| It's the ultimate in convenience, or so it
seems at first. Buying commercial accounting software can seem like the perfect solution
since it is used by so many for profit organizations.
However, numerous nonprofits find themselves in need of
features that commercial software cannot offer. Because nonprofits can have extremely
specific accounting and reporting needs they oftentimes move beyond their ability to
efficiently use commercial products. When that happens a move up to a fund accounting
software solution is necessary.
How do you know when to make the switch? If you use
commercial software when should you upgrade to fund accounting software? Should you buy
fund accounting software right from the start? Let's look at three aspects of software:
differences, function and training. This comparison should give you a clear idea of what
to use and why.
Differences
The primary differences between commercial software and
fund accounting software are the types of tracking and reporting they offer. Nonprofits
are responsible for more types of reporting than commercial businesses are. Therefore
features such as tracking of restricted funds and their use, or separating and tracking
funds for grants are not offered in commercial software packages. Additionally, you may
need the ability to track incoming monies across different time periods, easily produce
reports that comply with both the Financial and Governmental Accounting Boards, and
generate additional reports that verify the application and use of restricted
contributions and grants.
Attempting to use a commercial program to separate, track
and report on donations, grants and other contributions is like forcing a square peg into
a round hole.
Function
The biggest question to consider is "Will this
software perform the tasks we need it to perform?" Look for tale-tale signs to decide
if your commercial product is lacking in features. For instance:
- Is your staff repeatedly spending excessive amounts of time
to produce reports or financial statements?
- Is it difficult to maintain budgets, track restrictions for
contributions or reconcile balances?
- Is a lack of security an issue?
- Do you have grants for which you need to track and report
expenses?
- Do you need to track and account for your fundraising
activities?
- Do you or your staff members constantly make the statement,
"I wish this software would.?"
If so, chances are you have outgrown the functionality of
commercial products.
Training
Other than an integrated user's manual and help index, some
accounting products don't offer training tailored to your organization's needs. Most
nonprofits would find it beneficial to receive customized training in order to use the
accounting package to its fullest potential.
Before making a decision, verify that your fund accounting
software vendor offers multiple options like in-person, web-based and classroom training,
for example. It is also important to ask what types of support are available for the
software as well as the cost (if any) for updates.
Other things to consider? Confirm that whichever product
you choose is FASB compliant. You'll also want to ensure your accountant is comfortable
with your decision and that s/he is capable of operating within the software you plan to
use.
Before making any decision, consider what accounting
functions you go through in a typical day. Outline any special needs you will have in the
future due to downsizing, expansion, grants, etc. Write down your questions and training
requirements then compare the commercial and fund accounting products you're evaluating to
find the one that is best suited for your needs.
© 2006, All Rights Reserved, Jacqueline M. Tiso |
