While smaller nonprofits are still staff- and budget-constrained, the quality and usability of
accounting software targeted to this market has not only improved considerably, but in many cases has kept pace with the software market (accounting included) as a whole.
CHANGE ON THE WAY
One thing that was immediately evident from the 14 vendors we surveyed who offer this software is that they are just as vested in staying state-of-the-art as their generic cousins, with some, like Intuit, Intacct, NetSuite and Red Wing Software, straddling the markets by offering both generic and vertical versions of their accounting applications.
Also evident was that the nonprofit accounting market has undergone a lot of change in the past several years. Competition was a primary motivation in many of these changes, but regulatory action, such as the new Financial Accounting Standards Board reporting requirements taking effect, are also fueling updates and upgrades.
Transparency was a topic many of our panel members mentioned. “There is a continued move towards transparency around stewardship and outcomes. In addition, accounting changes (like contract and revenue management) will be bringing more complexity,” Joan Benson, the senior product marketing manager at Intacct, told us. And AccuFund president Peter Stam agreed: “Users are expecting more transparency and financials more quickly and easier access to data.”
Areas where vendors are putting development efforts and dollars include fixed assets, more comprehensive and easier-to-use reporting, data analytics and metrics, and integration with other vendors’ applications.
TAKING IT TO THE STREETS
Mobility is a hot topic these days. For the most part, our panel thought so as well. Asked if they offered mobile applications, particularly for iOS and Android, many of our respondents said that they did. “Mobile access is imperative. We offer solutions for iOS, Android, Windows and Web,” said Paul Lundquist, vice president of corporate development at Open Systems.
Aplos Software chief marketing officer Christy Qualle added, “Mobile access is a unique challenge for accounting software, but is certainly the future of software. People want easy remote access and the ability to see the report they need, make a quick update, or share something with someone else while they are speaking with them. Those are the same reasons why we built Aplos as a Web-based product, rather than downloadable, and why we make the software mobile-friendly, so the mobile browsing experience is as similar as possible to a desktop session.”
And Red Wing Software sales engineer Julie Strain mentioned that she considered that their most significant recent upgrade was the addition of cloud services allowing users to access their program and data from a Web browser. Intacct’s Benson agreed: “Mobile access is critical for today’s organizations. Intacct is designed to be mobile-aware, enabling it to work on any device with an Internet connection, without requiring a separate mobile application.”
However, it certainly wasn’t unanimous. GMS president and CEO Donald Cassady told us that they do not currently offer mobile access. And Fund EZ vice president of sales George Marcolini responded, “Clients have not demanded mobile access very much.” That’s echoed by Cougar Mountain Software: “Our market research suggests that mobile access for actual accounting processes is not critical to the end user. We do not currently have any mobile applications; however, users can access Denali through our hosted solution. We do not currently offer any iOS or Android apps,” said director of marketing Ben Cornett.
Finally, there was at least one vendor that’s currently working on adding specific mobile apps. “As part of our redesign of our interface to be released in 2017, FastFund Online will be responsive to mobile devices,” Araize CEO Joseph Scarano told us. “Obviously, there is a limit to the amount of accounting work you can do on mobile devices, but our system will recognize if the application is being called up on a mobile device and display dashboards from accounting and fundraising and other summary data.”
At the same time, Araize does offer mobile access by virtue of it being cloud-based. “More clients are taking advantage of the anywhere, anytime access to their programs and data now that it is SaaS-based,” he told us. “They are accessing the software while traveling, working from home and even when they are on vacation. They are also setting up new users with read-only rights to specific reports that allow them to share more financial data and be more transparent.”
That kind of accessibility is something that Intuit partner Greg Bossen, president and creator of QuickBooks Made Easy, feels is a cornerstone of QuickBooks Online.
“Mobile access is extremely important,” he said. “The cloud’s on-the-go access, mobile collaboration, convenient and easy-to-use self-service tools enable accountants to work more efficiently. Mobile access gives nonprofits access to payments within QuickBooks Online at special fundraising events and allows them to connect with volunteer board members that have day jobs, but want oversight capability during the day. We offer free mobile apps so users can access QuickBooks data on the go with apps for iPad, iPhone and Android.” He also pointed out, “As Millennials move up into higher management roles, real-time accounting collaboration tools will be essential as professionals come to expect immediate access to financial information anytime, anywhere.”
NOT JUST ACCOUNTING
Another area we were interested in exploring with our panel was ancillary software. While some of the vendors surveyed produce only accounting software for the nonprofit market, others offer software for other tasks. Sometimes this is software that they have developed to integrate with their own accounting product. Other times, the accounting vendor has partnered with other vendors to enable them to offer a more complete nonprofit suite of applications.
The most common ancillary application among our vendors was donor management. Almost every vendor that participated in this survey either offers their own donor management software, or partners with another vendor or vendors to provide this capability to their customers.
Vendors that offer their own donor management applications include Araize, Blackbaud, Fund EZ and others. Open Systems’ Cornett told us, “We do have a donor solution for a previous version of the software, but prefer to partner with those who are committed to the donor marketplace. Donor management is a central piece of effectively supporting nonprofit organizations and public service entities. Denali is fully integrated with DonorExpress, which enables effective donor management.” That kind of partner relationship is common in the nonprofit software market.
