Have you ever worked a jigsaw puzzle? As long as one of the pieces didn't fall into the couch cushions or get chewed up by a dog, everything eventually fits together pretty nicely. When it comes to non-profit accounting, though, problems and solutions are often not as neatly aligned as a puzzle.
Many not-for-profit organizations have to manage multiple entities, accurately report on their sources of funding and work around tight budgets and small staffs, all while equipped with nothing more than a bunch of Excel sheets and/or a legacy desktop financial application such as QuickBooks. These are tall tasks for such limited tools. How can this mismatch be resolved?
What not-for-profit finance teams have to deal with on a daily basis
Like a puzzle with missing pieces or worn-down edges, non-profit accounting presents unique and significant challenges:
- Every fund or grant has its own particular characteristics. Money from an anonymous philanthropist may come with different strings attached (e.g., transparency requirements) than a gift from a major foundation does. This creates a lot of complexity for accountants as they track different funding sources across the system.
- Non-profits are now under heavy regulatory pressure. The Internal Revenue Service began stepping up its scrutiny of them in 2007, leading to higher costs for accounting departments across the U.S. At the same time, their already constrained budgets and teams have not always increased in kind.
- Without many resources to spare, not-for-profit organizations often do not invest in IT infrastructure or new applications because they see them as too expensive. They may think that implementing better software and gaining the necessary expertise to use it is not a priority. Accordingly, old but inadequate software sticks around and data is frequently difficult to access.
- In April 2015, the Financial Accounting Standards Board proposed big changes for how not-for-profit firms report their finances – the first major rewrite since 1993. Included in the proposal were overhauls of net asset classification, operating cash flow presentation and liquidity information.
Across the board, many non-profits face an uphill struggle against this mix of complicated reporting requirements, shifting industry regulations and their own financial constraints. They need an equalizer, more specifically a modern accounting system that gives them a clear picture of all of their granular financial and operational data and allows for precise tracking of project locations, teams and costs.
Non-profits have to keep close tabs on their funding sources.
Cloud accounting software gives non-profits a better shot at success
Using Excel and QuickBooks to tackle non-profit problems is sort of like trying to put a puzzle together with only half the required pieces. Big gaps will be left, and the picture won't be clear. Cloud-based software is a solution much better suited to the tasks at hand.
For starters, a cloud application such as Intacct is easier and more cost-effective to use than the traditional alternatives:
- Grant management, often a hurdle for non-profits, is streamlined, thanks to features that can handle grant renewals, create reports and invoice funders.
- There is no large upfront charge since the application (and its supporting hardware and software) is simply being subscribed to via a monthly fee.
- As a result, IT does not have to sink tons of its time into maintaining the system, freeing it up to work on other tasks around the organization.
- Upgrades as well as integration with other applications (like Salesforce.com for customer relationship management) are relatively straightforward and painless.
- Access is possible from any Internet-enabled device at any time, allowing volunteers to easily log expenses and board members to view reports and dashboards.
- Software such as Intacct is very easy to use, even for non-experts such as the volunteers many not-for-profits and faith-based organizations rely on every day.
These overarching benefits are achieved through the software's advanced automation capabilities and its robust Web-based interface. Dealing with multiple ledgers or currencies is possible through automated workflows, as is seamless consolidation of different operating entities and locations. Keeping all program stakeholders, from volunteers to the board of directors, in the loop is easier than ever before when using a cloud-based accounting system.
"Automated workflows provide many benefits to non-profit accounting teams."
Non-profits perform a wide range of important tasks, whether as faith-based institutions or through their work in fields such as health care. Their specific needs are similarly diverse, which makes cloud software a natural choice since it is highly customizable, flexible and scalable at a time when nonprofits continue to expand their collective presence.
The 2015 Nonprofit Employment Practices Survey found that not-for-profit growth in hiring was outpacing the corporate sector, but that budgeting remained a major challenge. A cloud solution like Intacct can resolve this issue and others and give non-profits the best possible shot at sustainable success. It is cost-effective, scalable and straightforward to use, whether you are an accountant at a not for profit or a volunteer trying to log your hours.
