Case Studies: Nonprofit Accounting
Budget-conscious nonprofit organizations are always looking for more bang for their buck in fund accounting solutions. At the same time, increased regulatory and stakeholder scrutiny is requiring a greater investment in robust and compliant reporting capabilities. We talked to two firms helping their nonprofit clients achieve these efficiencies with two different accounting solutions.
Firm: 1st Choice Advisors
Firm users: 7
No. of clients served: 150
Product: Abila MIP
Commencement date: 2012
On record: CEO John Francis
Process: Many of 1st Choice’s employees had been using Abila for over a decade before the firm, a consultancy serving nonprofits and governmental agencies, became a formal Abila service provider four years ago.
Prospects typically approach 1st Choice because of a familiarity with their Abila practice or a referral from another organization that is. “Typically these organizations are struggling with their existing solution— particularly in providing the necessary reporting formats to their stakeholders,” Francis said, explaining that these stakeholders can be “providers of federal or state funds, or it might be the board looking for additional information around either financial information or outcomes and efficacy — which is a big current topic.”
The recent trend of efficacy reporting is “not only how you are doing financially, but how the performance is affecting the community we’re serving,” Francis said. “[Their] existing systems are not capable of providing enough information, and they’re relying on a lot of spreadsheets or other ancillary tools to maintain that information, and it’s just too much to keep up with.”
Thus, many clients come to 1st Choice “looking for something to handle all of those needs in a more efficient manner, and also looking for added functionality.” Francis also reports that many organizations are now reviewing options for a cloud-based solution, which Abila offers in true fund accounting product MIP Advance.
Other client needs 1st Choice has been able to satisfy with the Abila suite of products include more automated workflows, electronic approvals, access to information and process approvals across multiple devices, and an overall move to a more paperless environment.
Abila’s integrated application also provides support for expense approvals, human resources and payroll, “another driving need that organizations are looking for,” according to Francis, especially in light of Affordable Care Act compliance.
“Clients aren’t having to take multiple systems and have them work together — it’s all within Abila MIP. Users really appreciate the ease and simplicity that it provides, from an end-user standpoint and an IT standpoint.”
1st Choice has an implementation methodology tailored for each client, and it begins with designing a chart of accounts to accommodate all the information the client needs to capture and report on. After building that framework, which includes electronically converting historical data like customers and balances, the company begins the training process, which incorporates classroom training for new users and both on-site and remote engagements, depending on client need.
Overall, the implementation process, from the client’s decision to use Abila to the go-live environment, takes 30 to 60 days. “The entire process is planned, and we have to ability to provide remote access to all clients,” Francis said. “We walk them through post-go-live activity, their first monthly close, quarterly close. We are providing a very thorough implementation and training process.”
Challenges: “I’d say the move to the cloud-based environment is probably one of the biggest challenges we have assisting clients on,” Francis shared. “We have some clients who are very aggressive in their approach to moving to the cloud and others are somewhat hesitant to adopt that technology. There are challenges in recognizing which clients are ready to begin making that change ... and not assuming everyone moves at the same pace.”
1st Choice navigates these different speeds by facilitating a review process that helps the clients decide if they are ready for the cloud and, if so, enact the proper planning and due diligence to make the transition.
Next steps: Funding limitations mean budgets at nonprofits are stretched thin, and smaller organizations are consolidating to gain efficiencies of scale, sometimes requiring the new entity to move up to a more mid-range Abila system.
Nonprofits are also facing more stringent levels of review from fiscal and regulatory agencies, leading 1st Choice to help clients more clearly segment out data like funding, revenue or expense streams.
Though the reporting technology is new, the need to report in detail is not, according to Francis and his more than 30 years working with nonprofits: “The amount of scrutiny on financials continues to increase, throughout my entire career.”
THE RIGHT FIT
Firm: Sommerville & Associates PC
Firm users: 7; 3 regularly
No. of clients served: 8
Commencement date: 2013
On record: CPA and staff accountant Dondi Hayhurst
Process: Tax firm Sommerville & Associates, which serves individuals and nonprofits, was looking for a nonprofit-specific solution and they “really found that in Aplos,” according to Hayhurst. “All the other accounting software out there is designed with for-profits or small businesses in mind. Aplos seemed designed specifically for small churches and donor-based nonprofits,” which constitute most of Sommerville’s clients.
Specifically, the firm was seeking a solution that was Internet-based and cost-effective, which Hayhurst said they also found in Aplos.
As the firm provides a range of solutions, Hayhurst and the team will ask new clients a handful of questions, including the organization’s mission and the kind of financials they need, to determine whether Aplos is right for them. “The organization’s financials mirror what their exempt purpose is — for some nonprofits, the main thing is sales, not donors,” she said. “In a short phone call, we are determining their exact needs.” After that call, prospective clients are directed to the Aplos Web site to determine if the software and pricing is in line with their needs.
Of the eight clients currently served on the solution, about half only use Aplos once a year for return preparation, while the others go into the system every few weeks to enter payroll or do bank reconciliations. Aplos can be used “as little or as much as the client needs,” with Sommerville providing all the accounting services.
Hayhurst especially appreciates the cost-effectiveness of Aplos, with capabilities like the contributions module and fund-tracking included, instead of having two or more costly software systems to manage. She also touts its user-friendliness.
Challenges: Hayhurst has some issues with Aplos’ reporting, specifically when clients requiring audits can’t get the relevant information for their independent auditors in those reports. She has expressed this to Aplos, which is working to improve the reports.
Another hurdle can be the migration process for clients coming from another system. “It is something to be mentally prepared for,” Hayhurst explained. “You can’t go from an Intuit program to a non-Intuit program and expect it to agree. The challenge is that nonprofits don’t want to spend the time, or don’t have the time, or the people or the resources. You have to mentally prepare them for that.”
Next steps: Sommerville will continue growing its Aplos base, while eagerly anticipating more accountant-friendly reports from the solution. “We hope the reports are worked out so I feel we can offer it to the next level of clients, with regulatory and audit requirements,” Hayhurst said.
Based on Aplos’ track record of “fabulous” and responsive customer service, however, she is not worried. “In a world where software is making the decisions for me, I love having that line to contact support,” she said. “I have confidence that we receive good customer service that’s polite. I love that.”