Aplos is another vendor that both rolls its own and partners with another vendor. “We offer donor management features because for many organizations the process of managing donations and managing the accounting is interwoven,” Qualle said. “However, we don’t always do everything within our platform that a nonprofit administrator would need; that’s why we have great partners that we work with that specialize in certain areas, such as a payroll provider or Bloomerang for a more robust donor management system or Church Community Builder for church management.”
But other software offerings often go beyond just donor management. For example, Fund E-Z also offers foster care, Medicaid/Medicare/insurance billing and fundraising. Blackbaud also offers fundraising. And Araize’s payroll is specifically targeted for nonprofits, which typically requires the allocation of an employee’s pay and payroll taxes to multiple programs and grants. GMS offers donor management as well as revolving loan servicing software, which is used by agencies that offer loans to businesses that may have problems securing a loan at a bank.
WHEN YOU WISH UPON A STAR
Customer requests also drive many of the development and partnership decisions vendors make. Metrics (such as key performance indicators) and dashboards, along with other analytics, are things that our panelists told us their customers have been asking for.
Reporting is another area where nonprofits are asking for more. According to Red Wing’s Strain, “We seem to be getting a lot of requests for even more robust report customization. This might include things like not only being able to add a column which is a predefined calculated column, but to actually create a column or row in which they get to define the calculation.”
According to Blackbaud senior product marketing manager Michael Blanton, “Like most categories of software, users of nonprofit accounting software will increasingly look for data-driven insights, alerts and learnings from their tools so they can proactively recognize critical issues and trends in their organizations.”
Serenic’s director of sales and marketing, Chris Stevenson, added, “Donors, boards and management continue to expect more from their accounting operations and higher degrees of fiscal accountability, financial reporting, transparency and governance.”
GAZING IN THE CRYSTAL BALL
In polling our panel, one of the things we were most interested in was where these experts thought the industry was going. Aplos’ Qualle noted, “People are certainly moving more towards SaaS-based subscription models in greater numbers for the ability to access accounting information from any browser, on any computer.”
“Mobile apps for simple data entry will also be paramount in the not-so-distant future,” she continued. “Software companies are also moving more towards partner integrations, rather than building all modules from scratch, since it allows them to offer feature sets and fully developed, specialized platforms to their customers faster.”
Subscription-based application leasing is rapidly growing in popularity. There are several reasons for this. Affordability is a powerful incentive, eliminating the need for expensive capital investments in hardware and ongoing upgrades, updates and maintenance. Also, many nonprofits are embracing subscription-based software simply because that’s the route SaaS and other cloud-based vendors make their software available. The cloud is making large inroads in every area of software, and nonprofit accounting is most certainly one of them.
At the same time, Red Wing’s Strain sees more investment in software down the road. “Nonprofits are starting to run their organizations more like for-profits, with an emphasis on sustainability and finding different sources of revenue to grow,” she told us. “This will lead to an increase in spending on technology and infrastructure to support this growth. There will be less of an emphasis on minimizing administrative costs compared to program costs, and more of an emphasis on spending more to grow the organization to serve a larger constituency.”
Strain also foresees more consolidation in the industry: “This will also lead to mergers of nonprofits to combine their resources. These trends will make it imperative for the nonprofit accountant to have the most up-to-date technology that brings together all financial aspects of the organization, including accounting and donor management.”
Open Systems’ Lundquist agreed: “As we have seen in other markets, there is more consolidation happening. So the larger NFPs are also merging and, with that, they demand more from their solutions.”
Both of these vendor experts see this consolidation as an opportunity to upsell existing and new customers.
Several of our vendor panel members pointed out the changing role of accountants and accounting in the nonprofit industry. “Accounting is transforming from primarily an exercise in compliance and historical reporting into the primary indicator of organizational performance and future sustainability. Accounting professionals are becoming critical to analyzing which programs have the most significant, cost-effective impact on an organization’s mission,” said David Geilhufe, senior director and general manager of nonprofits and corporate citizenship at NetSuite. “As they take on this strategic role, they still need all the traditional controls and compliance capabilities, but now need technology, leading practices and reliable long-term partners that can help them meet new expectations and influence their nonprofits in new ways.”
Serenic’s Stevenson sees a change in the way customers approach the application: “We see our clients moving away from the traditional role of accounting software that reserved its use only to the accountants. They are positioning Serenic Navigator at the core of their business and decision-making by increasing the number of users to allow for more inclusion and broader access of information.”
ROOM TO ADVANCE
As much as nonprofit accounting software has evolved in recent years, there’s still room for improvement. As stated earlier, customers want more reporting and analytics. And all software continues to push the boundaries in usability, via machine learning, data mining and other technologies.
Technology, computing and regulatory changes are all moving targets. What’s state-of-the-art today will probably be old hat in just a few years. Given how many changes and updates our vendors reported in this survey, it will be interesting to see how much further they have advanced the art in our next survey.