process, this version is easy to grasp even for novice users.
With the solid number of software integrations it supports and the nonprofit-specific features like grant tracking and contact management, it’s indeed a practical choice for small businesses and organizations.
But if you’re after a powerful, all-purpose program that can meet vast accounting needs for nonprofits, then you have to consider QuickBooks Enterprise Nonprofit. It’s a great option if your organization is mid-to-large or is experiencing major growth.
QuickBooks Enterprise Nonprofit has a steeper learning curve than QuickBooks Online but it has a huge retinue of accounting services that are engineered for nonprofit organizations. These include:
- Tracking grants, expenses, and donations.
- Storing donor and vendor information.
- Creating specific, advanced reports for stakeholders, donors, or for needs that pertain to your organization.
- Creating budgets.
- Simplifying tax reports.
- Sending invoices.
- Tracking volunteer time.
One of the programs’ most exciting features is its ability to integrate with fundraising software like NeonCRM and Kindful. Streamlining your fundraising campaigns with these integrations will make the process a lot more efficient.
What some might consider a bonus feature but is really a load of convenience is QuickBooks Enterprise Nonprofit’s ability to automate payroll services. You can pay your staff directly through the app, but to access this function, you need to upgrade to the Gold, Platinum, or Diamond plans.
That brings us to the software’s major repellent for nonprofits: it’s a bit pricey and might require different upgrades for some convenient features.
For instance, it’s naturally a desktop tool, unlike QuickBooks Online that offers remote access. To gain cloud-based access on QuickBooks Enterprise Nonprofit, you need to pay an additional fee for each user that will remotely access the program.
Unlike some of its cheaper versions, QuickBooks Enterprise Nonprofit doesn’t have a free trial. You have to buy it off the rack at a rate of $112.50 per month.
There are also premium plans with advanced features like the Gold, Platinum, and Diamond. To access the Gold plan, you need to pay $1489.50 per year. The Diamond plan costs $3618 per year.
For users who prefer remote access, each of the premium plans has a fixed upgrade fee for each user added.
For small organizations that only want the basic features at cheap prices, QuickBooks has tools with plans that go for as low as $25 per month.
- Offers several nonprofit-specific features like donor management, expenses and donations tracking, advanced reports, volunteer time-tracking, etc.
- Integrates with fundraising software like NeonCRM and Kindful.
- Automates payroll services with upgrades.
- Offers remote access with upgrades.
- Offers online backup and data storage.
- Might come across as expensive to small nonprofits.
- A lot of the convenient features, like payroll automation, remote access, and unlimited employees are only available with paid-for upgrades.
- Doesn’t offer a free trial, unlike QuickBooks Online.
- It’s quite complex, especially for novice users, and takes some getting used to.
2. Sage Intacct
Best Non-Profit Accounting Software For Tailor-made Solutions.
The special value of Sage Intacct is that it’s a vast platform with unique accounting solutions tailored to suit various types of non-profits.
Whether you’re a healthcare organization, religious ministry, or NGO, Sage Intacct’s accounting services come with nifty features that benefit these organizations.
For instance, for establishments like churches that might have to deal with a consistent flow of donations and expenses, the program provides real-time financial reports. Not only that, its automated process makes donation tracking and bills management faster and much simpler.
Based on its design and functionality, Sage Intacct was built with convenience and speed in mind for both small and large nonprofits. Features like one-click commands, simplified dashboards, and its automatic workflow make it intuitive and user-friendly.
At the same time, it’s a pretty powerful software with basic and practical advanced functions designed for nonprofit accounting such as:
- Tracking and managing donations, grants, and expenses.
- Automating transactions and real-time reports.
- Simplifying bank reconciliations.
- Tracking and managing budgets.
- Managing foreign and international transactions.
- Accessing donors.
- Managing payroll.
- Monitoring performance and revenue.
These specialized features extend to a vast clientele base of nonprofits that also includes charity foundations, membership organizations, educational nonprofits, and more.
A major reason Sage Intacct can boast of offering such a streamlined and fast workflow is its vast capacity for integrations. The program is web-based and has an open API architecture, so it’s possible to integrate it with a lot of the software used by nonprofits.
