Is Excel Sufficient Long-term for Accounting for Nonprofit Needs?

 

accounting for nonprofits When you first started your nonprofit organization, it is likely you were focused on your mission more than anything else and were just trying to get things off the ground. The mission of your organization is the most fundamental element of all that you do, but you may have sacrificed in other areas in order to save time and money while getting the message out about your mission. One example is likely how your accounting for nonprofits processes began versus where they should be in order to maximize what you do behind the scenes from an accounting perspective.

It is likely that you started out using Excel to keep track of expenses and have basic data available, but the reality is that many nonprofits continue to use Excel when a nonprofit accounting software solution would service their needs so much better. There comes a time, as your organization is established and growing, when you must realize that you need other software systems in place that are efficient and accurate in order to help you continue in your goal of fulfilling your mission. Let’s take a look at why Excel might not be a workable accounting solution forever.

Why Is Excel more of a problem than a long-term solution for your nonprofit?

Using Excel at a start-up nonprofit is doable, but this won’t last for long. Consider it to be similar to the process of an infant becoming a toddler. An infant might not be mobile so the parents enjoy the freedom of knowing their child will stay put where they placed them, but this won’t last for long. Pretty soon, the parents will be running around needing to watch their toddler’s every move to ensure their safety as they grow and become increasingly mobile and curious.

The same is true for using Excel as an accounting solution. As your organization grows and evolves, you’ll need a solution that can keep up with the pace of the growth. Excel is great for starters because it can do a good number of tasks, is easily available, and is very widely used in the world of business. It is worth acknowledging this. The limiting factor, though, is the spreadsheets that are not as sturdy or useful as the Excel program itself and can cause problems down the road.

Why are spreadsheets not a long-term solution for reporting accounting data?

A spreadsheet done badly has a potential to be extremely costly. A small error in typing can be extremely costly. An error made by a European bank in an Excel spreadsheet ended up costing them nine billion dollars in revenue. Ouch! Sadly, this is not the exception but is more of a rule when it comes to spreadsheets. With the combination of manual data entry, copy and pasting techniques, and formula entry errors, the reality is that spreadsheets aren’t fool-proof nor efficient and could be more costly than helpful in the long run.

As you can see, Excel has two major limitations:

  • Cannot keep the pace with a growing nonprofit organization
  • Spreadsheets that are likely to be riddled with human errors

If Excel, although it was likely used at the onset of your nonprofit, is not a sufficient long-term solution, what is? Nonprofit accounting software is a great solution. In order for you to understand why, stay tuned next week as we look at six problems caused by using Excel as an accounting software substitute.

In the process of you exploring the best accounting software for nonprofits, take a look at two robust accounting software solutions that RBP Methods offers that could be a great fit for your nonprofit. Abila MIP Fund Accounting and AccuFund Accounting are solutions that will solve the two main challenges of Excel by growing with your organization’s needs and by eliminating the need for manual data entry through automated transaction entry. They also offer customizations that Excel cannot in terms of reporting functions. Contact RBP Methods to learn more.