If fund accounting were a screenplay, the working title would be "Sarbanes-Oxley Meets the Baby Boomers." It is a curious time for charitable organizations, because they are faced not only with the prospect of enormous growth in endowments and contributions, but with demands for greater accountability and compliance measures to help manage that growth.An estimated $10 trillion will pass from the Baby Boom generation into charitable organizations from now until 2050. Intersecting this increase in giving is a nation with a growing obsession for accountability. In the wake of the stock market bust, the energy scandals, the Internet scandals and a recession, people want an unparalleled level of transparency in every aspect of accounting.
What this means for charitable organizations and the accountants who assist them isn't just that they may face greater regulation in the future, though the industry has already seen new requirements from the Financial and Governmental Accounting Standards Boards for more complete disclosure. More important is that this wave of accountability will force changes within organizations - adding higher compliance costs, and demanding more attention to internal controls. It will likewise drive a demand for better decision support and analytical software. And it will alter the ratio of pass-through dollars to costs.
The fund accounting software examined by Accounting Today in 2005 indicates that software vendors are aware of the need to address these areas and are moving to make that possible. The software programs reviewed represent a cross section of capabilities, styles and pricing, though all are strong contenders for use by accountants and their nonprofit clients.
FastFund Nonprofit Software V. 2
FastFund Nonprofit Software is intended for organizations whose staff must quickly grasp financial and accounting principles - and then communicate these to management and the board of directors, as well as funding sources and the public. For this reason, it is focused on getting the accounting right through the use of a well-crafted, modular accounting system and an easy-to-navigate interface.
Integrated into a single accounting solution, FastFund installs as three products - a general ledger system with modules for accounts payable, accounts receivable and allocations; a fundraising module; and a payroll module. Each of these is sold separately, but together are designed to provide full back-office functionality for less than $1,500. Though relatively new (introduced in 2000, and now only in its second major release), FastFund is nonetheless a stable product that reflects the 20 years of experience its authors claim.
The general ledger easily handles the chores of logging receipts and disbursements, budgeting, reports, bank reconciliation and check-printing on either laser or dot-matrix printers. The ledger is organized into standard accounting functions - company data, a chart of accounts, lists (vendor, supplier, employees, etc.), transaction entry, activities and reports. Flexibility is provided by user-defined account numbers for each program or grant, organized into segments for funds, multi-level cost centers, object codes and sub-accounts. All modules comply with the requirements of FASB 116 and 117, adhere to strict accounting principles and offer a detailed audit trail of all transactions.
The payroll module, updated to Version 2 this spring, simplifies the creation of payroll and enables the allocation of gross salaried and related payroll taxes for all employees to multiple programs. Its features include built-in tax tables for all states; calculation of taxes for employees; automatic accrual of vacation hours; calculation of after-tax deductions, such as employee contributions to health plans, disability insurance premiums and donations; automatic payment of payroll tax liabilities; and payment via either computer checks or electronic funds transfers for direct deposits (with the optional direct deposit module).
The fundraising software provides the capability to track donors, prospects, constituents, appeals, campaigns and other key elements of fundraising, acknowledgment and accounting. Integrating with either the FastFund accounting system or QuickBooks, FastFund Raising is a flexible and powerful engine that sets up a table of codes based on the user's coding system, then handles the chart of accounts; campaigns, appeals and gifts; prospect and donor lists; and cash, pledge or in-kind processing.
Araize offers a low-cost, integrated system aimed at small to midsized nonprofits. The software comes with a free year of support and a money-back guarantee, but it is its ability to make complicated accounting principles easy to manage that will impress accountants and their nonprofit clients.
MIP Fund Accounting Pro V. 6.2
Best Software Inc.
Best is the Procter & Gamble of the accounting software world, offering well-packaged programs under brands that deliver on their promise of value, efficiency and accountability.
Their MIP Funding Accounting Pro software is no exception - an attractive, easily navigated suite of integrated accounting and management modules focused directly on helping nonprofits budget, manage their costs, secure their data and audit trails, and report their results with unparalleled attention to accountability.
The program's 20 accounting modules include the standard accounting and billing programs for AR, AP, payroll, purchase orders, fixed assets and bank reconciliation. But it also includes some not-so-common modules that are of great import to nonprofits, including grant administration, a night shift scheduler, encumbrances, allocations management and advanced security. All of the modules are tightly integrated with the general ledger and with one another.
The software is offered in three versions: MIP Fund Accounting Intro, with core accounting functionality for three or fewer users; a Pro version, for organizations of up to 10 users and budgets of $1 million to $10 million; and an Advantage version for enterprise clients needing 10 or more users and an annual budget of $10 million or more.
MIP Fund Accounting 6.0, introduced in September 2004, features a completely rewritten budget module with a simplified worksheet and an unlimited number of budget versions; major enhancements to the report writer, including native PDF printing support and the ability to create custom, calculated columns; new billing options; and a new grant administration module that enables users to track grants, from application through closeout, directly through their MIP Fund Accounting system.