Since it’s a cloud-based application that doesn’t need to be downloaded on desktops, remote access is a given for your organization’s employees or volunteers. The platform also provides full security, and you’re able to manage and monitor the activities of users who’ve been given access.
Because Sage Intacct is so vast, it can come across as complicated to novice users. It does, however, have a pay-as-you-need payment structure that small nonprofits can take advantage of. There are no standard pricing plans available on the website. To use the product, you have to reach out to get a customized plan that suits your budget and needs.
- Has an automated workflow that generates live reports and monitors transactions.
- Handles foreign and international transactions.
- The software integrations are very flexible.
- Manages payroll.
- Processes bank reconciliations.
- Offers full security and membership management.
- Offers remote access.
- It might be complex for novice users.
Best Accounting Software For NonProfits and Governmental Agencies.
AccuFund Accounting Suite is a full-on accounting system designed for nonprofits and government agencies.
With a core infrastructure that provides anything from cash receipts and general ledgers to essential features like flexible financial reporting, seamless integrations, and easy bank reconciliations, it’s a standard choice for any non-profit.
But what really makes the suite stand out is just how customizable it is. Depending on the accounting needs of your organization, you can always add new modules and functions such as payroll automation, grants management, and more.
Because of its flexible structure, nonprofits can design custom forms and categorize transactions uniquely to suit their specific needs. Also, the financial report writer has several filter options.
Add these features to the ability to customize reports as needed and you have a truly robust reporting platform that can be utilized to create specific internal and external compliance reports. This makes AccuFund a great option for nonprofits and government entities that run strict financial operations and require utmost transparency.
Whether it’s been provided in the core system or it’s a service you have to access via customization, AccuFund Accounting Suite can provide the following solutions:
- Tracking and managing donations, expenses, and loans.
- Handling payroll, tracking employee time, and streamlining HR management.
- Developing and managing budgets.
- Storing documents.
- Importing and exporting.
- Handling utility bills, tax reports, and licenses for government agencies.
Acufund’s flexible nature makes it practical for nonprofits of any size, but more importantly, it’s a strong model for scaling. Organizations can tweak the system to fit their needs as they expand.
Also, the program not only provides comprehensive access to hundreds of users but also allows for a fair number of seamless integrations with apps like Zoho and Expensify. Basically, if your organization is a first-time user, you can easily transfer and automate your existing operations and completely onboard your staff.
You can either access the platform from your servers or utilize it remotely since it offers both a cloud-based and onsite model.
As with most fully equipped and powerful software, it can be difficult for novice users to learn. The incredibly efficient automations and reporting will save you hours of work, but you might have to make several calls to their customer service or get an expert to put you through.
Of course, training is always provided to new users to make onboarding easier, but depending on the size of your business and your level of knowledge, you might find some of the features complicated.
The pricing model is flexible and consultation-based. Essentially, you pay as you need, but some features might be expensive for small nonprofits.
- Financial reporting is robust and customizable.
- Its custom modules and integrations make it very adaptable.
- Supports payroll and human resources management.
- Provides bank reconciliations and compliance reporting.
- Offers strong security and data storage.
- Can be accessed remotely.
- Might seem complicated to novice users.
- Doesn’t offer a free trial.
Best Accounting Software For Churches
Nonprofits like churches often need an accounting system that lets them accept donations, track their cash flow, and allocate funds for their ministry, Aplos is specifically designed to serve those functions and more.
The program is particularly great for managing donations, as not only can you track donations, you can apply them to specific budgets as needed.
Faith-based organizations and nonprofits often depend on the ability to raise funds and convince donors, Aplos’s donor and event management features are strongly equipped for that purpose. It takes fundraising and gift-giving to another level with a gift automation process that facilitates repetitive contributions.
Ideally, the software provides strong accounting and reporting functionalities for small to large nonprofits, but it’s truly practical for churches because it provides essential and advanced functions such as:
- Monitoring cash flow and optimizing budgets with fund accounting.
- Registering, managing, and tracking events and fundraisers.
- Accessing donors and managing their profiles.
