Navigating the world of the best accounting software for nonprofits can be a daunting task. With countless options available, how do you ensure you’re choosing the right one for your organization? In this blog post, we’ll unravel the mystery of finding the perfect accounting solution by exploring the top 10 choices, delving into essential fund accounting features, and providing valuable tips for selection. Get ready to embark on a journey that will empower your nonprofit with the tools it needs to thrive financially.
Key Takeaways
This article outlines the top 10 nonprofit accounting software options for organizations to consider.
Evaluate factors such as ease of use, user experience, security, and data protection measures when selecting an appropriate solution.
Consider organization needs, budget, and growth potential while examining features & reviews before making a choice.
Top 7 Nonprofit Accounting Software
Choosing the optimal nonprofit accounting software can greatly influence your organization’s financial stability. To make this process easier, we’ve compiled a list of the top 10 options to consider, which includes the best nonprofit accounting software available:
Wave Accounting: A free accounting software that features income and expense tracking, reports, and a reporting dashboard. For an added fee of $20 per month, Wave also offers payroll services.
Zoho Invoice: This comprehensive accounting solution starts at $9/organization per month and enables you to manage and track invoices, monitor transactions, and generate invoices in multiple currencies and languages.
NetSuite is specifically tailored for nonprofit organizations. It offers several solutions such as accounts receivable and payable, cash management, fixed asset management, general ledger, and tax management. Pricing information is available upon request.
QuickBooks Online: With plans starting at $7.50/month, this software is well-suited for nonprofits with complex accounting needs and large donor bases. It integrates with Raiser’s Edge, offers robust budgeting capabilities, and provides grant management.
Xero: Starting at $13.00/mo, Xero offers automation features, advanced reporting capabilities, grant tracking, and billing. Payroll software is an additional $40, and inventory management features are available for nonprofits that need to track and manage their inventory.
Sage Intacct: Sage Intacct is a cloud-based financial management software designed to cater to the needs of nonprofit organizations. It offers a wide range of features including fund accounting, grant tracking, and financial reporting. It also supports project accounting, time and expense management, revenue recognition, and multi-entity and multi-currency management. The software is known for its robust reporting capabilities, allowing organizations to generate real-time financial reports and dashboards. Sage Intacct's pricing is available upon request.
Aplos: Aplos is a comprehensive nonprofit accounting software that is specifically designed to cater to the needs of nonprofit organizations and churches. The software offers a range of features including fund accounting, budgeting, donation tracking, and financial reporting, making it a one-stop solution for all nonprofit accounting needs. It also provides CRM capabilities allowing organizations to create donor profiles, communicate with donors, track relationships, and personalize engagement and retention strategies with targeted outreach tools. Furthermore, Aplos offers online giving and event registration tools, making it easier for organizations to manage donations and fundraising events. Pricing for Aplos starts at $59 per month.
Fund Accounting Essentials
Fund accounting is a specialized form of accounting, which includes basic accounting functions such as fixed asset tracking. It is used to track and share the financial details of each fund or program in an organization. Nonprofit accounting software frequently employs it to guarantee precise financial reporting and adherence to regulations.
The primary purpose of fund accounting software is to provide visibility into where an organization’s funds are being allocated. Organizations can verify appropriate fund allocation according to donor intent by keeping an eye on categories. To configure QuickBooks Online for a nonprofit organization, you can:
Access the system’s account and settings to treat customers as donors.
Adjust income and revenue to reflect revenue and expenditures.
Modify the tax form to Form 990, which is a tax form assigned to nonprofit organizations.
The use of fund accounting software for nonprofits offers several benefits:
It obviates the necessity for expensive fund accounting systems.
It effectively tracks donations and expenses.
It supports multiple currencies.
It stores all information related to transactions.
Cloud-Based vs. Desktop Solutions
One pivotal decision in selecting accounting software for your nonprofit is the choice between a cloud-based or desktop solution. Both options have their pros and cons.