MIP is no stranger to the needs of nonprofits. Founded in 1982, the company had already served a large, diverse nonprofit customer base when it was acquired by Best Software in 2001. What sets this software apart from others in this genre, though, is that Best Software has done an exceptional job of expanding, enhancing and updating this product. Sporting a crisp, friendly interface, MIP Fund Accounting 6.2 is a modular, scalable and exceptionally well-done accounting suite.
The Financial Edge V. 7.4
Blackbaud is a global solution provider whose product lines encompass not only The Financial Edge accounting suite, but The Raiser's Edge fundraising system; The Education Edge system for independent schools; and The Information Edge system for executive data analysis. In addition, the company offers its extensive base of nonprofit clients services such as training, prospect modeling, technical consulting, Web-based fundraising and process engineering.
The Financial Edge uses a general ledger to capture transaction flows from the other modules, including AP, AR, payroll, cash management, fixed-asset management, point-of-sale support and forms generation. It is a robust, mid-priced accounting system with a strong orientation toward executive decision support, effectiveness analysis and accountability.
Ultimately, all accounting software has this focus as its goal. But where most fund software is transaction-based - focused on recording and tracking cash transactions, collections, payments and costs - Blackbaud pays inordinate attention to the more intricate details of analysis, flexibility and accountability. Blackbaud's focus is on intelligence, to provide stronger strategic planning and budgeting tools, as well as the efficient allocation of resources; accountability, with both internal and external reporting support and strong internal controls; flexibility, through customization in rules, reports and forms; and efficiency in collections across multiple services and dimensions.
This is a very stable product that has shown only incremental change over the past year (from Version 7.2 to 7.4). New for 2005 are an optional allocation management module that provides a central location for allocation tasks; and a new indirect cost allocation, for calculation of reimbursable indirect costs, such as overhead or facilities and administrative costs, according to grant guidelines. In the optional projects and grants module, a new account restrictions tab will allow or restrict specific accounts from being used for projects.
Blackbaud knows its market, and The Financial Edge presents a strong blend of budgeting, analysis, reporting and accountability tools. Priced in the mid-range, it includes technical support through the phone, the Web and e-mail, with a knowledge base and FAQs thrown in.
This is a polished, powerful program with full integration to fundraising and executive decision support systems that provide exceptional client flexibility and support.
Cougar Mountain Fund Accounting Suite V. 9.0
Cougar Mountain Software
Cougar Mountain Fund Accounting is a solid mid-range system designed to easily manage multiple grants and funds with different year-ends and comprehensive GASB reporting. Built on the firm's 23 years of experience in accounting and point-of-sale accounting software solutions, the Fund Accounting Suite incorporates general ledger and budgeting, payroll, AP, bank reconciliation, purchase order generation, data exchange, inventory and the R&R report writer.
Fund Accounting Suite handles complex transactions such as inter-fund transfers, fund balancing and financial reporting, and has the ability to work in the current year plus two years forward for forecasting purposes. It also offers exceptional audit capabilities, generating a clear audit trail as it automatically allocates costs to specific accounts or across funds using either dollar amounts or percentages. And the ability to track assets and contributions by restricted, temporarily restricted or unrestricted allows for the reporting required under FASB 116 and 117.
New in Version 9.0 - introduced in the fall of 2004 - are more than 20 new features that expand the power and flexibility of the product and make it easier and faster to use. The ability to quickly drill down to transaction details, enhanced look-up and reporting features, and new security features were added, along with enhanced reporting capabilities.
The program is obviously designed to be an accounting workhorse, but offers some surprising features that significantly enhance its value - including credit card verification for donations, unique check comments in the check printer, the ability to include pictures of merchandise in the inventory module, and the ability to carry negative GL budget balances. An additional benefit is the inclusion of retail point-of-sale functionality. Cougar Mountain understands that many nonprofits derive at least some of their funding from retail sales, and this functionality is a critical part of the company's appeal.
Fully integrated and offering the secure audit trail essential to accountability, the Fund Accounting Suite allows for an unlimited number of funds, departments or grants. It is specifically designed for the needs of nonprofit organizations and government agencies that must balance multiple fund ledgers, and its solid accounting underpinnings make it an ideal but economical step up for a growing nonprofit.
CYMA IV Not-For-Profit Edition V. 7.0
CYMA Systems Inc.
CYMA Systems marks its 25th year in 2005, and its extensive experience with nonprofits is noticeable in the latest version of its Not-For-Profit Edition. This is a robust and stable product built on the Pervasive SQL V. 8 engine, whose modular approach, internal controls and FASB compliance give it rock-solid performance and compliance capabilities.
The system's modules include a general ledger, AP, AR, bank reconciliation, job costing, payroll and purchase order management. Any combination of these may be installed, but must include a System Manager module for integration. Version 7.0, introduced in October 2004, adopts hundreds of enhancements to the modules, as well as adding new modules for inventory control and sales order management.
CYMA's NFP Edition is a straightforward solution that features an attractive and easily navigated interface. The critical functions of nonprofit reporting are handled "out of the box" via FASB 117-compliant financial statements written with Crystal Reports. Additional flexibility is offered through the use of unlimited custom fields and 24-character alphanumeric account numbers, automatic offset and additional fund maintenance and balancing features, and automatic fund balancing functionality to automate end-of-year closing.