- Creating and managing teams and volunteer groups.
- Offering advanced communication systems.
At the core of Aplos’s usability is its communication system. With the ability to integrate with several CRM software and the features like mass emails or texts, it gives you the option to increase cooperation from team members, partners, and contributors.
As far as bank integrations go, Aplos is partnered with financial services like Plaid and Finicity to synchronize your bank interactions. Some organizations might need more sophisticated bank integrations.
On the plus side, the platform is cloud-based and user-friendly, so it’s well-suited for its ideal audience. Setting it up is hardly a hassle, even for novice users, because of the available training resources and incredibly responsive customer service.
Aplos offers a 15-day free trial after which you have to subscribe to one of its pricing plans. There are three plans available with the most basic one starting at $29.50 per month.
To enjoy the full Aplos suite along with its advanced accounting solutions, you need to request a demo to choose your preferred features and get customized pricing. The cheapest package for this plan goes at $159 per month.
- Offers fund accounting.
- Provides donor access and management.
- Facilitates collaboration with CRM integrations, team management, and communication tools like emails and texts.
- Tracks donations and promotes gift-giving.
- Manages events and facilitates fundraisers.
- The features are accessed and automated from a central location so the workflow is streamlined and easier.
- Can be accessed remotely since it’s cloud-based.
- The integrations could be more flexible and sophisticated.
Best Cloud-based Accounting Solution for Enterprise-Level Nonprofits.
Large nonprofits that have a sizable number of employees and donors do not only need enterprise-level accounting solutions, they also need access to a high level of connectivity and transparency across-board. If that describes your organization, you might want to consider Financial Edge.
Designed by Blackbaud, a company that has provided cloud-based software for nonprofits for up to three decades, Financial Edge has a nice combination of accounting and communication features that will be useful to nonprofits with large networks.
The standard accounting features are cutting-edge, with a fund accounting service that monitors grants, allocated budgets, and also ensures reporting that meets FASB (Financial Accounting Standards Board) standards.
The software provides customizable reporting, so you can input and track data unique to your organization. Plus, it offers real-time reporting and intelligent analytics that cover not just your finances, but also interactions with your donors and volunteers.
Because of its integrations and full suite of modules, Financial Edge can automate and streamline your entire accounting workflow as well as boast of the following features:
- Fund accounting that monitors your grants, projects, and tracks each aspect of your cash flow.
- Donor management and volunteer tracking.
- Standard importing and exporting capabilities.
- Marketing and communication tools to boost outreach and interact with supporters and employees.
- Advanced fundraising solutions and integrations.
One of Blackbaud’s major products is a fundraising software named Raiser’s Edge. The company integrates the product with Financial Edge to deliver fundraising features of a higher standard.
For instance, you can gain insight into special data like your supporters’ demographics as well as their life cycle with Raiser’s Edge’s CRM functions. You can also integrate payment options into your fundraising and contact channels to boost your fundraising efforts.
Essentially, the idea of Financial Edge is to synchronize all the information and processes that have to do with your accounting and make them accessible from one central location. The marketing and communication tools enable you to interact with your donors and respond to their actions with automated emails.
That’s not all, Blackbaud goes as far as to offer a custom-built website that would integrate with your system and streamline your communication channels.
Financial Edge offers fairly standard data security. Naturally, you can grant user access to your team members and utilize the platform’s communication tools to ensure collaboration, but you maintain full security over the software as well as the control to grant specific approvals or permissions.
In what can only be deemed as convenient, Financial Edge is not as difficult to use as software of its nature might ordinarily be. It does have a vast suite of modules that can be pretty complicated but it has user-friendly features like intuitive dashboards and one-click functionality to compensate.
Also, migrating your local or previous database to the software is easy, plus there’s an onboarding process as well as a support team on hand to help users grasp the tool.
The major complaint from most Financial Edge users is its expensive nature. Pricing is not readily available on the website but you can request a demo to get a feel of the software. You might find the upgrades and services to be quite costly.
- Integrates with Raiser's Edge CRM software to optimize the fundraising process.
- Provides donor management capabilities and unique insights like donor persona.
