Over the past decade, non-profit organizations have dealt with new challenges, including rising donor skepticism and increased scrutiny from the IRS. In recent years, the IRS significantly revised Form 990, which includes questions to gauge accountability, and requires nonprofits to provide more information if they have gross receipts of more than $25,000 annually.
Generic, entry-level accounting software solutions such as Quickbooks® may initially allow a non-profit to thrive, but as a non profit corporation grows and gains multiple funding sources, they find these solutions can’t meet their unique tracking and reporting needs.
Signs Your Nonprofit Needs to Upgrade its Current Financial Management System
As non-for-profits grow and become more complex, they often begin creating work-a-rounds to deal with the fact that they’ve outgrown their small business software. Some common indicators include:
#1: Difficult Accounting Audits are a Common Occurrence
Your organization should be able to easily access reports of every action that takes place within the system, who completed that action, and when the action took place. Entry-level accounting software solutions such as QuickBooks® have audit trails that can be turned on and off leaving you in the dark. Fund accounting software for nonprofits provide your organization with the financial transparency you need.
#2 You’re Frustrated by Product Limitations
You can’t get your financial statements directly from your accounting management solution and you find yourself completing complex calculations and data manipulation outside of the software. With nonprofit accounting solutions, you won’t have to seek external solutions, like Excel to get the job done.
#3 Non-Compliant Reporting and Insufficient Business Intelligence Capabilities
There isn’t enough functionality to track information by program, grant, location or whatever breakdowns are most critical to your organization. A true accounting solution offers an internal report writer and access to standard reports designed for nonprofits.
#4 Unable to Perform Accounting Tasks
Month-end allocations of administrative costs require the use of complicated Excel spreadsheets that are prone to error. Spreading payroll taxes and benefit costs across the various grants and programs has become an all-day event. Allocation management is a standard feature in fund accounting software and is designed specifically for nonprofit financial management.
There are other common signs your not-for-profit has outgrown its small business accounting solution.
Review the full list in detail here to learn what steps to take to be ready to present a new solution to your board of directors.
Interested in taking a look at MIP fund accounting software? Contact John Haney at 260-423-2414 to schedule a personalized demo.