SpecialReport_Layout 1 12/16/15 11:44 AM Page 1 HE ON ROFIT IMES TM TThe Leading Business PublicationN For Nonprofit ManagementP • www.thenonprofittimes.com •T $6.00 U.S. January 1, 2016

SPECIAL REPORT: FINANCIAL/ Deciding If You Need Enterprise Accounting Software

BY CHRIS BERNARD up across the accounting landscape. These lightweight accounting. True double-entry accounting -- a method ore than two decades have passed since tools, which include Wave, FreshBooks, and Zoho of entering data twice to show both where funds come the first widely accessible accounting soft- Books among others, are often a step up from Quick- from and their effect on the bottom line -- is not being ware made it easier for nonprofit financial Books, but can’t compete feature-to-feature with the done. What is being done is more akin to bookkeeping, managers and small business owners to more-enterprise level solutions such as those provided he said, simply tracking where money is being spent M by Abila, AccuFund, Blackbaud, Intacct or NetSuite and and keeping on top of bank balances and bills. balance the books. Today, accounting software is more powerful -- and in many cases, more user-friendly -- and others. Smaller nonprofits might not actually need all The lightweight tools on the market are sufficient for the market is more competitive due to a wide array of the power of the higher-end tools. There are trade-offs this task. The tools don’t require a lot of accounting ex- new options and features. to sticking with the simpler solutions that all nonprofit pertise or experience. In fact, one of their selling points But many financial people have not fundamentally financial managers should carefully consider. is they don’t rely upon users’ familiarity with the jargon changed their accounting practices to take advantage of One such question is whether your nonprofit needs or advanced principles of accounting. A staff member the new possibilities such software can provide. Many fi- a full-fledged enterprise solution or if it can it get by with a basic understanding of accounting fundamentals nancial people still use the ubiquitous Intuit Quick- with a more lightweight tool. and a good relationship with the organization’s CPA can Books, a tried-and-true entry-level solution, condemning The type of system you need depends in part upon make do. them to entry-level accounting practices.Others make do how you will use it. David Geilhufe, senior director for Enterprise systems, on the other hand, are designed with a combination of QuickBooks and Microsoft Excel. NetSuite, whose Cloud-based ERP (enterprise resource for more rigorous double-entry accounting and aimed A new crop of low-cost or free software and mobile planning) software suite includes an accounting solu- at users with accounting experience. apps that prioritize usability over power are popping tion, said many small nonprofits are not actually doing Continued on page 2

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SPECIAL REPORT: FINANCIAL/ACCOUNTING SOFTWARE

Continued from page 1 sulting firms rather than nonprofits, their low cost and and functionality provided by the tool. “The old accounting solutions required a lot of ac- ease of use make them appealing to nonprofit man- “They can report to their internal and external users counting knowledge to make them be accurate, but the agers just the same. “They’re oriented toward billing much more quickly, and with better accuracy,” said Peter lighter-weight tools don’t,” Geilhufe said. “It’s one of their and invoicing, which is not how nonprofits function,” Stam, president of AccuFund, which offers a nonprofit selling points. This is not a new trend. It’s why so many he said. “You don’t bill your donors.” Cloud accounting system, among other financial man- nonprofits gravitated toward QuickBooks. You don’t Enterprise systems can better fit the nonprofit agement solutions. “They get better results, for internal need to be an accountant to understand it or use it.” model. For example, they allow for multiple revenue users and external sources. And managers can spend That’s both a pro and a con, he said. “The pro is, sources (such as federal and state grants and dona- their time working on insights, evaluating what’s going you’re managing your money. The con is, you’re not re- tions), integrate with constituent relationship or donor on rather than spending all their time reporting,” said ally doing accounting. The vast majority of nonprofits Stam. “When you get multiple people running multiple never do accounting and that’s not a problem. It’s more spreadsheets to create reports instead of managing pro- important that they exercise fiduciary responsibility They can grams, they’re not spending their time effectively. than have full accounting capability.” report to their They’re not looking at what it’s costing them in terms of But, they could be more effective if they did, he said. time to do things efficiently.” “There’s 20 years of evidence that small nonprofits can internal and Dan Murphy, senior product manager for Abila’s make do with the lightweight systems, but if they want external users nonprofit-focused MIP Fund Accounting, said a more to graduate beyond ‘Do I have enough money in my robust system gives the user greater insight into the ex- bank account to pay my bills?,’ you can’t do that in much more penses incurred by the organization. those systems. You need the extra capability of modern quickly, and “That gives you an increase in decision-making abil- enterprise systems.” with better ity about how to use resources,” Murphy said, “but it’s Tom Walker, senior product manager for financial ‘‘ also a huge step in capacity increase when you move solutions at Blackbaud, vendor of the Cloud-based Fi- accuracy. from a lightweight solution. Part of the benefit of that nancial Edge and Financial Edge NXT accounting pack- -- Peter Stam isn’t just the time that you save or the work that you ages, agreed with Geilhufe. “When nonprofits are ready save on reporting, but that it allows you to go after to start thinking beyond simple financial statements management systems, and work with restricted funds. other funds.” and start to look at trends and program effectiveness, it But such a package can cost thousands of dollars a year Walker said that for the smallest organizations, a is time to consider an enterprise solution,” he said. to license, and might require someone with relevant ex- lightweight solution might be adequate, but too many perience and knowledge -- either on staff or as a con- organizations settle for making a bookkeeping and HOW MUCH TO SPEND? tractor -- to work with it. The cost of such a tool alone Excel spreadsheet solution work. Though he hates to admit it, Walker said, there’s an- might be out of reach for a small nonprofit, much less “When that stops working, that’s when it makes other determining factor at play: cost. the cost of a dedicated accounting staffer. sense to bring it to the next level,” he said. “It costs Geilhufe said that though the lightweight systems The additional expense could pay off for organiza- more, but making the leap opens you up to greater op- typically are targeted toward small businesses or con- tions in the right position to make use of the features Continued on page 4