- Inbuilt communication and marketing tools.
- Offers fund accounting solutions.
- Provides data security.
- It’s cloud-based software.
- It’s expensive, especially for small organizations, and the upgrades could be costly.
Best Accounting and CRM Software for Growing Nonprofits.
Sumac is an ideal option for small to mid-size nonprofits that need CRM capabilities to streamline their accounting and fundraising tasks. The product is offered by Silent Partner, a nonprofit-specific software company that has tailored solutions for non-profits for almost three decades.
You should understand that Sumac is first and foremost a CRM software, so it’s been built for managing your contacts and donors as well as their lifecycle. It does integrate with accounting software like Quickbooks, so it can streamline your reporting tasks.
The software can also be used to process your donations and manage payments, meaning it can keep track of the important aspects of your cash flow
For specific accounting solutions like report building and data migration, a more practical option is Silent Partner Software, a nonprofit service produced by the same brand that offers Sumac.
A huge advantage users of Sumac enjoy is that it’s highly customizable. The program allows the use of add-ons that can be tweaked to capture information that is unique to your organization. Users also get to enjoy the following services:
- Personalized Email Marketing.
- Donor Management.
- PA-DSS compliance.
- Website Integrations.
The website integration feature is one of the flexible aspects of Sumac. This feature lets you customize donation pages that can be featured on your website. These pages can then be used to collect donor information.
What you would truly enjoy about Sumac is its affordability. At a base price of $35 per month, it’s very economical compared to most enterprise-level accounting software.
There’s also the option to run a demo and check if the solutions suit your needs. Your bills are determined based on consultation.
- Offers a customizable CRM solution.
- Integrates with accounting services like Quickbooks.
- Builds custom donation pages with website integration feature.
- Offers PA-DSS compliant donation processing.
- It’s cloud-based.
- It doesn’t provide accounting-specific services like report writing.
Best Fund Accounting System for Small to Medium Nonprofits.
FastFund Online is a full suite of integrated services offered by Araize, a nonprofit-specific software provider. The suite contains just about every product or solution a growing nonprofit might need for its accounting tasks. These include fund accounting, fundraising, and payroll.
One of such products is FastFund Accounting, a cloud-based fund accounting software that provides all the essentials when it comes to nonprofit accounting. The program is well-equipped for compliance reporting, so you can easily generate reports that meet the guidelines of FASB, including the ASU 2016-14 directive. You can also use it to complete IRS-compliant forms like the 990, 990 N, and 990 EZ.
FastFund Accounting lets you import cash receipts, journal entries, client or vendor information, and other data incurred from your transactions, like your vendor invoices and client bills. The supported export modes are Excel, PDF, CSV, and HTML files.
Apart from the ability to track your grants and expenses for projects and activities, FastFund also offers customizable modules that can manage data and generate reports unique to your organization. As intended, it’s a complete solution for managing your cash flow. Some of the many features it provides to that effect include:
- Budget creation and reporting.
- Bank reconciliations.
- Automatic fund balancing.
- User authorization and permission for security.
- Standard account reporting, plus transparent and accurate audit trails.
- Revenue projection and reporting.
What’s great about FastFund is that it’s easy to use. Apart from the fact that it has a comprehensive interface, the software offers its features in intuitive modules and interfaces. For instance, for managing donor and employee information or tags, users can search for duplicate names and merge them if necessary.
FastFund Accounting integrates with Araize’s fundraising and payroll software so you can get the full nonprofit accounting experience. Features like cost allocations, accounts payable, and accounts receivable are also made available through integrations.
The software is suitable for small and growing nonprofits because the pricing is quite convenient, compared to enterprise-level nonprofit systems. Then it’s quite intuitive and not hard to grasp for even novices. The easy onboarding and training and the responsive customer service are quite beneficial too.
FastFund Accounting has a standard price plan of $42 per month. The standard plan doesn’t receive accounts payable, accounts receivable, and cost allocation services. You need to pay $19 per month to add each feature or simply pay a premium fee of $94 per month that would cover them all.
