Turning to NFP Software

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The software pendulum is swinging and many non-profit organizations are flocking to accounting software specific to their industry.
In previous years, not-for-profit organizations often made-do with less- costly and less-complex solutions such as QuickBooks or Peachtree. These widely available solutions were purchased because they were cheap and easy to learn. But many users have begun to yearn for a system that more tightly fits their needs.
Some of the key reasons not-for-profit organizations are taking a closer look at software specific to their industry are:
True fund accounting. When a not-for-profit organization needs true fund accounting, it is required to fully segregate its accounting for each separate fund. If it has restricted, unrestricted, endowment, or property funds (among others), it may require software that can create automatic due-to and due-from entries anytime there is a transaction between two or more separate funds. Some not-for-profits have tried to mimic true fund accounting by creating adjusting journal entries. This manual tracking works when there are very few interfund entries. However, as transaction volume grows, they need to rely on their accounting software to keep different funds in balance through the creation of automatic due-to and due-from accounting entries.
Better reporting. The reporting within lower-cost accounting systems is wonderful for 99 percent of for-profit businesses. As funding and grant requirements expand, not-for-profits increasingly find they may be required to generate reports for projects and grants based on fiscal periods different from their organization's year end (not an easy feat with some accounting software). The general rules for financial reporting are increasingly requiring stricter fund reporting. These reporting requirements, coupled with the possibility of losing funding from major revenue sources, have prompted many not-for-profits to look for better, not-for-profit-specific accounting software.
Easier expansion. When a not-for-profit starts out, it's often very small. Many times, such organizations' funding sources will not substantially increase over time. Then, as they apply for new grants, they'll find reporting requirements become heavier and they may no longer be able to fit into the less- capable accounting software they originally purchased. In many instances, the move to not-for-profit-specific accounting software is much easier when the organization is small and still developing the procedures and policies by which accounting records will be maintained. Not-for-profits with growth potential might be well advised to skip generic accounting software and move directly to systems designed to segregate records into the restricted, unrestricted, and endowment funds often required by new funding sources.
Integration with fundraising. Until recently, raising funds and recording accounting transactions were completely separate events. Now, as organizations seek to harness the efficiency of their software, they increasingly want the fundraising systems to talk to the accounting. This means that receivable and general journal entries are transferred in real time. The result is faster and more accurate accounting records.
Stricter accounting regulations. Reporting requirements have started to dictate that not-for-profits provide information in a prescribed format. With not-for-profit software, the extra steps of pulling information into a spreadsheet and manipulating the reports can be largely eliminated.
CPA recommendations. Accounting firms are increasingly recommending that not-for-profit clients use fund accounting software. This allows the firms to get out of the bookkeeping business and reduce the amount of time they spend getting their clients' books into reportable condition. With the ability to produce presentation-quality financial statements, some not-for-profits can significantly reduce year-end audit bills by handing their accountants substantially complete financial statements, which only require that audit procedures be applied.
Generic software not adding new features. Off-the-shelf accounting software products seem to have reached their limits in terms of adding new reporting features. Often, the underlying program code is so detailed and the types of users so varied that it's impractical to expect significant new not-for-profit features will be added to the more generic systems. Therefore, not-for-profit organizations are researching more of the specific fund accounting systems, rather than waiting and hoping for features to be added to the off-the-shelf generic ones.
In most instances, the data in one accounting system won't transfer over to a new one. You'll have to either keypunch or import the data. The vast majority of software switchers find that it's more cost effective to keep the old system alive for archival reporting and use newly implemented software for current and future financial reporting needs.
When you begin the search for new accounting software, keep in mind that the software marketplace is one of consolidation. Over the past several years, the major publishers have bought out the smaller players. The smartest move is generally to select your accounting software from among the market-leading brands. What follows are the strongest candidates for your review.
Intuit FundWare
FundWare targets both the governmental and not-for-profit markets with a suite of more than 15 different software modules. In October, version 7.3 was released and is available in a Pro version (suitable for organizations with eight or fewer users) and an Enterprise version, which targets not-for-profits or governmental entities with larger numbers of users and transactions.
The system's general ledger includes all the firepower that you'd expect from a product that's been around for 27 years. The accounting structure has been designed to be table-driven, which incorporates transactions, categories, and user-defined fields to allow for a highly flexible account structure that lends itself to easy expansion and reporting.
Other available modules include the F9 link for FundWare. With this software, you

Intuit FundWare

Intuit Public Sector Solutions
Greenwood Village, Calif.
(800) 551-4458
www.fundware.com
Price: $995 to $3,995 per module.

can use real-time general ledger data in your spreadsheets with no need to import or export. Each time your general ledger data changes, you'll find the new accounting information has been placed automatically into your spreadsheet. Allocation Management, another unique module, generates allocating entries with an almost limitless set of rules and data points.
The Project Grant module is almost certainly a requirement for most organizations. With it, you can eliminate the spreadsheet method of tracking revenues and expenses pertaining to certain grants. Instead, you can link and report upon your different grants without hard-coding numbers into your general ledger or exporting data to a spreadsheet.
Earlier this year, Intuit announced that it was seeking a buyer for FundWare which operates as part of Intuit's Public Sector Solutions division. While it's uncertain who might be the ultimate purchaser, with a reported 2,000 end users of the software, it seems likely that FundWare will be around for many more years.
If your organization is looking for a mature system with lots of advanced features, then Intuit FundWare is a good bet. The breadth of modules makes it certain that nearly every capability you are seeking can be met with this package.
MIP Fund Accounting Pro
MIP Fund Accounting software is available in three different versions, which makes the system easily affordable for organizations of almost any size.
The Intro version is targeted at not-for-profit organizations with under $1 million in annual revenues. MIP Fund Accounting Pro is designed for organizations with $1 million to $10 million in annual revenues and fewer than 10 concurrent users. If your organization is larger, then MIP Advantage is recommended. Operating on the SQL database, it's ideally suited for organizations with more than $10 million in annual revenues.
MIP Fund Accounting Pro

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