When it comes to finding the best accounting software, cloud-based accounting software programs such as:
Freshbooks
Xero
Zoho Books
QuickBooks Online
Wave
Sage Accounting
Cloud-based accounting solutions, such as Freshbooks, Xero, Zoho Books, QuickBooks Online, Wave, and Sage Accounting, are stored on remote servers and can be accessed over the Internet. They offer several advantages such as improved collaboration, scalability, and the ability to access the software from any location with an internet connection. However, there are potential downsides including security risks, lack of control over data, and the possibility of data loss.
On the other hand, desktop accounting solutions offer greater control over data, no requirement for an internet connection, and can be a more cost-effective choice.
Customization and Integration Capabilities
Nonprofit accounting software ought to display adaptability and integration capability with other software tools to simplify processes and automate tasks. Customization capabilities enable organizations to modify the software to suit their specific business needs, such as custom fields, workflows, and reports.
Integration capabilities allow organizations to link their accounting software with other software tools, such as customer relationship management (CRM) systems and donor management platforms, facilitating seamless data transfer between systems. For instance, DocuPhase has Optical Character Recognition, and QuickBooks Online can be customized to treat customers as donors, adjust income and revenue to reflect revenue and expenditures, and modify the tax form to Form 990.
Donor Management and Fundraising Tools
Nonprofits require efficient donor management and fundraising tools to optimize their impact. Nonprofit accounting software often includes features to track donations, online giving, and event management to assist organizations in these areas.
Top 4 CRM Systems for Nonprofits
Salesforce Nonprofit Success Pack (NPSP): Salesforce NPSP is a customizable platform developed specifically for nonprofits. It allows organizations to manage donors, volunteers, and other constituents in one place. It offers features like donor management, donation tracking, and fundraising, in addition to Salesforce's robust CRM capabilities.
Blackbaud Raiser's Edge NXT: This is a comprehensive CRM and fundraising platform designed for nonprofits. It offers donor management, fundraising, event management, and volunteer management capabilities. It also provides analytics and reporting features that help organizations understand their donors better and make data-driven decisions.
NeonCRM: NeonCRM is a cloud-based CRM solution designed specifically for nonprofits. It offers the capabilities of donor management, membership management, event registration, and email marketing. It also integrates with popular accounting software, making it easier for nonprofits to manage their finances.
Light Green Light: Light Green Light is an acclaimed accounting software specifically designed for nonprofit organizations. It offers a comprehensive suite of tools to help manage and streamline financial operations. With features such as fund accounting, budgeting, grant management, and donor tracking, Light Green Light simplifies the complex tasks associated with nonprofit accounting. The software also offers robust reporting capabilities, providing real-time insights into an organization's financial health. This helps nonprofits maintain accurate records, make informed decisions, and ensure compliance with regulatory standards.
Invoiced’s Invoice-to-Cash module, for example, integrates with various payment channels and online payment systems, including credit cards, debit cards, and electronic payment methods like PayPal. Furthermore, Sage Business Cloud Accounting’s project tracking feature can facilitate fundraising activities, while Zoho Books offers donation tracking functionality and donor management features such as sending payment receipts to donors and managing accounts payable.
Aplos, a popular nonprofit accounting software, provides CRM capabilities that allow organizations to:
Create donor profiles
Communicate with donors
Track relationships
Personalize engagement and retention strategies with targeted outreach tools.
Financial Reporting and Compliance
Nonprofit accounting software must offer accounting features that facilitate financial reporting and compliance, including managing accounting tasks like producing financial statements, submitting Form 990, and complying with nonprofit accounting standards.
The process for preparing financial statements for nonprofits involves:
Monitoring incoming funding by month
Monitoring outgoing funds by month
Providing an annual total of both
Subtracting expenses from incoming funding
Outlining how the surplus will be reinvested.
Form 990, an annual tax form that tax-exempt organizations are required to submit to the Internal Revenue Service, provides details regarding the organization’s mission, sources of funding, and how the funds were distributed during the tax year. Form 990 is available for public viewing.