For some other integrations and solutions, like fundraising features, or the ability to have five simultaneous users, you would need to pay extra monthly charges. You can request a demo to have your feel of the system before getting pricing tailored to your needs.
A plus for new users of the software is that there is no setup fee. The company’s responsive customer service is also free.
- Provides a full-on accounting suite with essential features like budget creation and expense tracking.
- Offers rich compliance-reporting features.
- The data exporting supports a variety of formats, plus the data importing is fast and convenient.
- Setup is free.
- It’s cloud-based.
- It’s a fast-developing software but it’s not as functional as more robust, enterprise-level programs.
Best Accounting System to Aid Growing Organizations.
Denali Fund is one of the products offered on Cougar Mountain Software's suite of accounting solutions.
The system is ideal for small to mid-sized organizations that need standard fund accounting to manage and track their cash flow. With basic components like a secure audit trail, general ledger, account payable module, and more, you can maintain a transparent outlook on your finances.
As a growing nonprofit, your organization will especially benefit from Denali Fund's growth-oriented model. The software has the option to integrate or remove extra modules, so you can adjust and add more features as you scale.
The report writing is customizable, so you can track and manage data unique to your operations. Apart from the custom reporting, Denali Fund also offers these standard fund accounting features:
- Grant and donation management.
- Event bookkeeping.
- FASB and GAAP compliance.
- Contact management.
- Add-ons like bank reconciliations and a payroll system.
The Denali business suite provides the best of Denali's accounting solutions. This service lets you manage your accounting with convenient features like intelligent analytics, pulse alerts, and multi-location inventory management.
Pricing is not readily available on Cougar Mountain’s website, so you have to contact the company to book a demo or get a price quote. The product’s scalable model however means that small and mid-sized companies can take advantage of its flexible offers. Essentially, you purchase more modules and features as your organization grows.
There’s also the option of a free trial. Prospective users can sign up for a 60-day trial to test the software’s features. The trial comes along with two hours of support and training to help you understand the program.
Denali Fund offers both a cloud-based and an on-premise version.
- Integrates customizable modules and provides custom reporting.
- Has the option of adding extra and advanced modules to support scaling.
- Offers a standard payroll system as an add-on.
- Allows a free trial.
- Offers a cloud-based model.
Best Accounting Software for Volunteer Groups.
Moneyminder is the perfect solution for those who wish to flee from the complicated maneuvers of enterprise-level or standard accounting systems. It’s a simple and easy-to-use cloud-based solution designed for volunteer-led organizations whose members are not so adept at or thoroughly committed to bookkeeping.
The software helps you handle your transactions and track your payments and expenses. It keeps a tail on your fundraising cash flow and lets you reach out to donors. True to its purpose, Moneyminder makes it easy to record figures with quite comprehensive one-click reports. This convenience also extends to running your audits and creating accurate reports at the end of your fiscal year.
Volunteer groups often organize events, so Moneyminder lets you draw up and monitor budgets that can be tailored to suit your unique plans and activities. For all its simplicity, the application contains standard features that are essential to nonprofit operations. These include:
- Volunteer time tracking.
- Donation tracking.
- Bank reconciliations.
- Inbuilt document library to store and organize files.
- Multiple bank and payment service integrations.
- Daily backups and strong security.
- Membership management and the ability to send financial statements via email.
Moneyminder integrates with up to 12,000 different banks and popular payment services like Paypal and Square. By connecting with your preferred bank or payment service, you can synchronize and monitor all your online transactions with the software.
A very convenient feature for volunteers and nonprofits is the option to create and integrate an online store with Moneyminder. This online store can serve as a front for your fundraising campaigns as well as create a seamless link between payments/donations and the app.
Moneyminder has a free version, which is not only a nice surprise but a strong benefit for tiny volunteer groups. The free version is useful, as you can create budgets and reports and even track some of your expenses, your dues specifically. You can also add as many users as you want.
To enjoy the rest of the multiple features though, you need to upgrade to Moneyminder Pro, which starts at an annual price of $159.
To use some advanced options like the multiple bank integrations or the ability to import your data from Quickbooks, you have to pay extra charges. The online store option has a unique payment structure where you get charged for each transaction or payment processed.
