Investing time and money in nonprofit fund accounting software is an important undertaking. Why are you considering a new software system? Perhaps your organization has experienced growth or downsizing or you have been awarded new grants that require additional complex reports. It’s critical to determine not just the key changes that prompted the initial search, but all the related needs that must be met by your new software.
Keep the following in mind when selecting nonprofit fund accounting software for your organization:
- The size of your organization
- The complexity of the accounting required
- The type, number and frequency of reports needed
- The key information and details your organization wants to capture and report
- The future needs of the organization
- Interfacing systems
- Remote accessibility
- Internal IT support availability
- Cloud Support/Security
Who Has Access to the Software?
Once you have identified and evaluated your organization’s needs, you must determine who will have access to the software as nonprofit fund accounting software is generally priced by the number of users, or “seats”. Therefore you should know how many staff members will use the software and at what capacity. Organizations commonly have management staff that may want system access to read reports and results but may not need transactional access. If you have this need, investigate the availability of discounted “read-only” licenses to avoid buying full seats for executives.
Evaluating Your Solution
Once you have determined your needs and the number of users your organization will need, it is time to evaluate a variety of solutions. The following is a sample set of criteria used by many organizations to evaluate nonprofit fund accounting software solutions.
Features and Functionality—Start by ensuring that the basic nonprofit fund accounting functions are present. Then check each feature against your needs checklist. Understand what benefit a feature has for your organization before you give it any weight.
Price vs. Overall Cost – Module prices are not your only expenses. Add the price of support, training, consulting, and conversion to the overall cost when you compare software. For example, low-priced nonprofit fund accounting software that requires customization may be extremely expensive to install, maintain, and train your staff on, making your total cost much higher. Don’t be surprised—insist on a straight answer on the cost of the solution and all related services before you buy.
Installation – Will you be using the solution deployed as a hosted solution or does it need to be installed? How easy is it to install or uninstall? Does it require extra consulting dollars to install?
Configuration and Setup – How easy is it to create the chart of accounts? How quickly can you set up the product for daily use? Will you require a consultant to accomplish the setup?
Value – Compare the overall cost of the features and functionality you need to the benefits your organization will get. This prevents you from paying extra for functionality that doesn’t pay you back. It also allows you to compare systems on the basis of what you will actually use.
Reporting Capability – At a minimum, be sure you can get all the reports your organization needs. Ensure that the reports can be run on a range of dates with over-lapping fiscal years and in the formats that you now use. Also, consider how easy it is to create custom reports.
Scalability – The ability to purchase just the modules you need now and to add more modules later provides a growth path for tomorrow while preserving budget flexibility today. Look for a manageable growth path through a modular system and product upgrades.
Audit Trail – Consider the audit trail the nonprofit fund accounting software produces. Your audit cost can be greatly affected by the package you select. Ask for references from CPAs who audit companies using the software and ask organizations about their audit experiences and expenses.
Interfaces – Can the nonprofit fund accounting software communicate with other accounting-and non-accounting-related software? The best solutions have an open architecture that allows easy communication with other technology solutions. This allows you to choose packages of the highest quality for each function, for instance fund accounting, fundraising, human resources, student billing, and so on.
Remember, the primary intent of your search is to obtain value-adding results for your organization, rather than just buying the least expensive accounting system available. Low-cost systems may require supplemental work with manual entries and spreadsheets to obtain the same benefits. Likewise, you do not want to overbuy for your needs.
Selecting the best nonprofit fund accounting software for your organization takes time and effort, but the rewards are great. A smoothly operating software system improves not just accounting functions, but also the efficiency of the operations of the organization itself. Armed with timely, complete, and accurate information, organizations can make better decisions and respond more quickly to change. Throughout the evaluation and purchasing process, you will find many resources to help you in your search. If you treat the purchase of new nonprofit fund accounting software as a long-term investment, you will select a solution that has the capabilities you need and a company that will be a long-term partner in your success.