Top Nonprofit Accounting Software in India - Get Free Trial

Accounting for nonprofit organizations refers to both the process of documenting financial transactions as well as reporting on such transactions. It is also often referred to as fund accounting, and it needs balanced accounts depending on limits set by the supplier. Accounting for nonprofit organizations is concerned with keeping track of how monetary resources are used inside an organization. Trust accounting software can be easily integrated with third party software. 

Nonprofits, associations, churches, and faith-based missions confront distinct obstacles than for-profit companies. Accounting requirements for a nonprofit are one of these problems. Nonprofits must handle donor donations, fundraising events, grants, investment income, membership fees, and so on, rather than sales and revenue. Furthermore, with limited funding for administrative chores and tight reporting requirements, such as FAS 116 and 117, nonprofit organizations may save time and money by installing a nonprofit accounting system, while lowering the possibility of reporting mistakes. You can also integrate CRM software and ERP software with the non-profit accounting software. 

Contributions, programming income, fundraising, investment returns, and membership dues are the sources of cash that are accounted for by nonprofit organizations. When compared to those of companies operating for profit, some of their financial records are entirely different.

Accounting software designed specifically for nonprofit organizations may help these groups arrange their finances, create budgets, and keep tabs on their donations. Instead than just modifying existing solutions, nonprofit accounting software takes into consideration the fundamental distinctions that exist between nonprofit accounting and traditional company accounting.

The following are some examples of these differences:

• The mission of the funds: Nonprofit organizations, in contrast to private and commercial enterprises, are committed to the advancement of social and humanitarian causes.
• Fund restriction and regulatory under control: Donations from supporters are the primary source of funding for nonprofit organizations, in contrast to private and commercial businesses, which generate revenue by selling goods or services to their clientele. As a result, organizations that serve a charitable purpose are subject to a wide variety of regulations regarding the use of money and the reporting of those funds.

The most effective accounting software for nonprofit organizations takes into consideration these distinctions.

Furthermore, 79% of organizations intend to expand in the next 12 to 18 months, according to our nonprofit finance report. Your company may plan for the future by managing its cash with an accounting software system designed for expansion.

You'll quickly outgrow QuickBooks, spreadsheets, or other types of general accounting software if you still use them. You may ultimately save time, money, and stress by investing in a nonprofit accounting system that will grow with your organization and accomplish both your short- and long-term objectives. Additionally, moving your financial and donor data from one system to another removes the data security risk.

The following five signs indicate that a nonprofit organization's accounting system is not adequate:

• Excess data entry: Because your accounting system does not interact properly with other systems or with reports, you are required to manually input data from these other sources.
• Maintaining too many spreadsheets: It shouldn't be necessary for you to extract data from your accounting system and then edit that data in Excel in order to get the reports that you want.
• Lagging in reports: When reporting is so difficult to complete that the finance staff is unable to provide management and the board with up-to-date information, decision-making is inhibited. 
• Data storage: If the information you need to provide is not readily accessible via your accounting system, department and programme managers may need to produce their own records and reports outside of the system.

Inadequate security: It is possible that grants and contributions may be put in peril if your accounting system does not offer an acceptable level of security to deter fraud and ensure compliance with regulations.

If you are looking at switching to a new platform, these are the eight most important qualities that the accounting software for a charity fund should have: 

• Accounts payable

This function is essential for the maintenance of vendor data, the computation of payment dates, the detection of suspicious payments, the scheduling of advance payments, and the attachment of accounts payable documents.

• Receivable and billing

This function is useful for assisting with the efficient preparation of invoices, the transfer of balances, the calculation of sales tax, and the duplication of invoices.

• Budgeting 

Take advantage of budgeting and forecasting by creating what-if scenarios, versioning your work, and getting clearance from appropriate parties.

• Inventory 

Tracking serial numbers and lots, managing prices, and calculating landing costs are all made easier by inventory capabilities.

• Payroll 

Tracking time and attendance, employee self-service, prevailing wages, and certified payroll are all functions that may be assisted by payroll.

• Reporting 

Comparisons of the budget to the actual expenditure, accounting for grants, contracts, and projects, and management of funds are all components of the report.

• Security 

Role-based authentication, encryption, locked reporting periods, and backup recovery are all examples of security elements that must always be present.

• Flexibility 

The presence of these two components makes it possible to pick the necessary features and select from a variety of payment options. 