- The program is very easy and straightforward to use.
- Integrates with multiple bank accounts and payment services.
- Offers an online store to help fundraising.
- Has a usable free version.
- Setup is free.
- It’s cloud-based.
Best Fund Accounting System for Organizations with Vast and Complex Operations.
Nonprofits that have a strict focus towards fund accounting and want a cutting-edge solution to effectively manage every single stage of their financial operations should consider MIP Fund Accounting.
The program's vast functionalities are equipped to track every transaction and handle complicated finances. With its multi-dimensional chart of accounts, intuitive dashboards, and custom report writing feature, you can create unique reports and effectively monitor every aspect of your cash flow.
MIP Fund Accounting removes the limit on the amount of funding sources you can track. This flexibility also applies to your budgeting, so you can draw up and analyze unlimited budgets.
At the general ledger level, the system's extensive suite allows users to report on the expenses and operations of multiple cost centers and departments within an organization.
Apart from keeping a tight hold on complex financial activities unique to your organization, MIP Fund Accounting also provides predictive analytics. This means you can forecast financial scenarios and add an edge to your decision-making.
Included in MIP's robust platform are the following solutions:
- FASB and GASP-compliant reporting.
- Grant Management.
- Funds allocation.
- Payroll and Human Resource Management functionalities such as timekeeping and attendance tracking.
- Third-party integrations.
- Advanced security.
MIP balances its powerful functionality by operating as a scalable model. You don't have to purchase the entire suite with every feature. Instead, you add more features as your organization grows and your financial operations expand.
As you might have guessed, the program is quite complex and can take some getting used to. For this reason, new users are provided training and full setup services. There's also a support team on hand to help you find your way around the system.
MIP offers the choice of an on-premise or cloud-based model. As for pricing, you can request a demo and get a quote for the features that suit your needs.
- Provides a full-on fund accounting service that manages your entire financial operation.
- Contains a multi-dimensional chart of accounts.
- Tracks unlimited funds and allows unlimited budgeting.
- Offers predictive analytics.
- Offers a payroll and human resource management platform.
- Has a cloud-based model.
- It's a complex program so it might be sometimes challenging or time-tasking to work with.
How to Choose the Right Accounting Software for My Nonprofit Organization
Finding the best accounting software for your nonprofit can be overwhelming. Comparing the several available systems on the market would consume your resources, especially your time and energy, and sometimes even money. Setting up a new system to adapt to your business model is often never free either.
Still, you can't just select any solution. Choosing the wrong system would waste even more of your resources. It can compromise the financial goals you’ve set and delay your true mission: helping people.
The trick is to have a careful selection process that would consume less time and ensure you never end up with the wrong solution. Taking the following steps would help you select the right accounting software for your nonprofit:
1. Determine Why You're Getting a New System
Often the first step, depending on the size of your organization, is to have a valid and well-thought-out reason for adopting a nonprofit accounting software.
This is a natural procedure, as there would be things or processes your organization lacks that made you consider a new solution. Some of the most common reasons include:
- Establishing an accounting solution for a new organization.
- Replacing an already existing solution.
In the case you're replacing an already existing auction, you would consider your reasons for switching. These could include:
- The need to streamline your operations.
- Having more control over your processes.
- The need for a scalable model that would effectively adapt to your growing organization.
- Moving to a less complicated and cheaper software that suits your nonprofit's size, or vice versa.
There would be other factors to consider as well. Draw out all your important reasons so they can serve as a foundation for the next step.
2. Consider Your Most Needed Features
Since you now know why you need the software, it'll be easier to know which features to look out for.
You shouldn't do this without the assistance of your bookkeeping team and all involved personnel, of course. Cooperate with them to know what processes they would like to automate and streamline and what functionalities they would require.
Some of the functionalities nonprofit accounting often need include but are not limited to:
- Fund accounting.
- Custom reporting to suit your unique operations.
- Grant and expense management.
- Compliance reporting that would make your numbers add up for regulatory bodies like the FASP and the GASB.
- Funds allocation.
- Automated processes.
