The goals set before most nonprofits may seem simple to an outsider – raise money and spend money helping your cause. However, anyone who has ever worked in nonprofit knows that the actual day-to-day tasks involved in managing a nonprofit are much more complicated. Raising funds, retaining donors, managing volunteers, reporting to board members, balancing accounts and analyzing budget spend demands a high degree of automation and business acumen.
Fortunately, streamlining an organization’s accounting efforts is relatively simple when a good nonprofit software package is in use. So, what makes a good nonprofit financial management software package? Ok, before I answer, short disclaimer; I am the Product Manager for Sage Fund Accounting and Grant Management, two excellent nonprofit financial management solutions. This means I spend a lot of time researching and figuring out what features benefit our customers the most. Here are the four features I find to be the most helpful and that provide the greatest amount of time savings and return on your investment.
Nonprofit organizations are almost all operating under varied chronological constraints. Some need to work within the confines of the standard fiscal year, while others are subject to school, calendar, grant or funding years. Whatever the constraints you should be looking for nonprofit accounting software that enables you to run date driven financial statements, for any period of time, without closing the books. A true nonprofit accounting system allows you to create the reports that you need on demand, without external reporting tools and Excel manipulation. I guarantee you will save dozens of hours each month and at the end of major reporting periods if your software does all the above.
When your board members want to understand the future cash flow of your organization or when executives want to do a risk analysis on all recent campaigns – you need data intelligence. A good nonprofit accounting package is scalable and includes data intelligence tools. These types of tools automatically analyze data, display trends, and provide tips, tricks, and reminders so that nothing falls between the cracks. They can vary from complex reporting with charting or can reside as a standalone business intelligence (BI) tool that provides insight to many people, not just your accounting users.
Workflow Based Budgets
If there is one thing that all nonprofits have in common, it is budgeting. Not all budgets are alike but the process and the flow is almost always the same.
Create a rough draft > Send for review > Enable all departments to put in their increases and decreases > Review again > Send to the board > Get feedback > Send around again > Edit some more, and the process goes on and on and on…
A good nonprofit accounting package provides a workflow based budgeting system that dovetails into your organizations preferences for budget viewing, editing, and finalization. Regardless of how you get the budget into the application it should be able to produce budget-to-actual financials as well as transaction-to-budget balance checking. These types of features do not cut down on your review cycle/s, but they do help you to stay on track and to keep the budget in check with actual spending.
Clear Audit Trails
There are many reasons why nonprofits need to maintain financial and operational audit trails. New staff members and directors often need to review historical processes. Media and high-end donors often ask for this information when profiling an organization. Recipients of a nonprofit’s goodwill may even want to review records before agreeing to accept donations. Regardless of the reason, this kind of accountability is easy to provide if the right software has been in use. A system with an audit trail, advanced security, and data level encryption is sure to give your auditor and your board members just what they need to feel confident in your nonprofit’s operations.
Continue striving toward successful nonprofit management by reading our “NonProfit Accounting Success Kit”.