• Manage funds and donations

Nonprofits get funding and contributions from a variety of sources (individuals, organizations, and websites). They must maintain thorough records of their revenues and spending since they may be susceptible to government audits. Inconsistencies in their reporting might result in reputational harm, penalties, or even legal action.

• Connect online contributions to the main money pool

Donations received from other nations via online websites or payment gateways, such as PayPal, need to be represented in the primary money pool of the nonprofit organization rather than being kept in a separate account.

• Sort reports according to different transaction codes

For the sake of clarity and effective administration of funds, various types of transactions need to be allocated their own unique codes. By including filters into spending and profits reports, consumers will have an easier time seeing the various transactions and will have a better understanding of how money is used.

• Generate reports in multiple formats 

Reports need to be able to be created and presented in a number of forms, such as Excel files or PDFs, by organizations that focus on charitable giving. This is due to the fact that the vast majority of volunteers lack experience in accounting and, as a result, need to be able to see reports in forms that are both comfortable and straightforward.

• Multiple currency support

Donations or monies received by the nonprofit organization in a currency other than its main account's currency need to be connected with the primary account and immediately converted.

One of the first things you should consider when looking for your next accounting software solution for your nonprofit organization is the kind of software distribution model that will work best for your company. There are three primary choices available to you:

• On-premise solutions are software solutions that you license and execute on your own internal servers. These solutions are also known as "local" solutions. This indicates that in addition to maintaining the software on the server, you will also need to make an investment in hardware and then maintain it.
• Hosted solutions, also known as single-tenant solutions, are stored on a server that is solely devoted to your company in a faraway data center that is run by a third-party hosting provider. You still need to purchase a license for the programme, but you will not be responsible for any upfront hardware expenditures.
• Cloud computing solutions, often known as "software as a service" or SaS, provide direct and continuous access to the financial management system over the cloud. These solutions are designed for many tenants. Everything that you need will be maintained by the vendor, and in exchange, you will pay a subscription fee for the system on a per-user and per-month basis. There is no need to make an initial investment, and there is also no requirement to undertake any upkeep. 

Over the course of the last ten years, cloud computing services have steadily increased in popularity among charitable organizations. Cloud accounting software for nonprofits not only eliminates the need for an up-front investment in hardware or IT support, but also makes it possible to do work in a safe environment from any location. The epidemic has made it very evident that there is a pressing need for this capability.

When it comes time to examine providers for your financial system, keep in mind that you are ultimately selecting a complex software programme. Even with cloud computing applications, the core screening process stays the same. Consult the basic assessment checklist below, and then on to the following section for additional questions to ask cloud providers.

Gathering requirements: Carefully identify and record your requirements. Obtain feedback and reach a consensus among the organization's main users working in the finance department and other associated areas. Do you need integration with customer relationship management systems? Talk to development. Do you need the implementation of new procedures for purchase requisitions? Discuss the matter with accounts payable.

Detect top priorities: There is no solution that can fulfill every need for every user. Identify which features and criteria should be considered "must-haves" and prioritize them so that you may choose the software solution that caters to the specific requirements of your financial team.

Create the request for information: After you've determined your criteria, it's time to write your requirements, expectations, and parameters on a Request for Proposal (RFP) form that you can submit to a short list of suppliers. Using the same form for all suppliers allows you to compare solutions on an apples-to-apples basis. Here's a Nonprofit Accounting Software Buyer's Checklist to help you write your RFP.

Research: Create a short list online by sifting through competitor products and combing through independent research and reviews. You may use social media sites such as LinkedIn and Twitter to connect with individuals who are already using the items you are considering.

Focus on your priorities: Functional excellence is unavoidable regardless of deployment strategy. Modern charities need a complete financing framework. Many organizations value multiple entity consolidation and grant-based accounting as much as real-time reporting, process flexibility, automated approvals, and software integration.

Check references: Make sure that you thoroughly check the references provided by the seller. Make sure that suppliers can give access to satisfied and successful consumers, but don't forget about internet forums such as G2 where you can see feedback that has not been checked or censored in any way.

Nevertheless, as the size and complexity of your nonprofit organization continue to increase, you will eventually reach a point where manual, time-consuming processes will drain your organization's productivity, and the lack of real-time visibility into key metrics and outcomes will stifle the organization's growth. If you want to be a responsible steward, you need a system that takes use of the most recent technological advances.

A contemporary accounting system should, at the very least, automate and simplify essential financial management tasks including Accounts Receivable, Accounts Payable, and Financial Close.