- The availability of a cloud-based or on-premise model.
- The functionalities of a payroll tool.
- Integrations with systems and software that are vital to your nonprofit's processes.
There are several other factors to consider. Working with your accountants will let you know which features you already have, and which you need to get.
3. Think About Your Team and Business Limitations
Cooperating with the involved personnel should naturally bring this step to fore but you also need to consider the changes that implementing a new system might bring and your organization's ability to adapt to this change.
You need to know if you have employees with the required expertise to handle the software, especially if it's a complex system. Sure, training and support should be provided by your chosen solution to help you adapt, but if your team lacks the required competence to get up to speed, you would get a lot of bills from their customer support.
Check with the IT team to see if your existing infrastructure can fit with the new system. Confirm if you need technical upgrades, and factor in the cost of these upgrades into your budget for adopting a new accounting software.
4. Draw Up a Budget That Works in Your Favor
When considering the budget for implementing a new system, you have to factor in every related cost. This includes everything from the expenses of upgrading your technical systems and training your team to the money you pay for customer support.
Ideally, a realistic budget would consider these three broad factors:
- Subscriptions and software purchases.
- Maintenance and upgrades.
- Training and support.
Depending on the accounting solution, you might have to pay a one-time fee or follow a subscription-based model. Factoring in all related costs for either option will give you a predictive comparison and let you know which solution will be more favorable to your finances over time.
5. Shortlist Solutions That Most Closely Meet Your Expectations
The easiest way to find your preferred accounting software is to search the internet. This task will be made easier since you already know what you're looking for and what you can afford, both budget and operation-wise.
When analyzing a possible solution, you can do the following to understand its features and see if it matches your requirements:
- Read online product reviews and case studies.
- Join online communities and forums that specialize in the industry or on the software itself and ask questions. If you're lucky enough to get in contact with people that have used the software, ask about their challenges and experience with the system.
- Hire a consultant or contact a software expert for free tips
- Schedule and watch the product demo if the vendors have provided any.
- Talk to their sales or support team and ask important questions about the features you require.
Again, the size of your organization and budget is vital. New and smaller nonprofits may be better off with inexpensive and easy-to-understand cloud-based solutions, but then there's always the risk of discovering that the software lacks features that you need in the future.
For instance, you might discover that your chosen system can’t accept some credit card payments or integrate with some of the popular banks used by small organizations and businesses. It might be unable to offer payroll services or provide the functionalities of a budgeting tool.
Running into limited functionality is never a good thing, as you have to revisit the costly trouble of implementing a new system and onboarding your organization. To avoid this, it's best to go with an accounting service that offers scalable solutions. Essentially, they let you pay as you grow.
Enterprise-level systems with robust suites are always the preferable option for big and complex nonprofits. Nonprofits that need such solutions must have the prerequisite expertise and infrastructure to handle the complicated systems, but they'll always benefit from their advanced and specialized functionalities.
6. Plan for Possible Shortcomings
There'll be natural drawbacks that come with implementing the new system. The most common ones you can plan ahead for or even avoid include:
- Ending up with an unexpected timeline. Sometimes it could take longer than you thought for a new system to get operational, and this would obviously affect your existing and running operations.
- Having to deal with decreased productivity. The training and onboarding period means most of your accounting staff are busy getting acquainted with the new software, so not many hands are on deck running the actual bookkeeping.
- Paying for subsequent and additional costs. Extra payments could add up to become a huge financial sting. Ideally, you should have solved this issue by drawing up a realistic budget that considers every cost involved. Confirm from the sales team to be sure there are no hidden costs.
- Improvising when the product doesn't meet up to expectations. Although you've done your utmost research, don't assume any solution you choose will perform exactly as advertised. In the real world, disappointment is a possibility, and you have to be prepared to improvise or look for alternatives.
7. Make Your Decision
Your research and selection process should be run by your important stakeholders. This means you'll collaborate to compare the pros and cons of each shortlisted solution.
It's ideal to narrow down your picks to a top two or three, and then subject those to extensive comparison. A scorecard can help in this case. At the end of this process and with the concurrence of your team, you can choose your ideal accounting software.
