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The ultimate guide to choosing the best nonprofit accounting software
If staying on top of reporting and financial performance for your nonprofit takes too much time and has become overly burdensome, it’s not you — it’s your software. It might be time to find a nonprofit accounting software system that is able to grow with your organization and help solve challenges, instead of creating them.
There is much to consider when you start the journey toward adopting a new nonprofit accounting software system. To make the journey easier, we created The Nonprofit Accounting Software Buyer’s Guide. It’s packed with information and guidance that nonprofits need to identify their requirements, compare solutions, and evaluate vendors. Inside this complimentary guide, you’ll find:
- A side-by-side comparison of three software delivery models
- Gut check: 6 questions to ask before considering a cloud-based financial solution
- Real-world case study of a nonprofit that increased efficiency by 60% and productivity by 40% after moving to the cloud
- Step-by-step guidance for conducting a software evaluation
- 7 attributes to look for in a cloud vendor
- 7 Service Level Agreement (SLA) must-haves
- 2 factors to be wary of when you evaluate software pricing
5 signs it might be time for new nonprofit accounting software
Here are 5 symptoms of an inadequate nonprofit accounting system:
- Excessive data entry: You have to manually enter data from other systems and paper because your accounting system doesn’t integrate well.
- Too many spreadsheets: You shouldn’t have to take data out of your accounting system and manipulate it in Excel in order to get the reports you need.
- Lag in reporting: Decision-making is hampered when reporting is so cumbersome that the finance team can’t deliver current reporting to management and the board.
- Data silos: If your accounting system doesn’t enable you to share information easily, department and program managers may create separate records and reports outside the system.
- Poor internal controls: If your accounting system doesn’t provide adequate security to prevent fraud and maintain compliance, grants and donations can be thrown in jeopardy.
Is the cloud right for your organization?
Deciding what software delivery model is right for your organization is one of the first things to think about for your next nonprofit accounting software solution. There are three main options:
- On-premise solutions are software solutions you license and run on your own internal servers. This means you need to invest in hardware and then maintain it, in addition to maintaining the software on the server.
- Hosted solutions (single tenant) reside at a remote data center operated by a third-party hosting provider on a server dedicated to your organization. You still license the software, but you avoid the upfront hardware costs.
- Cloud computing solutions (multi-tenant), also known as “software as a service or SaaS,” offer direct, always-on access to the financial management system via the cloud. The vendor maintains everything you need, and you pay a subscription fee for the system on a per-user/per-month basis. There is no upfront investment required and no maintenance to perform.
Over the past decade, cloud solutions have become more and more popular with nonprofit organizations. In addition to eliminating the need for upfront hardware investment or IT support, cloud nonprofit accounting software enables you to work securely from anywhere. The pandemic has made the need for this functionality crystal clear.
How to get the software evaluation process started
Even if you plan to move to the cloud, nonprofit accounting software is still a sophisticated and mission-critical application. So, you can’t skip over the best practices that form the basic groundwork of traditional software evaluations.
The first step involves gathering your organization’s requirements and documenting your needs. Remember to reach out beyond the finance and accounting team, because you will be sharing information and reporting across the organization. With what systems should your nonprofit financial management system integrate? What kinds of reporting and dashboard capabilities are expected/desired by your executive team and board?
Next, you need to identify the top priorities and challenges of your organization. Now take a look at your requirements list and rank the functionality you want according to how important it is to helping your organization overcome challenges or accomplish objectives. The Nonprofit Accounting Software Buyer’s Checklist provides a list of the 40 essential features of a modern accounting system. It will be helpful in completing this step and help you determine the “must-haves” for your unique organization and mission.
Once you have completed this heavy lifting in terms of thinking through your needs, there are five additional best practices in the evaluation and selection process. Each step is described in the Buyer’s Guide.
Cloud financial management vendors have to continue earning your business every month that you subscribe. Therefore, they’re highly incentivized to deliver value to your organization and to establish a long-term service relationship. When you’re ready to adopt a new solution, remember, you’re in control. Make sure you understand the pricing model and exactly what your organization will be paying for and when. If you have spent time carefully assessing your options, you will make an excellent decision.
Walk through the complete process for selecting the best nonprofit accounting software solution when you download The Nonprofit Accounting Software Buyer’s Guide and the companion tool, The Nonprofit Accounting Software Buyer’s Checklist. These comprehensive tools can help you determine key requirements, choose a software delivery model, vet vendors, and evaluate SLAs in order to choose right solution for your specific needs.
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