The NFP Edition is also geared to deal with the special requirements of fundraising and allocations, including pledged receivables; inter-fund receivables; inter-fund payables; unrestricted, temporarily restricted and permanently restricted funds; cash and non-cash contributions; grants and contracts; special event revenue; program expenses; fundraising expenses; and donated services and materials.
An integrated Web browser, the eDesktop, provides access to online information about eDesk, new features, and financial calculators (including calculators for break-even analysis, business valuation, cash flow, equipment buy vs. lease, financial ratios, and loan amortization worksheets). The Custom section lets the user customize the eDesk environment for individual needs using standard HTML coding.
The CYMA Not-For-Profit Edition is a product focused on the wide range of activities that a nonprofit is likely to encounter. Its solid accounting underpinnings, modular approach and attractive pricing are well suited for nonprofits on a tight budget and those that want the flexibility of a modular system.
Fund Accounting Software Series V. 6.0
Executive Data Systems
The Fund Accounting Software Series is another very stable, 22-year-old system for nonprofits. It takes a modular, transaction-oriented approach to handling the fund accounting and reporting requirements of nonprofit organizations. Its core advantages for nonprofits are its speed, smooth integration with Microsoft Office, and the company's extensive experience in working with nonprofits of every size.
Any time you deal with software that has been in active use for decades, the interface is more likely to be utilitarian than design-driven, and FASS is no exception. That aside, the relatively easy learning curve and straightforward presentation of transaction entry and reporting make FASS ideal for organizations that wish to spend more time fundraising and less time bookkeeping. Data entry is offered both through a standard graphical interface and an alternate character-based, spreadsheet-style entry screen - another attribute of programs that have an existing cadre of long-time users.
Financial statements comply with FASB 116 and 117, with funds automatically segregated into unrestricted, temporarily restricted and permanently restricted classes. Journals, ledgers and most financial statements can be reviewed on the screen, and FASS presents a clear audit trail for accountability. Though the reports are well-designed and easy to comprehend, the OLE integration with Microsoft Word and Excel are important assets of the FASS system. They allow for additional formatting and information presentation, and are particularly useful for outside accountants or directors who may be more comfortable with the data capabilities of these programs.
Organized around code tables, list boxes and stored reports, FASS offers an excellent balance between pre-formatted options and user-defined elements. During transaction entry, for example, it is easy to add new accounts or refer to list boxes for journals, funds or accounts. Transaction amounts may be automatically distributed to up to 36 different general ledger accounts. Account descriptions of up to 50 characters are displayed when account numbers are entered. And though the general ledger includes a strong report writer capability, FASS also offers user-defined statements of activities and functional expenses that may be more useful than traditional reports.
Integrated modules are offered for multi-fiscal year project reporting, AP, AR, bank reconciliation, payroll with direct deposit, inventory management, purchase order management, fixed asset management and invoicing. A separate but integrated software program, Donor Records, handles the tasks associated with raising funds and tracking donors.
Executive Data System's Fund Accounting Software Series is ideally suited to the needs of mid-range nonprofits, but is building a strong following among smaller fundraisers as well for its scalability and ease of use. The modular design and a carefully selected "starter kit" for smaller nonprofits give the software an excellent balance of economy and utility.
Serenic Navigator V. 3.6
Serenic Navigator is built on the Microsoft Business Solutions Navision platform, and provides a robust suite of enterprise-level solutions and business management applications for nonprofits and government agencies. It is designed to let organizations manage an unlimited number of funds, automate transaction approvals, monitor budgets in real time, and offer advanced tools for managing complex allocations.
Founded in 1999 and acquired late last year by Vision HRM Software, Serenic Software has grown rapidly due to its status as a Microsoft Business Solutions vendor, with license to craft industry-specific enhancements to the Navision platform.
Serenic Navigator provides the ability to quickly and easily generate SFAS 117- or GASB 34-compliant financial reports, while delivering powerful data inquiry and analysis functions through MBS Navision's advanced filtering and drill-down technology. Reports can either be printed or published to HTML Web publishing.
Core modules of the software include general ledger, cash management, payables, receivables, purchasing, requisitions, payroll, project accounting, time and billing, inventory management and fixed asset management.
Arguably the most technologically advanced of the nonprofit packages, Serenic Navigator is built on a high-performance client/server foundation and sports a familiar, Windows-compliant interface. Use of the MBS Navision platform enables the program to maintain the most current interface capabilities of Windows, as well as advanced navigation features. It is also highly scalable, which is critical to the needs of larger nonprofits. And it allows for continuing growth of the product line through the utilization of other Navision features, such as customer relationship management, e-commerce and Web-based information sharing.
With a total price range of from $25,000 to $75,000, depending on the number of users and specific functionality required by the client, Serenic Navigator is clearly positioned for the high end of the nonprofit market. But it is also virtually the only program that can meet the flexibility and scalability demands of these enterprise organizations, and its lack of limitations on accounts and data values are an invaluable aid to both larger nonprofits and government agencies.
Dave McClure is the president of Kent Associates, in Alexandria, Va., an independent testing laboratory and evaluation service.
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