There is always the possibility of running into solutions that are perfect but for just a few missing features. In this scenario, consider possible trade-offs and the essentials you can't afford to miss out on. This would help you prioritize so you don't choose a system that you would regret in the future.
Also, don't be afraid to enter the market again and research if you think you missed something and your “perfect” software is still out there.
It's common knowledge that nonprofits have a different financial infrastructure than for-profit organizations. They are subject to special standards and scrutinized by regulatory bodies because they usually aren't required to pay tax. Failure to meet these standards could lead to legal troubles.
Nonprofits need accounting solutions that can maintain a much-needed transparency on their financial operations. Traditional accounting software can't deliver that level of accountability, nor can they meet the stringent standards of regulatory bodies.
The following reasons explain more about the differences between nonprofit and for-profit bookkeeping:
The Absence of an Equity or Shared Ownership
Unlike in businesses where individuals and entities own shares of a company, a nonprofit is not owned by anyone.
The organization is run under the laws of the state as a public trust, so its founders and directors are not entitled to any shares nor are they expected to receive dividends like in for-profit companies.
Different Methods of Accounting for Revenue
Nonprofits don't sell goods and services like for-profits, so they can’t handle their financial accounting in the same manner. Although they work with accounts receivable and accounts payable modules as well, they can't track their expenses and revenue in a general ledger as businesses do. Instead, they track their cash flow in a series of general ledgers.
A nonprofit's revenue is generally made up of donations and grants. As a result, they can't use these funds in any manner they see fit. They can only allocate the funds for purposes they've specifically agreed on with the specific donor or grantor.
The series of general ledgers are used to account for each fund received. Essentially, they manage and utilize each fund separately. This way they don't muddle up the numbers, and they can prove with clarity that the fund was used as promised.
There’s no definite or popular price range for nonprofit accounting software. Depending on your chosen system, your bill could run for as low as $0 to as high as $4000 per year. Pricing is usually determined by how sophisticated the software is and the features your organization needs.
A solution like Moneyminder has a free version that costs nothing, which is quite rare for accounting software. A tool like Quickbooks can go from $40 to more than $3000 for the most advanced features. In many cases, accounting systems might offer a base fee of $30 to $40 per month for the most basic features.
However, not all systems use a subscription-based model, some offer one-time payments. Bear in mind that your cost of purchasing the software wouldn’t be your only expense. Upgrades, maintenance, and support are always around the corner to attract more payments.
The most important thing is to look out for the features most important to your organization and research for the most affordable software that can provide such. Always consider the possibility of extra payments, like support billing and buying of extra features when you’re ready to scale.
Ideally, you should ask as many questions from a product’s sales team as possible and list out all possible fees that could be incurred within a realistic timeframe. Call this your total cost of ownership. Do this same research for other products and compare to find out your most affordable solution.
Which Nonprofit Accounting Software Should I Pick?
This question really depends on the needs of your organization. Which nonprofit accounting software provides the features I need the most and how affordable is it? That’s the question to ask.
One thing to watch out for though is the scalability of your chosen solution. This applies especially if you’re a small to medium nonprofit that is aiming for growth. One of the worst things that can happen is to exhaust a system too quickly and realize you’d have to waste more time and resources to adopt a larger system. Accounting software that lets you upgrade and add more features will prevent this trouble.
Here are some software that could be a great fit whether you're a small, big, or growing nonprofit.
- Quickbooks is a fantastic option for businesses that plan to scale. It has different pricing plans you can upgrade to over time. You can simply start with Quickbooks Online then work your way up to Quickbook Enterprise Nonprofit as you need more advanced features.
- Denali Fund is also great for scaling. The software lets you add or remove extra components as you need, so you can just pay for add-ons instead of having to upgrade to another plan that might have features you don’t need.
- Financial Edge is an enterprise-level solution that is ideal for large organizations. You should also look out for programs that either provide or integrate with ERP software.
- Moneyminder is an easy-to-use and very affordable system that will be satisfactory for small nonprofits.
It rarely gets complicated when you cut your cloth according to your size. All the better if it stretches as you grow!