As your nonprofit organization adds programs and funding sources, reporting becomes increasingly complex. You may find yourself having to rely on spreadsheets and workarounds, which can quickly become unmanageable and error-prone. As compliance, funding, and complexities grow, these issues can quickly hinder mission productivity and you may be exposed to larger burdens including:

  • System constraints limiting your ability to adapt other new and vital technology
  • Poor financial control which can lead to future loss of time and money
  • Lost opportunities for additional funding because your system is not flexible or robust enough to properly handle tracking and reporting requirements
  • Riskier audits as internal controls and operating efficiencies surrender to system constraints

Sound familiar? If so, you may need a more robust accounting system. Time to ask yourself the following five questions:

  1. Does my current solution incorporate nonprofit-specific accounting rules?

Audited financial statements must present information in accordance with the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 116 and 117, or Governmental Accounting Standards Board (GASB) guidelines. If your reports need heavy customization to comply with these guideline, you should consider software that easily provides compliance-ready reporting.

  1. Can I easily measure performance of a program or activity?

Nonprofits typically need to measure a program or activity outcome, and track beyond basic financial information – something off-the-shelf and most commercial accounting software is not designed to do. Your software needs to be robust enough to track and report performance or outcome measures on financial statements, as well as budgeting outcome measures for accurate forecasting.

  1. Am I able to create reports for varying fiscal years?

While commercial accounting often assumes that fiscal years end in the same months each year, nonprofits often have to report to several different audiences, with different information requirements and reporting timelines. Thus, the ability to track and report across different time periods (cross-fiscal-year reporting) is critical for nonprofits.

  1. Can I easily show how money is tracked or budgeted?

Funds must be treated as distinct entities with their own general ledger and individual revenue, expense, income, and balance sheet reports. Nonprofits need software that will automatically handle the offset postings to cash or payable accounts by fund, as well as the encumbrance processing, grant tracking, and budget controls.

  1. Can I perform allocations of indirect costs by grantors?

Accuracy of allocations is critical in providing auditors and grantors a complete audit trail, but these allocations typically are not handled well by a commercial accounting system not designed with nonprofits in mind. Allocations need to be performed on virtually any account balance at the program level, department level, or grant level, and across multiple segments at one time with advanced calculation options, including fixed or dynamic percentages, unit measures, and more.

Want to find out more? For other reasons you might need to upgrade to software built for the complexity of nonprofit finance and accounting, download “10 Reasons Why Nonprofits Need True Fund Accounting™.”

And register to attend our live webinar Thursday, May 11 at 1 p.m. CT, Managing Nonprofit Financials for Greater Success with Abila MIP. You’ll discover how advanced reporting, budgeting, and other capabilities can help you overcome challenges, including effectively managing multiple funding sources and securing grant funding.