Today’s nonprofits are faced with increasing challenges. Between the demand for more intricate financial reports, strict grant requirements, and the lack of donations, it is safe to say that nonprofit organizations have a lot on their plates. The government continues to regulate nonprofit financial reporting, requiring nonprofits to measure and report on the performance and outcome of their programs and activities.
Since the majority of an organization’s funds come from a variety of sources, this can be a challenge to meet if you rely on a standard accounting solution. The proper nonprofit financial management requires the proper software, and fund accounting offers nonprofits many advantages. Besides giving nonprofits the ability to track every dollar that makes its way in and out of the organization, fund accounting exhibits additional benefits that make it well worth the sometimes costly investment.
Consider the following benefits of fund accounting and determine for yourself whether or not you should make the investment:
- Increased Visibility
Nonprofit organizations often have to prioritize activities and programs in regards to their finances and resources. Leadership often plans new programs only to find out that the resources or funds are not available to support them. Fund accounting gives nonprofits better visibility into their finances and allows users to know the status of their funds in real-time. This enables organizations to make the proper decisions regarding the funding and development of new programs, as well as helps them plan better for the future.
- Foolproof Auditing
The auditing process can be extensive, and organizations that rely on record books to keep track of their finances will find it challenging to retrieve data quickly. With fund accounting, nonprofits can generate the required report by simply entering the time period of a particular transaction. Rather than dig through receipts and verify them in the software program, organizations with fund accounting can access to their data in one place, making audits quick and easy.
- Meeting Tax Compliance
While most non-profit organizations do not have to worry about filing income or property taxation, organizations which exceed a certain threshold in gross receipts must file Form 990 with the IRS. Fund accounting helps organizations keep track of their receipts within the system and produces the Form 990 from within the software rather than just providing the information nonprofits will need.
- Substantial Reports
Fund accounting’s substantial reporting features give organization stakeholders and board members the ability to access important information anytime, anywhere. This enables those in charge to make key decisions about programs and events as they are needed. A solid fund accounting solution will provide comprehensive reports for anyone interested, including the board of directors, program managers, executive director and various funders. Fund accounting also contains a wide variety of report enhancements, such as charting and graphs, so organizations can create unique and meaningful reports.
- Online Donations
Fund accounting can be integrated into your organization’s website so donations can be given (and accepted) online. By linking your website to other reputable websites, visitors can learn more about your organization and possibly make a donation via the internet. Fund accounting includes complete payment processing, ensuring that all online donations are secure and hassle-free.
- Easy Fundraiser Planning
Fund accounting makes planning for fundraising events a breeze. With the emergence of online registration and automatic email invitations, planning a fundraising event has never been easier. Fund accounting makes event planning easy by giving users the capability to map out seating arrangements, menus and much more.
- Increased Efficiency and Productivity
Fund accounting performs accounting procedures in the most efficient way possible. Data entry tasks can be done in half the time, and the software alerts you every time a duplicate is entered. Organizations can rely on fund accounting to increase their efficiency and improve their employee productivity rates.
Fund accounting has evolved over the years into the ideal solution for nonprofits. Keep the above benefits in mind as you research and select your fund accounting solution. The right fund accounting and tools will enable you to meet financial reporting standards, transform your organization and keep better track of your funds.