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SPECIAL REPORT: FINANCIAL/ACCOUNTING SOFTWARE 5 Ways To Get More Out Of Your Accounting Software Not all enterprise-level accounting solutions are created equal but most offer the capability to implement the following tips

Configure auto-scheduling. Not all soft- Accounting Automation ware solutions have it but people often don’t take the time to set it up even when it There are many accounting software packages employed in the nonprofit world. 1is available. Auto-scheduling lets you config- Below are some of the more prominent applications. ure reports to run at regular intervals triggered ei- ther by calendar dates or specific events, and then automatically email those reports to specific people Abila Blackbaud users $3,800; five or more users -- for example, program staff, board members, or MIP Fund Accounting Financial Edge NXT $4,300. Up to three users, $249/user/month; Single user starting at $249/month License and warranty, $35/month/user funders. Not only is auto-scheduling an enormous $149/month each user after three 800-443-9441 800-933-3501 time saver, it can ensure a consistently transparent 800-811-0961 www.blackbaud.com www.gmsactg.com view of certain accounting features for the people www.abila.com who supervise or monitor them. Cougar Mountain Software Intacct Corporation AccuFund Inc. Denali FUND Intacct Integrate payroll. Most organizations AccuFund Accounting Suite Standard Basecamp Package Typical entry-level pricing for nonprofits use software to manage payroll. Many ac- Single-user: $2,995; three users: Single user $1,999; $357 each is $3,600/year counting systems can manage payroll or $6,495; add $895 for each additional additional user 877-437-7765 integrate with other payroll-specific sys- user. Ascent Package http://us.intacct.com 2 tems, though many lightweight solutions require Cloud-based pricing starts at Single user, $2,999; $357 each add-ons or modules to do so. Another time-saver, $150/month additional user Intuit Inc. linking payroll and accounting can also eliminate Summit Package Quickbooks Premier for Nonprofits error and reduce the need for double-entry. AccuFund Accounting Suite Professional Single user, $4,999; $357 each Starts at $499.95/year for one user Single-user: $6,595; three users: additional user 877-683-3280 Use built-in time and expense-tracking $8,995; add $1,195 for each additional 800-388-3038 http://quickbooks.intuit.com/premier/ systems. Again, some of the lightweight user www.cougarmtn.com Cloud-based pricing starts at Quickbooks Enterprise Solutions for tools don’t support this functionality, $225/month CYMA Systems Inc. Nonprofits 13.0 3which is actually geared more at small 781-433-0233 CYMA Not-For-Profit Edition Starts at $1,000/year for one user business users, but time and expenses can be crit- www.accufund.com Basic package starts at $795 866-379-6635 ical for small nonprofits. Tracking either or both Typical 5 User System with Grant http://enterprisesuite.intuit.com/indus- in a system can give an organization insight into Agilon Tracking: $5,800 try-solutions/nonprofit/ how and where it spends its resources, which can Agilon Business Financials 800-292-2962 pretty quickly make them more efficient -- and Starts at $27,000 for 1 to 4 users www.cyma.com NetSuite often more effective. Starts at $42,000 for 5 to 10 users NetSuite Mid-Market Edition 800-480-9015 eTEK International Free through TechSoup Set email alerts and notifications. www.myagilon.com eTEK Fundamentals for up to 5 users at qualifying Whether you set dashboard notifications Starting at $5,000 for one user nonprofits or configure the tool to email users, auto- Aplos Software 800-888-6894 NetSuite Fund Accounting mated notifications are an excellent way to Aplos Accounting www.etek.net Starting at $9,995/year for 5 users 4 ensure that the right people are alerted when cer- $15/month for one user 877-NETSUITE $25/month for unlimited users FUND E-Z Development Corp. www..com tain actions occur. For example, an expense report FUND E-Z Nonprofit Accounting that needs to be approved or a purchase order that Aplos Oversight Suite Single user $1,995; each additional user OneNFP needs to be signed or a check that clears the bank. Basic enterprise platform free to approximately $500 OneNFP Financials This simple step can cut down on wait times and nonprofit users of Accounting Suite FUND E-Z Nonprofit Accounting (Pro Starts at $99 per user per month make sure nothing gets overlooked. 888-274-1316 add-on) $1,495 877-261-7045 www.aplos.com 877-696-0900 www.onenfp.com Push your systems to achieve insight www.fundez.com rather than rote reporting. Rather than Araize Open Systems Inc. a specific, tactical setting or feature, this is FastFund Nonprofit Software Grants Management Systems, Inc. TRAVERSE for Not-for-Profit more of a philosophy. Capturing outcome Single user, starts at $35/month; two to GMS Accounting and Financial Starts at $195 per user per month 5 metrics and move data between systems -- for ex- five users, $60/month; $25/month for Management/Reporting System 800-328-2276 ample, so your organization knows how much it every five more users One to two users, $3,500; three to four www.osas.com costs to provide each meal or the per-participant users, $5,000; five or more users, cost of each program -- can add a ton of evalua- FastFund Premium $7,500; License and warranty, Serenic Software $75/month single, $100/month $35/month/user Serenic Navigator tion and management value. Take advantage of multi-user up to five users Three users, starts at $16,000 the technology and what it can offer you. Spend 919-460-3990 Revolving Loan Servicing System 877-737-3642 the time it takes to figure out what you want to www.araize.com One to two users, $3,300; three to four www.serenic.com measure and track, and then set up your systems to track them. -- Chris Bernard