However, if you just automate the bare necessities, it will be difficult to fuel your company's development while also satisfying its need for accountability and transparency. In instance, nonprofit organizations have specific requirements for accounting, monitoring, and reporting that must be met by the financial management systems they use, and these requirements call for unique capabilities.

On-premise accounting software that is inflexible, inefficient, and out of date is being swiftly replaced by a new generation of contemporary cloud financial management systems. Today, more than 90% of corporations report employing cloud technologies, and charity organizations are no exception.

Accounting software tailored to the needs of nonprofit organizations equips organizations of any size with the tools necessary to efficiently manage both their revenues and expenditures. It is necessary to meticulously document all financial information for non-governmental organizations (NGOs), which are subject to audits by the government. As a consequence of this, these systems are able to record a company's transactions, as well as its grants, expenditures, assets, and donations. Their number one objective is to find a happy medium between the giving and receiving of charity donations and other monetary contributions.

Nonprofit financial software, which is very similar to accounting software for nonprofit organizations, helps create fiscal transparency, ensures that federal reporting rules are followed, optimizes the amount of money donated, and decreases the amount of money spent on things that aren't required. Because of the interplay between these characteristics, a charitable organization is able to maximize the use of its resources, preserve its financial visibility, cultivate its reputation, and win the unwavering faith of its donors throughout time.

Finding out what kind of buyer you are might help you choose the appropriate solution for your needs. You should be aware of the specific requirements that you have and only pay for the items that you consider to be essential. A great number of purchasers make the common error of purchasing products that provide a wealth of functions that they only seldom make use of. Buyers of accounting software for charitable organizations often include the following: 

Non profit organizations: These organizations are entirely supported by the contributions of its volunteer members and may on occasion accept money from corporate sources and other contributors. The implementation of social welfare programmes and initiatives is their principal source of expenditures.

Charities: These are organizations that are dedicated to a specific cause and are supported financially by either the public or private sector. Because these organizations get contributions from a wide variety of sources, they are required to form a single fund in order to cover all of their operational costs.

Churches, mosques, religious places: The majority of the funding comes from contributions made by members and weekly collections held at the office. Churches need a system that provides a user interface that is straightforward and uncomplicated since parishioners undertake the majority of the accounting responsibilities.

Private schools and colleges: The government, private donations, and student tuition fund these schools. They must handle cash, personnel compensation, administration, maintenance, promotions, and marketing, and other daily expenses. Most schools have in-house accountants, therefore their needs are more complex. Thus, these organizations may seek a more advanced nonprofit accounting system.

At the completion of each fiscal year, subjects such as end-of-year acquisitions and partnerships, as well as legislation governing accounting for charitable organizations, often become noteworthy. There is a heightened level of scrutiny around their activities, and they are under pressure to maintain openness should their financing be impacted owing to accounting irregularities. In addition, there is heightened awareness of the issues surrounding their operations.

The following are some major trends that you should be aware of:

Keep separate ledgers of each fund: A nonprofit organization is required to maintain separate ledgers for each of its sources of revenue, including direct contributions, grant money, fundraising funds, commitments, and so on. Accounting software specifically designed for nonprofit organizations separately records various sorts of expenses and money sources, which simplifies reporting and increases the likelihood of accurate results.

Prioritize expenditures: The ledger reports of an organization provide a comprehensive perspective of the company's financial environment. Because of this, a company is able to strategically choose which forthcoming investments and costs should take priority.

Meeting budget goals: When board members of an organization have a complete view of the whole of the company's financial portfolio, they are better able to develop reasonable budgets and achieve the objectives connected with those budgets.

Automating tax preparations: Document 990 is a tax form that some organizations that are exempt from federal taxes are required to submit with the Internal Revenue Service (IRS). Many nonprofit accounting systems contain capabilities that produce this form.

Build confidence in your company: Transparency in an organization's financial data demonstrates to both existing contributors and potential donors how their contributions are being put to use. 

Prevention of fraud and errors: Omissions or inaccuracies may arise owing to internal inadequacies. As a result, charitable organizations have to adhere to the legal standards of what counts as contributions (revenues, gains, gifts, or transfers of assets), given services, and costs (fundraising and management).

• Top 10 Accounting Software in India for Small Business 2022
• Accounting Software Has Become A Necessary Need For Any Business
• Best Accounting Software for Small Business in 2022
• Pro Tips on How to Create an Online Accounting System on WordPress
• Ways to Manage Accounting for your Startup in 2022