2009 Review of Not-for-Profit Accounting Systems

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From the Nov. 2009 Issue

Much like the entities that will utilize them, nonprofit software products vary in breadth and scope. While smaller nonprofits and smaller government entities have no need for the bells and whistles of more sophisticated specialized software, larger nonprofits definitely do. The IRS Form 990 has been completely redesigned and began use for tax year 2008. Though the new form has only two more pages than its predecessor, it also now has 16 accompanying schedules ranging from Public Charity Status and Public Support to Supplemental Financial Statements to Supplemental Information Regarding Fundraising or Gaming Activities, and so on.

Obviously, most nonprofits will not be required to file all 16 schedules, but the point is that IRS filing requirements and FASB 117 Financial Statement requirements for nonprofits means that the assistance of solid nonprofit software will definitely make the nonprofit’s life easier.

Of course, the other side of the nonprofit that needs a solid software system is fundraising and donor tracking. A solid, accurate donor base is a necessity for a nonprofit of any size. And without it, the agency stands little chance of performing the work that others may depend on.
The products reviewed here range from basic, entry-level fund products to enterprise-level nonprofit solutions that easily handle everything from fund allocation to donor tracking. Most fall somewhere in between.

The following categories were considered in each product review:

Ease of Use/Flexibility. I’ve spoken with countless people who have invested a lot of time and money on a software product only to be overwhelmed by a steep learning curve. As a result, they are often forced to search for another product, wasting their time and their money, along with their employees’ time. Ease of use is important.

Modules/Scalability. Both large and small nonprofit organizations should consider the modules included with the base system as well as those available as add-ons. How scalable is the product? Can it grow as the nonprofit grows? This is an important category, particularly for nonprofits undergoing a transitional phase.

Features/Functionality. What does this software do that sets it apart from the competition? How easy is it to perform those necessary functions? Also, what are some of the new features that have recently been added to the product?

Reporting. Will the product produce the reports (Form 990 and FASB 117) that every nonprofit must be able to produce. What about management reports? Can reports be customized or exported to Excel or saved as a PDF file? How do the product’s reporting capabilities set it apart from other products?

Support/Help. Is a solid Help function available? Are users able to reach support personnel when needed? What are the support options?

Relative Value. This particular section is pretty relative (as noted in the section title), but we look at the cost of the product versus what a nonprofit will get for that price. If a system provides extensive features and functionality, but those features aren’t really utilized properly at your NFP client’s organization, or if the product does not provide the data needed for the NFP to survive and thrive, the relative value is low. However, if a different organization purchases the more robust and feature-rich system, and it meets the needs of that organization, then the relative value is high.

Be sure to advise your clients to take the time to visit the vendor websites for more information and product demos. Have them try out a few, and then help them make their decision. How well the program suits your client’s nonprofit organization will determine its value and ultimately the success of the organization and your relationship with it.

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