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SPECIAL REPORT: FINANCIAL/ACCOUNTING SOFTWARE

Continued from page 2 gets too complex to manage and report.” it back into the other system so you really get the full portunity. You’re not going to be handcuffed by your Benson said that charity evaluators such as Charity benefits and realizations of having that data,” she said. system and you can start to think about your programs Navigator and Philanthropedia are rating nonprofits on at a greater level of detail.” outcomes, so being able to measure those outcomes ACHIEVING INSIGHT See the chart on page 15 for an idea of how much and report on them is becoming critical. That requires You don’t need to be an accountant to do the sim- these systems can cost. reporting not just from financial systems but from ple math -- a more robust system equals more features. donor management systems, as well, to provide a more But when is it worth the investment in an enterprise- WHAT WILL YOU DO WITH IT? holistic view of the organization and its programs. level system? That level of detail can manifest itself in everything “A good accounting solution lets you grab your key Except for the smallest organizations, settling for a from reporting to outcomes, said Joan Benson, senior lighter-weight solution means making tradeoffs and “not product marketing manager focusing on nonprofits for managing themselves to their highest level,” Geilhufe Intacct, which also provides a Cloud-based ERP finan- Lighter-weight said, which poses a minimal risk for a small organization. cial solution. systems don’t “But for a bigger organization, the reason to go to a big- As organizations grow, they seek and acquire more ger system is you want to manage, you want to report re- funding sources, she said, which not only adds com- allow the kind stricted funds, you want to report to funders real financial plexity to bookkeeping but increasingly means in- of insight data that you and the funder have confidence in.” creased reporting requirements. The lack of robust In a phrase, Geilhufe said, it comes down to “achiev- reporting functions in the lighter-weight tools ends up organizations ing insight.” When the sector is being pushed toward a forcing organizations to go to other tools. are being much higher level of providing insight to donors and a “They’re reporting to different funders, to grantors, asked to track. higher level of stewardship for donor dollars, that re- to the board of directors, so as they’re growing they’re ‘‘ quires stronger capabilities, he said. going to have a lot more reporting needs,” Benson said. -- David Geilhufe “If data is the expectation, the most atrophied piece “They’re going to want to report on different levels, of data inside a small nonprofit is transactional account- and when they start having to do all that outside the performance indicators in real time,” Benson said. ing information,” Geilhufe said. “Lighter-weight sys- system, it becomes a lot more work and creates a lot “When there’s a lot more pressure for that, it’s pushing tems don’t allow the kind of insight organizations are more room for errors.” people to better solutions.” being asked to track, and should be tracking. It boils Stam said reporting capability is one of the primary She said that a powerful system with open architec- down to whether the organization is ready to manage benefits of the more enterprise-level systems. ture -- essentially, a design approach that supports the itself in a best practices way.” NPT “I think as soon as your organization gets too com- ability to speak to or integrate with other systems -- plex for the very simple accounting capabilities of (the can make it possible to import and export data across Chris Bernard is research and editorial director at lighter-weight tools), you should move up to any one of systems. technology nonprofit Idealware and a frequent the professional level systems,” he said. “As soon as you “That can let you bring in, in real time, information contributor to The NonProfit Times. His email is get beyond two actively managed funding sources, it from other systems, compare it, calculate it, and export [email protected]

How Non-Profits Can Reduce Operating Costs In The Cloud

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www.accufund.com/anywhere-npt 877-872-2228 ext. 215

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