Ease of Use and User Experience
When assessing the ease of use and user experience provided by nonprofit accounting software options, key factors to consider include a user-friendly interface, customer support, and training resources.
Usability can be assessed based on the following factors:
Ease of use
Access to customer support
Availability of assisted bookkeeping options
Payroll integration within the application
Integration of online payments within the application
For example, Zoho Books offers support via phone, chat, or email, and users can access the application from any online location.
Pricing and Discounts for Nonprofits
Pricing and discounts are major considerations when choosing nonprofit accounting software. Many providers offer free trials, discounts specifically tailored for nonprofits, and cost-effective plans with essential features.
QuickBooks Online is offering a great deal for new customers through TechSoup. With TechSoup, nonprofit organizations can get QuickBooks Online for $75 a year. Zoho Books provides a 15% discount off its starting price for registered nonprofits.
Security and Data Protection
When choosing nonprofit accounting software, security, and data protection are of paramount importance. The software should include data encryption, secure credential tokenization, and data backup options to protect sensitive information.
For instance, some software solutions incorporate modules to detect forged documents and prevent fraudulent transactions, while also leveraging robotic process automation (RPA) technology for enhanced safety. Ensuring that your chosen accounting software has robust security measures in place will help safeguard your organization’s data and maintain trust with donors and stakeholders.
Tips for Choosing the Right Nonprofit Accounting Software
Choosing the appropriate nonprofit accounting software is a significant decision with substantial implications for your organization’s financial health. To make the best choice, consider the following tips:
Evaluate your organization’s needs, budget, and growth potential. Assess the cost of the software, implementation, and training, as well as the cost of ongoing support and maintenance.
Examine software features, user reviews, and available support. Pay close attention to fund accounting essentials, donor management and fundraising tools, financial reporting and compliance, customization and integration capabilities, and security and data protection.
Consider the ease of use and user experience, including user-friendly interfaces, customer support, and training resources. Ensuring that the software is easy to use and provides the necessary support will help your organization maximize its efficiency and effectiveness.
Summary
In conclusion, selecting the right nonprofit accounting software is a vital step toward ensuring your organization’s financial success. By considering the top 10 options, understanding fund accounting essentials, evaluating cloud-based and desktop solutions, and taking into account customization and integration capabilities, donor management and fundraising tools, financial reporting and compliance, ease of use, pricing, and security, you can make an informed decision that best serves your nonprofit’s unique needs. Empower your organization with the right tools and watch it flourish.
Frequently Asked Questions
What is the best accounting method for nonprofit organizations?
The best accounting method for nonprofit organizations is accrual accounting, as recommended by the Generally Accepted Accounting Principles (GAAP). This method provides a more accurate view of the organization's financial situation.
Is QuickBooks good for nonprofits?
QuickBooks is an effective accounting tool for nonprofits with features designed to meet their specific needs. It can help streamline finances, track expenses and income, manage donations, and prepare accurate reports, making it a great choice for nonprofits. The software is easy to use and can be customized to fit the unique needs of any organization. It also offers a variety of features that can help simplify the accounting process.
How to choose nonprofit accounting software?
When selecting nonprofit accounting software, ensure it allows you to generate the required reports and easily manage funding according to the AASB, FASB, and IASB standards.
What is fund accounting?
Fund accounting is a specialized accounting method used to track and report the financial activity of individual funds or programs within an organization. It is commonly used in nonprofit accounting software to ensure accurate financial reporting and compliance with regulations.
What are the benefits of cloud-based accounting solutions?
Cloud-based accounting solutions offer users the benefits of enhanced collaboration, scalability, and accessibility, allowing them to access the software from any internet-connected location. These features make cloud-based accounting solutions an attractive option for businesses of all sizes. They provide a secure, reliable, and cost-effective way to manage finances and streamline operations. Users also benefit from the features of cloud-based accounting solutions as they provide real-time data access, seamless updates, and the flexibility to work from anywhere.
